Tighten up human rights & environment rules for mining companies, British MPs told

Richard Solly of LMN gives evidence to MPs in parliamentary committee session in London. (image: screengrab from official video)

DTE Update, London, 4th March 2014

The London Mining Network, World Development Movement and other NGOs today repeated their calls for tougher regulation of extractive industry companies listing on the London Stock Exchange. They want new requirements for companies to meet standards on human rights, environment and climate before listing in London, and to meet much higher transparency standards. The government should institute increased monitoring of extractive company behaviour, with clear sanctions for those companies who fail to abide by these regulations.

The Business Innovation and Skills Parliamentary Select Committee in London today heard evidence from four NGO representatives – from London Mining Network (LMN), World Development Movement (WDM), Christian Aid and WWF-UK - as part of their enquiry into the extractive industries sector.[1]

The enquiry was prompted in large part by the scandal surrounding Bumi plc,[2] the coal company riven by boardroom disputes between its Indonesian and British directors. The company has seen its share price slump, its shares temporarily suspended, and is the subject of ongoing investigations for corruption. An attempted “divorce” between the Indonesian and UK parts of Bumi plc is still unresolved, due to continuing disputes over costs, legal issues and debt.

Bumi plc’s major assets are investments in coal mines, including the huge KPC coal mine in East Kalimantan which has a long record of negative social, environmental and human rights impacts on local communities. DTE has repeatedly brought these impacts to the attention of the company and the wider public in the UK and Indonesia, arguing that community interests should not be drowned out by boardroom clashes.[3]

MPs questioned the NGO representatives for one and a half hours about the written evidence they had submitted in advance. LMN’s submission argued that the operations of UK-listed and UK-funded mining companies are causing severe damage and creating a legacy of bitterness. “Neither engagement with mining companies nor voluntary initiatives such as EITI are in themselves sufficient to hold mining companies accountable: stricter regulation is necessary.”

LMN is recommending that either the Financial Conduct Authority or some other statutory body be given the power, responsibility, funding and institutional capacity to enforce good conduct on all UK-listed extractives companies, including those trading on the London Stock Exchange’s Alternative Investment Market. “This must extend beyond matters of financial concern to shareholders and include compliance with human rights, social and environmental standards.” [4]

Supplementary material was sent after a meeting between DTE, JATAM (the Indonesian Mining Advocacy Network), LMN and members of the Parliamentary Committee in November last year, following a speaking and lobby tour by the Coordinator of JATAM and a representative of Indigenous communities in Colombia affected by the activities of BHP Billiton. [5]

In today’s session, MPs were interested to know why so many NGOs were working on the extractives industry, what their views were about engaging with extractive companies, how far it was damaging or otherwise to British interests that London is a centre for the extractives industry companies, and what was the most effective way of getting companies to improve their practices. They asked about measures introduced by other Stock exchanges (such as the Hong Kong and Johannesburg Stock exchanges) to impose human rights, social and environmental standards.

The NGOs argued that it is damaging as well as embarrassing for Britain to continue allowing companies with appalling human rights, social and environmental records to be listed on the London Stock Exchange. They should be compelled by law to publish much fuller information about all the impacts of their operations, said Richard Solly of LMN. These should include a requirement to report not only on jobs created, but also the number of jobs destroyed.

UK-listed companies should be legally required to note in their corporate reports all findings of non-compliance with IFC and OECD standards, he said, and of UK and non-UK regulations concerning biodiversity and environmental protection, as well as convictions in UK and non-UK courts. The UK’s Financial Conduct Authority should also ensure that UK-listed companies recognise and respect international human rights and environmental standards to which the UK is a signatory, including the Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights, the UN Declaration on the Rights of Indigenous Peoples and the Convention on Biological Diversity. Companies should be required to implement the highest environmental, social, cultural, labour, and health and safety standards.

London as extractives centre also brings a high financial risk, argued WDM’s Alex Scrivener: if the “carbon bubble” or heavy reliance on investment in carbon intensive industries bursts amid moves to decarbonise the UK economy, we could be again thrown into financial crisis.

Throughout the hearing, repeated reference was made to the particular situation in Indonesia with regard to the extractive industry. Reference was made to companies such as BHP Billiton, Rio Tinto (including the Grasberg mine), Bumi and other companies.  At the close of the meeting, WDM referred to the “gutting” by the coal mining industry of one particular province in Indonesia (East Kalimantan).[6]

The next stage of the committee’s enquiry is a visit to South Africa to view extractives industry practices there. After that, the committee will publish its report and recommendations to the UK government. Only then will it become evident how far this cross-party committee of MPs have taken on board the urgent need for reforms and what specifically they are recommending to remedy the situation.