LAPFF report on mining and human rights calls for greater investor engagement

The Local Authority Pension Fund Forum (LAPFF) has published a report on human rights practices in the mining industry, urging investors to engage further with the relevant companies they invest in.

The report covered five companies, Anglo American, BHP, Glencore, Rio Tinto and Vale, finding that many of these companies had acted responsibly in relation to some issues and taken steps to rectify some previously poor practice.

However, one of the ‘main concerns’ identified was the accountability gap relating to environmental, social and governance (ESG) practices in joint ventures between companies.

“This seems an industry-wide problem,” the LAPFF noted.

The report stated that there were “a number of human rights challenges” facing mining companies with “much room” for improvement in addressing these challenges, and that they often have serious financial consequences.

It added that companies, investors and governments must all play a role in rectifying human rights abuse in the mining industry.

The LAPFF called for collaboration with other pension funds and asset owners to discuss the issues identified in the report with the relevant companies they invest in.

It also urged investors to raise questions at shareholder meetings where companies are persistently refusing to engage effectively, and bring or support shareholder resolutions in support of human rights objectives to company annual general meetings.

LAPFF’s position was to engage with companies on ESG issues, but stated that individual funds and investors could consider divestment as a “last resort” if the view was taken that all methods of engagement were not effective.

“I want to be very clear; the five companies in the report have been those kind enough to engage with LAPFF over the past few years and most of their human rights practices are probably better than many others in the sector,” commented LAPFF chair, Doug McMurdo.

“These poor practices are of grave concern to me not just as a human being but as an investor. If I look at accounts of how many lives, livelihoods, and environments have been destroyed, and how much money could have been saved through appropriate governance and human rights due diligence, the scale is in the order of billions of dollars, though of course the lives are priceless.

“As investors we have, too often, been mere bystanders to a human and financial travesty. This report shows that both we and the companies must change.”

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