UK’s re-entry into deep coal mining financed by PRI signatory

PRI cannot dictate signatory investments, insists CEO

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The investment firm financing the UK’s controversial re-entry into deep coal mining is a signatory to the Principles for Responsible Investment (PRI).

The UK Government has been heavily criticised in recent weeks for choosing not to intervene in plans to build a deep coal mine at Whitehaven, in the North West of England, which will be Britain’s first in 30 years. The plans were approved locally by Cumbria County Council after the country's Secretary of State for Housing, Communities and Local Government, Robert Jenrick, declined to ‘call-in’ the proposal for further consideration, preferring the decision to be made at a local level.

The mine, developed by West Cumbria Mining, will produce coking coal, which is used in the manufacturing of steel. However, Lord Deben, Chair of the UK Government’s Climate Change Committee, wrote a letter to Jenrick last month warning that advancements in carbon-free steel production could render the mine obsolete as soon as 2035.

Private equity investor EMR Capital is listed on the website of West Cumbria Mining as the only “major shareholder and investor”, having invested £29m up to 2019. Chairman of West Cumbria Mining, Don Carroll, is named on EMR Capital’s website as a Senior Advisor.

‘It is not PRI’s role to determine the individual investments made by an organization – that is part of an organisation’s own fiduciary duty and a decision for its board’ – Fiona Reynolds

EMR Capital became a signatory to the PRI in February 2020. It has not yet submitted a publicly-available report on its responsible investment activities, but states on the ESG section of its website that its “management of ESG is aligned to the United Nations Principles for Responsible Investment.” 

The first of the six principles that PRI signatories must adopt is to “incorporate ESG issues into investment analysis and decision-making processes”.

EMR claims that its policies ensure “that ESG is a core focus for portfolio companies in all aspects of their operations”. It describes the proposed mine as an example of ESG investing because of planned protections for the local environment and the promised creation of a public green space on land adjoining the site. The mine will create 500 jobs, 80% of which it claims which will be filled locally.

When RI asked PRI’s CEO Fiona Reynolds where the organisation stood on a signatory funding such a project, she provided the following comment: 

“The PRI continues to provide its signatory base with a raft of research and tools to assess both climate risk and opportunities, this includes the Inevitable Policy Response, which points to the changes in government policies – including coal phase outs… [I]t is not PRI’s role to determine the individual investments made by an organization – that is part of an organisation’s own fiduciary duty and a decision for its board.”

“Signatories agree to mandatory reporting of their activities annually through our reporting and assessment framework. These reports are made public for anyone to view – including asset owners who ultimately determine which fund managers they provide mandates to.”

The PRI has found itself under mounting pressure to introduce stricter requirements for companies wishing to sign up to the principles, due to fears of greenwashing. In September 2020, it made the decision to ‘delist’ the first ever firms for not meeting minimum standards. It delisted five firms out of its more than 3,700 signatories, with a further 15 at risk of being delisted in 2021.

The UK is due to host COP26 later this year, hailed as the most important global climate summit since the Paris Agreement was created in 2015, but campaigners say the new project undermines the country’s climate leadership. Climate campaigner Greta Thunberg said that the decision not to intervene demonstrated “the true meaning of so-called 'net zero 2050'. These vague, insufficient targets long into the future basically mean nothing today”.

In his letter to Jenrick, Lord Deben said that the mine is projected to increase UK emissions by 0.4mt CO2e a year – a figure greater than the annual emissions from all other UK coal mines combined. He added that the project “will have an appreciable impact on the UK’s legally binding carbon budgets.”

EMR Capital did not respond to requests for comment.