One of the most difficult meetings I’ve ever had to endure during my career took place in the highlands of Guatemala in 2008. I was with a group of international shareholders who had travelled there to understand the impact mining was having on the local community.
The challenges and impacts of the open-pit mine on this poor indigenous community were real and raw. Two people had been killed protesting the opening of the country’s first gold mine. Communities complained of illnesses, water pollution and damage to homes from blasting. There was a feeling of frustration that their concerns were not heard, and they felt powerless in the face of a large and powerful Canadian mining company. On the other hand, some people in the community recognised that the mine brought employment and investment in local infrastructure, including additional health care, education, roads and even internet. The community was divided.
There were about 50 people in the room that day, a mix of traditional and modern dress, the women with their babies wrapped firmly against their backs. It was a humbling experience and it had a lasting impact on me.
Fast forward to 2022. I find myself in central London, working for an asset management company, spending my days advising on how to integrate ESG issues into investment decisions and helping create new investment products.
As I help my colleagues navigate sustainability and ever more complex regulations I am thinking more deeply about the ‘green’ transition. What will it take to move our complex social, political and economic system to a more sustainable future and do our best to mitigate climate change?
I’m a million miles away from that difficult meeting in the Guatemalan highlands so many years ago, but the experience sticks with me. How do we ensure communities and employees are an integral part of that discussion and partners in the transition, rather than an after-thought?
Ensuring a just transition
There are some uneasy facts when it comes to mining and the energy revolution. According to the International Energy Agency, the total demand for minerals and metals from clean energy technologies is likely to double or quadruple by 2040, depending on the climate transition scenario. This is driven predominantly by the need to significantly scale wind and solar for power generation. Demand for lithium alone may increase by between 13 and 15 times current demand levels. Copper and aluminium will be in high demand in order to meet the 50% increase in electricity transmission and 35% increase in distribution network lines to support renewable energy capacity.
These materials and metals need to come from somewhere. Much of it will come out of the ground in rural, poor regions of the world and it will be extracted by large mining companies. If we want to ensure we all move fairly to a sustainable world, then we need to get behind the ‘just transition’. It is a transition that must recognise the potential social and human costs of the energy revolution.
This is particularly important for mining. Not only could these costs be devastating for communities, but the backlash against responsible resource extraction could hold us back from meeting our net-zero goals.
Mine site certification will undoubtedly play an important role to ensure that mining to support the energy transition is done in a responsible way. That is why I sit as a volunteer on the board of the Initiative for Responsible Mining Assurance (IRMA). Communities and workers need to be active participants in deciding how and where mining will take place and their rights need to be respected. IRMA’s mining assurance standard gives these stakeholders a critical voice.
As we accelerate investment in green technologies, investors need to ensure mining development is not taking place at the expense of communities. IRMA’s rigorous and multi-stakeholder approach embedded in the certification process is a great tool to achieve this. It gives greater confidence over how mining companies are implementing their sustainability principles at the mine site and how they are incorporating ‘just transition’ principles into their operations. Just as purchasers of metals and materials are asking their suppliers to seek mine-level certification, investors will soon be asking companies to do so.