The Challenge
Why was the Global Investor Commission on Mining 2030 established?
An expansion of the mining industry is necessary to achieve the Paris Agreement goals, but the good practice that exists is undermined by a series of systemic social and environmental issues that challenge both mining today and will challenge its future growth if not adequately addressed.
A key example of this is the increasing scramble by governments and companies to secure the supply chains of transition minerals required to deliver on their net zero commitments. For instance, whether auto manufacturers can meet battery demand for new electric vehicles will depend on minerals required within batteries. Meeting net zero demand, according to one leading market analyst, requires lithium mining to increase production by 880% and graphite by over 900% in the decade from 2020 to 2030.
Even with significantly greater recycling, substitution of key minerals for other minerals and greater efficiency of mineral usage there is no path to net zero without very considerable expansion of mining.
The Commission is focused on addressing these systemic risks across geographies from tailings dams prone to collapse, to the impact of automation on its workforce, to the sector’s effects on biodiversity. This group of issues is not exhaustive, but is indicative of the range of challenges identified by institutional investors in the mining sector. A particular challenge is that there are many leading practitioners of good practice within their operations and a new generation of mining leaders, but when something goes wrong the whole sector is impacted. A collaborative approach to devise a path, carrying the confidence of the many stakeholders in mining, that ensures the whole sector, not just some leading companies, can operate to the highest global best practice standards will be a key focus of the work of the Commission.
Resolving barriers
It is important to note that not all issues are relevant to all mining companies. There is indeed extremely good practice in many parts of the industry and a new generation of mining leaders seeking to change the sector. However, when this group of issues are taken together they present a material risk to the sector and society’s implementation of the Paris Climate Agreement.
To help resolve these issues the Commission will identify gaps in global best practice standards across these environmental and social risks.
Where a global industry standard does not exist – as it did not on tailings management until a recent investor collaboration with industry and the UN following the Brumadinho disaster in Brazil – the Commission will identify such gaps. In other instances careful consideration will be given to existing Standards and associated ESG disclosures. Specifically, reviewing if they are sufficient and require support from investors and consolidation of ESG disclosures. The lessons from the tailings engagement are clear: investors must collaborate to understand systemic issues, align around best practice standards to incentivise and reward change across the whole sector, and require site-level audits to ensure change is happening on the ground and not just in the boardroom.
Additionally, careful thought will be given by the Commission to the opportunity to align supply chains behind identified standards and disclosures.
This Commission is supported by the Archbishop of Canterbury and the Archbishop of Cape Town and backed by investors and supported by the Principles for Responsible Investment (PRI) and the United Nations Environment Programme (UNEP).
This will not be an easy path but one that if taken will ensure mining’s social license and the achievement of the low carbon transition.
