How the mining industry can scale up sustainably

Church of England Pensions Board chief responsible investment officer calls on stakeholders to rethink how they invest in mining companies

Adam Matthews, chief responsible investment officer, Church of England Pensions Board


Adam Matthews, chief responsible investment officer, Church of England Pensions Board

The technologies we need to achieve the low carbon transition are ready. Clean power generation is well established, with renewables in Europe supplying more energy than gas for the first time in 2022. Battery technology is becoming increasingly advanced, enabling a transport revolution and changing the way grids will operate.

There is also growing realisation, although China recognised this many decades ago, that to achieve the Paris Agreement we are critically dependent on the availability of the metals and minerals needed to create these clean energy products. For example, over two million tons of lithium will be needed in 2030, with just one hundred thousand tonnes mined in 2021. Massive shortfalls are also predicted in the supply of many other transition-critical resources including copper, graphite, and rare earth metals.

Ensuring sufficient availability of these resources is vital to the climate transition. Improved recycling and a more circular economy will help. However, the reality is that the low carbon transition will not be delivered without a rapid and significant scaling up of extraction by mining companies. However, the sector’s strategy to mine resources in a manner that does not do harm to people and the environment is a major factor as to whether we will achieve the transition.

Miners need public trust to operate effectively

While the mining industry has a critical role to play in meeting the material demands of the transition, as a sector its failure to ensure consistently responsible practice has led to catastrophes occurring all too frequently, as with the Brumadinho tailings dam disaster which killed 270 people in 2019, the Mariana disaster and the destruction of sacred aboriginal sites in Juukan Gorge in 2020. Good practice does quite clearly exist, but needs to be replicated globally.

The critics of the industry point to the industry’s role in fuelling conflict and corruption, in accelerating biodiversity loss, in contributing to human rights violations both within mine sites and in local communities and in significant environmental pollution. It is imperative that the sector eradicates poor practices, and effectively implements robust standards to minimise risk of major adverse social and environmental impact. Doing so is vital for maintaining the trust and faith of the public that is required for mining companies to effectively extract resources and to consider any notion of significantly increasing extraction. In essence this is their ‘social license to operate’.

Best practice requires engagement with all stakeholders, and industry and investors need to be at the table

Church of England Pensions Board launched the Global Investor Commission on Mining 2030 to support the mining industry’s efforts to eliminate social and environmental harm; building an industry that demonstrates its commitment to social responsibility, while meeting the needs of society and the low carbon transition.

The investor-led commission, which is being advised by the United Nations and supported by Principle for Responsible Investment as well as ACSI, is a multi-stakeholder process to understand future demand for resources, where this is likely to come from, the issues that will challenge the sector in meeting that demand, the best practice solutions and standards to address those challenges and the infrastructure needed to evidence site level application of those best practice standards.

The commission will work collaboratively with stakeholders across the industry, including mining companies, unions, buyers of mined resources and host and impacted communities. Importantly, the commission also presents an opportunity to review the way we invest in the sector. Often holdings in mining companies represent a small percentage of most funds overall portfolios and the lens through which we engage is regularly as a result of a negative issue such as a disaster. 

Yet this fails to understand the critical relevance of the sector to all others we are invested in and the strategically important role the sector plays in the low carbon transition. Mining requires considerable investment to expand, and the commission presents an opportunity to step back and re-think how we value, invest and incentivise the mining sector of the future.

It is also clear that demand for resources can fuel conflict and parts of the sector operate in conflict prone environments. How the sector currently operates and will operate as it grows in such areas will be a critical issue to ensure that it is contributing to stability and sustainable growth. Understanding this element of the challenge mining faces will be enormously important.

The mission is unquestionably ambitious, but we can be encouraged by the success of the Global Tailings Standard and the announcement of a Global Tailings Institute to oversee conformance with the safe management of tailings facilities storing mining waste. Created by investors driving multi-stakeholder processes in the wake of the Brumadinho disaster this offers a model to learn and build from. Over half of listed mining companies by market capitalisation globally are now committed to implementing the standard two years post-launch. This rises to over 70% by market capitalisation actively engaging with the Standard.

A shared future for responsible mining is foundational to our long-term interests

Mining is a foundational part of the global economy’s transition to net zero. Everything we build to create the necessary transition technologies – from solar panels to smart grids – requires natural resources that have come out of the ground. However, we cannot expect the public, nor the investor community, to put their trust in an industry that is not committed to a responsible path that is commonly understood, and aligned with the needs of other stakeholders.

Change must be delivered collaboratively with mining companies and other stakeholders to build the responsible mining sector of the future. A future built upon commonly owned solutions, commitment, transparency and ultimately trust.

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