Institutional investors with more than €900 billion assets under management calling for improvement in mining sector

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Publication: Investor Statement on responsible water management as part of a responsible mining policy

In an Investor Statement published today by the Dutch branch of the International Union for Conservation of Nature (IUCN NL) and the Association of Investors for Sustainable Development (VBDO), 16 international institutional investors call for sustainability in the sector. The Statement specifically draws attention to improving water management with the underlying goal of preserving biodiversity. The initiators include Actiam, Aegon, NN IP and Robeco. The Statement also calls on the financial sector to publicly endorse this statement.

Utrecht, September 28, 2020 – For sustainable transitions such as that of the energy market, we are largely dependent on the mining sector. By way of illustration: in the Netherlands there were about 110,000 electric cars at the end of 2019. In 2015 there were only 10,000. That is a growth of 1,000% in four years.

The target of having nearly 2 million electric cars in the Netherlands by 2030 seems well on its way. However, the problem lies with the extraction of sufficient raw materials: a number of specific metals that are crucial for electric vehicles – nickel, praseodymium, neodymium, cobalt, dysprosium and lithium – will be in short supply in the production capacity.

The demand for metals will increase in the coming years, and with it the pressure on the sustainable supply of raw materials from the mining sector. Yet it is precisely in the mining sector where there is still much to be gained in the field of sustainability. Many disasters occur every year, often with a major economic, social and ecological impact.

Investors take the initiative to act

To reduce the negative impact of the mining sector on biodiversity, IUCN NL and VBDO have jointly approached investors, so that they can use their influence to make the sector more sustainable.

‘By talking to investors about the risks caused by the mining sector, not only for people and nature, but also for the financial institutions themselves, we were able to encourage these parties to take action,’ says Romie Goedicke, senior expert green economy at IUCN NL. With today’s statement, investors commit to addressing mining companies in their portfolios about practices that negatively impact available water quality and quantity.

19 investors have now joined the initiative and signed the Investor Statement. They will use their influence as shareholders in the discussions they have with the mining industry. The purpose of these discussions is to ensure that the companies involved actualize a significant improvement in their policy and its implementation. In addition, three engagement guides have been published. The guides are intended as a tool for investors to enter into a dialogue with the mining sector on the themes of water management, biodiversity and landscape restoration.

Poor water management is disastrous for biodiversity

Poor water management by mining companies often directly affects the fate of biodiversity in an area. For example, last year the mining company Vale was held responsible for a dam breach in which 12 million cubic meters of silt flooded an area, resulting in many deaths. In May of this year, a – 2 –

state of emergency was declared in Siberia after an accident at Norilsk Nickel, Russia, that flooded a permafrost area with thousands of tons of diesel.

“Due to the destruction of the habitat, but also due to pollution of, for example, water sources, mining unfortunately still causes an enormous loss of biodiversity. As a result, financial institutions are also exposed to the physical, reputational and therefore financial risks of this loss. For example, when another sector suffers from the loss of biodiversity caused by mining. If you are active as an investor in both sectors, you pay double the price”, says Angélique Laskewitz, general director of the VBDO. “Especially now, with the arrival of the UN Summit on Biodiversity and the international Water in Mining congress, the time is ripe for a strong appeal to the sector”.

Handing over the baton

The statement pays special attention to water management. Goedicke: “The demand for mineral resources is constantly increasing, also because of the global energy transition. To minimize loss of biodiversity and ecosystem services, IUCN NL is committed to responsible management of raw materials. In recent years, we have worked with VBDO to increase awareness in the financial sector about the physical and reputational risks of mining companies. This statement is very important because it allows us to pass this task on to investors; they are taking over our role as critical supervisor and we hope to strengthen their work. For example, by linking this to the work of our local partners in the effective implementation of policy”.

Because not only investors, but also social partners often play an important role in having discussions with mining companies, because they – in many cases even better than investors – have insight into local abuses. As practical support for the statement, the three engagement guides are therefore published simultaneously. The guides are intended as a tool for investors to enter into a dialogue with the mining sector on the themes of water management, biodiversity and landscape restoration.

Commitment to engagement

In terms of content, the statement contains several recommendations to the sector, including the publication of water management policy, the involvement of stakeholders, the implementation of stewardship, and accountability in the field of continuous scenario and risk analyzes. In addition to the commitment itself, the investors are calling on other parties to join the initiative and enter into discussions with mining companies to reduce their impact on water and biodiversity. The first talks between the investors who signed, and the companies are already planned.

ADDING YOUR ENDORSEMENT

If you would like to add your signature to this statement, please contact:

Hester Holtland
Senior Project Manager Sustainability & Responsible Investment, VBDO
hester.holtland-at-vbdo.nl

INVESTOR ENGAGMENT GUIDES