PIMCO, AP3 and Legal & General are among a 120-strong group of financial institutions taking on the sustainability challenges of the mining sector, with a new 10-year roadmap.
Investors with net zero targets are increasingly concerned that not enough capital is flowing into the mining sector, which will be crucial to delivering the vast quantities of metals and minerals needed to power the global energy and digital transitions.
At the same time, there are long-standing issues with the environmental and social performance of mining companies, and many responsible investors consequently screen some or all of the sector out of their portfolios on sustainability grounds.
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“We’re going to need at least 30 million tonnes of new transition metals and minerals,” said Adam Matthews, chair of the Global Investor Commission on Mining 2030, which is behind the roadmap.
“The market is at an inflection point. We can choose to support a vision of responsible mining that addresses the industry’s systemic challenges, which in turn would enable long-term value generation. Or we can allow the digital and clean energy system of tomorrow to be born of social discord and environmental breaches.”
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The roadmap calls for a more nuanced approach to mining by those providing ESG ratings and evaluations, in order to reward best practice and ensure “the mining industry is not by default ranked poorly relative to other industrial sectors”.
It also proposes the creation of shared investor expectations for mineral purchasers – especially automotives and technology firms – and the establishment of an International Minerals Agency to monitor global mineral supply and demand, and illicit mineral flows.
The Commission plans to develop a framework to track companies’ responsible mining practices, which it hopes will incentivise improvements and help investors make more informed decisions.
On sovereign bonds, the document calls for a new tool to assess how governments oversee domestic mining activities, to help investors identify potential credit risks or financial opportunities.
The group wants to set up a Global Legacy Fund to pay for the responsible closure of mines as they reach the end of their operational life, and a Global Centre for Peacebuilding and Business – based in South Africa – to address issues of conflict associated with the sector.
“This vision, driven by the long-term interests of companies and investors, will deliver real, meaningful benefits for local communities as well as for national economies,” said Matthews, who is also the chief responsible investment officer of the Church of England Pensions Board.
The Commission was launched in 2022 and represents investors with $18trn of combined assets under management.
Other members include Ninety One, ING, Orion Resources Partners and Royal London Asset Management. The Swedish Council of Ethics is a member on behalf of the country’s ‘AP’ pension funds.
The Commission is backed by the Principles for Responsible Investment and has received technical support from the United Nations Environment Programme.
The blueprint is open for consultation for the next 90 days.