Greater risks, greater awareness
While the mining industry has a role to play in the economic development of some countries, poorly managed mining operations carry huge risks. Indeed, many mines have a significant and negative impact on the biodiversity and ecosystems that provide vital food, fuel and fresh water to communities and businesses, that help mitigate the impacts of climate change, and that fundamentally underpin our economies.
The mining sector is expected to grow significantly over the next 30 years, and recent estimates by the World Bank put nearly a third of global forests under the potential influence of large-scale mining. What’s more, over 3,300 large-scale operational, planned or dormant mines in the world are in forests (often in areas of high biodiversity value), and every year for the last decade, 20 new large-scale mines have been commissioned in forest areas.
Because of this, the mainstreaming of biodiversity into the mining sector is high on the agenda of the Convention of Biological Diversity, made clear by their critical decision to accelerate mainstreaming of biodiversity in this sector as an essential first step for halting biodiversity loss, during the last Conference of Parties in Egypt. In parallel, several emerging corporate initiatives from big purchasing companies are showing interest in the biodiversity performance of mining companies, for example IRMA, ResponsibleSteel and Drive Sustainability.
No data, no action
However, data available on biodiversity issues in the mining sector is sparse and difficult to navigate, which limits investor scrutiny and action.
While investors may “mine” data on biodiversity from companies’ websites and sustainability reports, the data gaps are huge, and few companies go beyond the bare minimum when disclosing this information. At the same time, while the recent tailing dams catastrophes in Brazil (Mariana and Brumadinho) have sparked more scrutiny and calls for greater transparency, this has largely been confined to the specific issue of tailing dams, and unfortunately, the risks go far beyond that.
The loss of forests and biodiversity endangers the businesses that depend on them and should therefore be a key concern for mining company shareholders and other stakeholders.
Thankfully, the demand for biodiversity-related disclosure is gaining momentum. This was highlighted in the recent report by AXA and WWF, prepared for 2019’s G7 Environment meeting that “the lack of accurate, comprehensive and tailored nature-related data currently prevents financial institutions from developing investment strategies and engaging effectively with companies”.
Mainstreaming biodiversity into the mining sector through disclosure
It is becoming clearer that we urgently need to develop and improve metrics, indicators and other tools to measure and understand the interdependencies between biodiversity and the mining sector. The critical first step in doing that is disclosing current issues and practices.
Recognising this need, CDP launched a new biodiversity-focused questionnaire for the mining sector in 2019. This is aimed at collecting transparent, structured, comparable data that will enable CDP to provide multiple stakeholders and especially investors with critical environmental insight on how mining companies are managing their biodiversity impacts and risks, as well as realizing biodiversity-related opportunities.
Biodiversity disclosure: the vanguard
Over 200 companies in the mining sector were invited to disclose their biodiversity-related data this year and the 10 frontrunners on disclosure include Banpu Public Co Ltd, China Shenhua Energy, Endeavour Mining Corporation, Eldorado Gold Corporation, Independence Group, Indo Tambangraya Megah Pt, Lundin Mining Corporation, Petra Diamonds Ltd, Polyus PJSC and St Barbara. By responding to CDP, these companies are showing progressive action on a topic that is set to get more investor attention.
From the 2019 disclosures, some good examples from mining companies making moves to protect biodiversity in the areas they operate include:
- Petra Diamonds Ltd is actively working with Birdlife International to protect various bird species at their Cullinan mine in South Africa; and
- Polyus PJSC, the only ICMM member to have responded to CDP’s new mining sector-specific questionnaire so far, carries out systematic biodiversity assessments to monitor the impact of mining on biodiversity, for instance, in their operations close to the Vitim Nature Reserve.
However, these companies represent a small vanguard. Among the companies that were asked to disclose this year were all of the global top 25 mining companies (by market cap). To date, none of these companies has responded.
The results so far indicate that while there are moves in the right direction, much more needs to be done to improve disclosure, transparency and accountability. Companies not only need to be aware of the value and potential risks associated with biodiversity but must disclose this information to their stakeholders including investors, governments and customers. This is in the context of rising demand for biodiversity risk-related information from a range of financial market participants with investors in particular demanding access to clearer, consistent, comparable and reliable risk data.
It is now more crucial than ever that biodiversity is integrated into mining companies’ core business strategies and that they capitalize on the associated opportunities while setting and working towards commitments to minimize their impact on biodiversity. Disclosure on biodiversity issues is a critical step in advancing corporate accountability and will help businesses clarify and deepen their commitments to biodiversity and take the actions that are so urgently needed.
Join our 11th October webinar for a more detailed discussion about benefits and opportunities for biodiversity disclosure in the mining sector. Click HERE to register