MAC: Mines and Communities

'Deeds, not words': Miners reshape boardrooms as investors demand sustainability

Published by MAC on 2021-04-22
Source: Reuters

How to counter-argue what seems to be the fresh modus operandi of the extractive business elite?

Assertive investors (and their proxies, the ratings agencies/advisors) seem to be suggesting solutions. But to what extent the supposedly concerned investors are accepting such obviously paper-thin "deeds"? Reporting apparently counts as "deeds", regardless of its accuracy or completeness; 15% of an already obscene bonus counts as an incentive; and the World Bank somehow counts as "international development" experience. It is still mostly words, that might be a little more focussed on deeds, but still words. It seems that the gap between what is required and what is suggested to fix it is still huge.

This is also known as continuously resetting the clock: the shiny proposed future (which they say we should focus on) is now, against the less than stellar past, and there is a new shiny future we should be looking at. The mining industry can't boast many of its past actions, but they do consistently boast about their future, proposed actions. It is a curious temporal positionality: in the future, I will have already been responsible...

How to counter-argue what seems to be the fresh modus operandi of the extractive business elite, without falling for the evacuative, essentially sense-deprived traps they've set for us? Before we give way to this manipulative mind game, let's be bold enough to assert that this is a future, essentially based upon a past they've already consciously built for themselves, and from which they cannot now be allowed to escape.

If you read the report of last week's Rio Tinto annual general meeting, you'll discover many examples of this. Carefully formulated accusations, made by shareholders, backed by major investors, and above all by Indigenous and other community members, swiftly followed each other, building for us a new, unfamiliar picture: one in which the management is not merely in defence (a posture into which it's been forced over the past, virtually, half century).

Strikingly, it's also one in which, not just the "deckchairs on the Titanic" have been thrown overboard, but also the key personnel who recently sat upon them (two Rio Tinto chair-people among them; one who resigned a year ago, the second recently announcing his departure before next year's AGM). There's now a fresh CEO, recruited from Australia, undoubtedly selected because he could easily mount a condemnation of Rio Tinto's unexampled destruction of the Juukan Gorges 45,000 year old Aboriginal Heritage site, unalloyed to the rigid justifications tendered by the corporate "oldies".

These attempted self-exculpations (as tracked by Mines and Communities, and others, at the time), were based on laws already existing in Western Australia. However, Rio Tinto chose allegiance to such a false thesis (a practise in which the former prime minister, Tony Blair, had already indulged), until it became impossible to sustain any further, in light of its former advocacy for the Indigenous Right to Prior Informed Consent, which it manifestly had violated from the outset of this stupendously sorry, shabby, misplaced venture.

Rio Tinto - in the shape of its still functioning chair, Simon Thompson, has been forced to openly acknowledge so frequently of late that it "got it badly wrong". Actually, it would be more accurate to argue that Rio Tinto has failed to get anything right. And this was due to the company having lost its own history, along with the corporate backing to re-invent and re-present a new one.

As will surely be realised, on reading the Rio Tinto AGM report transcribed by London Mining Network, the company has not been able to "re set the clock". In fact, it has not even begun to understand the fundamental issues, the lack of agreement on their content and how they should be tackled, the disparity between company and nation-state - just some of the operational "futures" that cannot be settled. Nor will they ever be, so long as others, like us, continue  battling to ensure expanding recognition of many more admissions, not simply that "we got it wrong", but  "we can never get anything right, as we currently stand".

See also:

Apr 14, 2021 Evasion and hypocrisy: the 2021 Rio Tinto plc AGM Report by Richard Solly

'Deeds, not words': mining firms reshape boardrooms as investors demand sustainability

Helen Reid

Reuters -

13 April 2021

JOHANNESBURG - Under fire after a string of high-profile disasters, mining firms are shaking up their boardrooms in response to criticism that they are failing to meet their own environmental, social, and governance standards.

Shareholders are demanding change from an industry whose reputation has been battered by deadly collapses of mine waste storage facilities in Brazil, and Rio Tinto’s destruction of sacred rock shelters in Australia.

Companies are responding with changes to the structure and skillset of their senior management - a shift investors and governance experts say is sorely needed to mitigate risk in an inherently hazardous industry.

“The level of understanding and capability at board level is insufficient at the moment in the mining sector, and it doesn’t yet in our view support the transition of these companies to best practice,” Andy Jones, metals and mining lead at investment manager Federated Hermes, said.

Brazil’s Vale SA - keen to show its dedication to safety and sustainability after two tailings dam failures in less than four years - recently announced the biggest shakeup in its board since it was privatized in 1997.

Seven of the 13 members of the new board set for approval this month have extensive experience in ESG and sustainability-related issues, up from five previously. The company has also added requirements for nominees to have experience in community relations.

AngloGold Ashanti last year appointed as a non-executive director a mining governance adviser to the United Nations Economic Commission for Africa, Kojo Busia, after the board identified the need to increase its efficacy in ESG oversight, it told Reuters.

Barrick Gold also bolstered its ESG credentials with the appointment of World Bank executive director Anne Kabagambe to its board in November, highlighting her experience in international development.

Some miners have also begun tying executives’ and directors’ bonuses directly to measurable ESG outcomes. Rio Tinto has connected 15% of executives’ annual bonuses to ESG metrics for the first time.

Bonuses for the director of Vale’s executive board for safety are calculated based only on health, safety, and sustainability indicators.

But companies must also improve internal reporting and foster a culture of openness if the industry is to prevent a repeat of past mistakes, governance experts say.

“The remuneration is obviously key in terms of setting incentives, but that on its own doesn’t work unless the board is getting the quality of information and there is a spirit of independent thought and challenge,” said Joanna Hewitt, a partner at law firm Baker McKenzie in London who advises companies on corporate governance.

For boards to exercise proper oversight, directors need access to information that bypasses management, Daniel Smith, a governance advisor with CGI Glass Lewis, told Reuters last November.

To achieve that, a specialist heritage advisor reporting directly to the board could be appointed, or a board could have an ESG subcommittee responsible for stakeholder management, including of traditional owners, he said.

To help investors track their progress, mining companies must publish more data on issues like community engagement, water and air quality, and rehabilitation and closure plans, said Charlotte Valeur, founder of governance advisory firm Global Governance Group.

As a result of investor pressure, more mining companies are reporting so-called scope 3 emissions data, a measure of downstream CO2 emissions by metal consumers. Data transparency is key, says Valeur.

“It has to be deeds, not words,” she said. “What it’s easy to do is have some fluff - but what we want is hard numbers.”

Reporting by Helen Reid in Johannesburg, Melanie Burton in Melbourne.


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