Mining companies failing to meet their own ESG policies

Many major mining companies are failing to implement or report progress on meeting their own ESG policies and standards, according to a new report, which also warns of potential “SDG-washing” in the sector.

The report, put together by independent research organisation the Responsible Mining Foundation, is a biennial “deep-dive” into 38 large scale mining companies looking at ESG policies and practices as well as 10 responsible mining indicators for 180 individual mine sites.

It said that much of the “modest” overall progress made since 2018 on issues covered by the review had come from companies making new commitments rather than concrete actions, with company efforts to track, review and act to improve the effectiveness of their EESG (economic and ESG) activity found to be consistently “weak”.  

For issues like local procurement, grievance mechanisms, and air and water quality, the Responsible Mining Index (RMI) Report 2020 found “little or no evidence” of sharing mine-site level information and “scant evidence” of engagement with local stakeholders. 

Of the 180 individual mine sites assessed against 10 responsible mining indicators only one scored more than 50%, while 145 sites scored less than 20%. Forty-five sites scored zero on all 10 indicators.

None of the companies shows consistent performance across the mine sites they own or operate.

The new report comes at a time of increased scrutiny for mining companies, with many stakeholders having questioned the sector’s responsible mining commitments since the tailings dam disaster in Brumadinho, Brazil last year that killed nearly 300 people.

Investors have signalled their interest in an alleged disconnect between policy and practice at mining companies, with the likes of the Church of England Pensions Board, the Swedish AP funds, and the PRI sending a shareholder delegation to Brazil later this year to undertake their own assessment of the responses from companies to mine tailings dam disasters and related risks. 

Upon announcing the delegation, the investors explained: “Our difficulty is that we are hearing radically divergent accounts of events and responses, and we need clarity not just on what happened, but about how to respond to where we are now and how to prevent future tragedy.”

The RMI report highlights the role of this investor group in driving stronger action and transparency on ESG issues, citing its work demanding disclosures of location and safety data on miners’ tailings storage facilities. 

When it comes to the UN Sustainable Development Goals (SDGs), companies are highlighting positive contributions to the goals in their Sustainability Reports but generally omitting reference to negative impacts, the report said. 

Hélène Piaget, CEO of the RMF said: "The SDGs provide a valuable societal framework for reporting and action on economic, social and environmental concerns, but an unbalanced emphasis on the 'good' that companies do may obscure the negative impacts, be they inherent or unintentional, that may impede the achievement of the SDG goals.''

“This one-sided reporting fails to present stakeholders with a true picture of the challenges the mining sector faces in its support of the SDGs.”