2018-05-11 Facing Finance
Lesley Burdock, Facing Finance e.V. email@example.com, +49 (0)175 4964 082
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Minerals and metals are an integral part of our daily lives, from smartphones to toothpaste, but the global extractives industry is also heavily involved in some of the worst labour, environmental and human rights violations, particularly in countries of the South. The industry also has a substantial impact on climate change, particularly those companies involved in the extraction of coal, oil, or in risky practices such as Arctic drilling. In fact, just 7 of the 10 companies shown are responsible for almost 8% of global GHG emissions. The Dirty Profits 6 report released by Facing Finance highlights the investments of ten European banks in ten extractive companies which continually violate human rights and damage the environment.
The violations in this report by the ten extractive companies (including Barrick Gold, Grupo Mexico, Eni and Gazprom), variously cover contamination of land, water and air; silencing community activists using violence, threats and intimidation; labour violations and forced labour; and failure to provide the remedy communities deserve.
While banks increasingly claim to be improving their ESG policies, and that they pay attention to incidents and violations by companies, the report shows that almost a third of all capital provision (€32 billion) by the ten banks was to the very worst category of companies – those with poor human rights and environmental policies, a lack of commitment to international standards, severe violations and an unwillingness to engage on these issues. Over the seven-year period the two UK banks HSBC and Barclays provided nearly €9 billion to this category. The largest provision of capital to all the companies, was by BNP Paribas, Barclays and Credit Agricole, with DZ Bank and Rabobank providing the least.
“The Dirty Profits 6 report shows that most banks, particularly those that made the most capital available, are not taking strong enough action to ensure that the mining and extractive companies they invest in respect human rights and environmental concerns”, said Lesley Burdock of Facing Finance.
An example of one of the cases covered in the report is that of the company Samarco Mineração (jointly owned by Vale and BHP), responsible for the worst environmental catastrophe in Brazil when its tailings dam broke in 2015, killing 19 people, destroying entire villages and damaging around 2,200 hectares of land and 650 km of river. It has become increasingly clear that this was a preventable tragedy and that the tailings dam was poorly managed. Danilo Chammas of the International Network of People affected by Vale notes "Besides being negligent in taking all necessary measures to avoid the dam's collapse, Samarco, Vale and BHP Billiton have also not taken the required responsibility with regard to reparatory measures for the victims. We have been following up on the company for many years, so for us this does not come as a surprise, given the company's bad record of human rights violations and damage to the environment, as well as its usual lack of ability to deal with those affected by its operations." BNP Paribas and HSBC were two banks which provided direct capital totalling €537 million to Samarco Mineração in the years leading up to the incident.
These banks omitted to take action through their due diligence processes to ensure stronger standards of management and thus to prevent the tragedy. The companies Vale and BHP over the seven year period were also provided with capital of over €5 billion and €20 billion respectively - predominantly by HSBC and Barclays.
Facing Finance expects banks to take responsibility for human rights and environmental concerns in their decision making. In particular by improving transparency and making public all relevant information related to engagement; by defining the line between engagement and exclusion of companies; and by taking a proactive approach to identifying non-compliant companies. Facing Finance's Thomas Kuchenmeister comments; “Banks claim to use engagement with companies as a tool to identify and mitigate human rights violations and to validate their investments, but most banks provide no public information on this process. Without this information the public cannot know what banks have done to meet their ethical obligations.”