Deep Insights #52: A different approach means a positive future

Episode 52 May 04, 2023 00:20:18
Deep Insights #52: A different approach means a positive future
Deep Insights with Mining Review Africa
Deep Insights #52: A different approach means a positive future

May 04 2023 | 00:20:18

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Show Notes

The Global Investor Commission on Mining 2030 is an initiative that seeks to ensure ESG best practice is implemented in all spheres of the mining sector. In doing so, it aims to create a sector that is transparent, does not infringe on human rights and one that can achieve net zero carbon emissions.

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Episode Transcript

Speaker 0 00:00:00 Hello, and welcome to Deep Insights, brought to you by Mining Review Africa. My name is Rochelle Beta and in this episode, senior editor Jarrod Peter speaks to Adam Matthews, chief Responsible Investment Officer at the Church of England's Pension Board about the Global Investor Commission on Mining 2030, an initiative that seeks to ensure E S G best practice is implemented in all spheres of the mining sector. In doing so, it aims to create a sector that is transparent, does not infringe on human rights, and one that can achieve net zero carbon emissions. Let's join the discussion. Speaker 1 00:00:43 Hello and welcome to Deep Insights. Today I'm joined by Adam Matthews, who's the Chief Responsible Investment Officer at the Church of England's Pension Board, and he will be telling us more about the Global Investor Commission on Mining 2030. Adam, thank you for joining us today. Speaker 2 00:01:03 Thank you for having me. Looking forward to it. Speaker 1 00:01:05 Okay. As a starting point, Adam, can you tell us about the Global Investor Commission on Mining 2030? Why was it formed and what are its objectives? Speaker 2 00:01:18 Sure. I mean, if I could just take a step back a moment and just perhaps give a bit of context on why, um, we, as a group of investors, well, we as an investor, but also as a group of investors are, are sort of wanting to really engage with the, the, the mining sector in a different way. When you look at portfolio, um, we're invested across lots of different cl asset classes, infrastructure, property, public companies, private companies, et cetera. And how we invest in the mining sector is, is a, is a slither within that and most sort of diversified investment portfolios for asset owners like US pension funds. Um, mining represents a relatively small exposure to us when viewed across that whole portfolio, but yet it's a deeply significant sector and there hasn't been the appreciation on the investor side just quite how important the mining sector is. Speaker 2 00:02:11 And so often we engage with the mining sector in response to a disaster, and therefore it's often through a negative prism that we, we start to really sort of engage in detail. Now obviously there's lots of analysts that work for fund managers, which, which run our money for us as as pension funds, and they're engaged with the industry day-to-day, week to week basis. But when the sort of wider investor community, um, is, is sort of really getting to grips with the sector, it is often because something's gone wrong like a disaster. Um, and therefore there's a reaction, there's an intensive sort of set of dialogues with the individual company or with the sector. And what we're sort of look wanting to do is really trying to change the way that a, we understand the mining sector and in doing so, appreciating its relevance and it's important, it's strategic role it has with many of the other sectors that we're invested in and how they're absolutely dependent on what mining produces, be it the steel set to be it the automation or the aviation, et cetera. Speaker 2 00:03:12 And then at the same time also really sort of taking a, a, a look at the relationship with our own individual climate targets. And again, there's an enormous dependency on that for us as a pension fund. So we as a pension fund have a net zero target to achieve across all of our pension funds assets. And again, the role that mining plays in society's ability to meet its net zero goals and our fund in relation to that is, is is a really important relationship. So, so on that basis, we just sort of wanting to have the opportunity to say, look, this sector's important. We need to engage with it differently. We need to recognize that it's hugely relevant to our, our objectives in achieving net zero. It's usually relevant to many other sectors that also we're encouraging to, um, have net zero targets. And actually the dialogue you're often having with mining companies is probably with analysts and it's often in a much shorter term horizon than the long term interests that the world's pension funds ultimately have. Speaker 2 00:04:12 And so the commission presents us with an opportunity to, in effect, get a better understanding across the wider investor community of that role that mining plays that future demand, the issues that are gonna challenge it to be able to deliver that demand in a way that doesn't leave a negative social or environmental legacy. And also question the way that we as investors could be investing in potentially a different way to give that long-term security and incentivization to sustainability and best practice. And I just think that that gives a ray a array of issues and opportunities to sort of go through a commission, um, and, and potentially really reshape the way that, um, investors relate with, with the mining sector. So that, that was the sort of underlying impetus for why we wanted to set up the commission, but also the experience and the lessons that we've learned from the work we've been doing on, on, on tailings and taking that into a broader set of issues as well. So hopefully that gives you a bit of context on on on the thinking behind it. Speaker 1 00:05:15 Okay. That certainly, that certainly does, Adam. So you, you mentioned, um, that, that um, that there are particularly agenda items that you have identified to carry out your mandate and understand that there are 10 agenda items. Can you tell us more about these? Speaker 2 00:05:36 Absolutely. I mean, starting at that point of, I mean we, we are all looking at these, these curves of demand of we're gonna need lots more of this, this critical mineral or, or this commodity, et cetera, for the transition. Um, and when you actually sort of break those down, where is that gonna come from? And then what are the issues that are going to challenge the mining sector's ability to, to produce them and meet that demand? Because basically there's, we all know there's got to be a significant scaling of the output to, to meet that demand. And when you sort of understand that landscape, which I think is an exercise we want to do as a wider investor community informed by many other stakeholders informed by the industry, you then also need to overlay that with, with those challenging issues. And, and for us, we've obviously been engaging on, on one of those, which is the issue of tailings. Speaker 2 00:06:29 And they're working with industry, working with the UN and informed by lots of other stakeholders. We've been able to define a global standard. We've been able to define disclosures from companies and, and attention at the board level, and now we're creating a global institute that will be independent and oversee site level verification standards being applied. Um, but there's many other issues that potentially need a clarity as to what's the global standard that we should all be working towards and aligning behind. And equally then what's the infrastructure that we need to be able to ensure that that standard is being applied at the individual mine site. And so when you look along that spectrum of, of issues, you've got relationships with indigenous communities and first nations, peoples biodiversity water. Um, there's, there's a, a raft of other issues in terms of human rights, um, and equally in terms of art design mining. Speaker 2 00:07:23 And what we're wanting to do is just to get a a, a good sense of where is the best practice, what is the global standard? Is there one is the standard fit for purpose? Can we align investors, banks, insurers behind that standard? And then can we ensure that we drive and support implementation at individual mind science at the corporate level as well? And, and that there's that clarity given to the industry in terms of that expectation from, from the, the investor in wider finance community. And so the commission will be working to achieve that informed also by the UN who at the same time are, are, are going through an assessment of, of global standards. And then I think there's gonna be a really important piece of ensuring that the wider finance community just does do that alignment so that there isn't further proliferation of, of E S G data requests now it's quite clear these are the standards we're gonna stand behind them, we're gonna work with industries to ensure that they're implemented and, and have that clarity in that focus. Speaker 1 00:08:20 Okay. Adam, is there a particular reason why you've pr prioritized these agenda objectives? Speaker 2 00:08:27 Well, really, they, they all are issues that cut across the industry and I absolutely recognize there are companies, um, and parts of the industry that are absolutely leaders in terms of addressing them. Um, but they're all relevant to whether a company can operate with a social license in whether it's at the local level, national level, or even at the international level. And these issues managed poorly really cause enormous conflicts. And the potential is that as mining responds to that huge demand that it has to produce, um, well meats for supporting the low carbon transition, these issues are gonna become ever more relevant in terms of either hampering the sector's ability to meet that or ones that really they need to be well managed otherwise to, to be able for them to do that. So, so we've looked at where are they cross-cutting issues that really need that clarity as to what is that expectation of the global best practice standard that we can really ensure is understood and been operated to. Speaker 2 00:09:33 Now I suspect there's some other issues, um, and we are open to considering what they are. I think there's issues like automation where there's probably an enormous amount of understanding in terms of the industry, but on the investor side, there's probably limited understanding of penetration of automation and how you can manage the transition within workforces related to the kind of impact that that will have. But in other areas, I suspect that there's real clarity around existing processes or existing standards that, that we could simply just acknowledge are good fit for purpose and actually we need to align behind. Um, but as I say, I'm, I'm sure there are other issues and we are open as a commission to considering what they may be and then and, and then going through due process with them. Speaker 1 00:10:17 Yeah. Well, it's abundantly clear that the Global Investment Commission on Mining 2030 is taking a more proactive approach. Um, how do you intend to achieve your objectives? Speaker 2 00:10:31 Well, I think the first step is ensuring that there's a, a broad set of, um, multi-stakeholders that can come together to help work with us in understanding that landscape. We want to be quite transparent around the steps we're taking. So as the commission moves through, um, the different stages of its deliberations will be openly outlining the issues that we're considering inviting input. There will be a group of commissioners at the heart of this that will be from that multi-stakeholder grouping, including industry. Um, and alongside that, there's gonna be a very large group of investors that, um, will be engaged as the commission walks through, through, through its work. And as say, we will take sort of considered steps, we're just devising the work plan at the moment, but in the first instance, really understanding that landscape of of demand, the ability of the sector to supply, where it comes to overlaying that with the issues and where that will, will challenge potentially, um, the sector examining where standards exist. Speaker 2 00:11:32 Are they fit for purpose, is there an ability to align behind them? Do they need, um, further enhancement and then a real focus in on, on the role of how we as investors incentivize and support the sector and could we do that better? And I want some real honesty in that conversation, but one area that is, is clear is that also obviously, um, mineral demand extractive industries, um, are often or in many places are operating in, in areas where there may be more challenging governance, um, considerations there may be operating in more fragile states or conflict prone areas. And that there really needs to be a recognition from the investor side of the importance of ensuring that we also understand how industry can work in supporting, um, and, and not contributing, sorry, in not contributing to conflict. And so again, another element of the commission's work will be looking at the, the role of industry and supporting, um, countries to flourish and not generating, um, conflict in some of the existing areas where there are conflicts. Um, we'll be also looking at how the industry can play a constructive role in that related with, with the support of the investor community. So it's a very broad agenda. Um, we do want to be quite open around the, the, the thinking of the commission as we walk through. It's not gonna be a report in 15 months. It's gonna be a series of reports as we walk through and we want to be able to really carry a wider constituency with us and that multi-stakeholder input. Speaker 1 00:13:03 Yeah, look, as, as you mentioned, it's, it's quite a, a mammoth undertaking, uh, that you're embarking on. So my question to you is that, how are you going to track the progress of your goals? Have you put milestones in place? Speaker 2 00:13:18 Well, I think that, that there's clarity in terms of the work plan and, and the first commission meeting, which is due to take place in in May, will, um, will sort of formalize that work plan. And we'll be open as as to how that will then play out. But one of the key outputs of the commission is also an implementation plan where it's great if we come out with a, a real clarity and a consensus on the, on how to move forward that vision of what the sector could be in 2030 and beyond. But equally, how do we get from that thinking to that reality? And the last piece of the work of the commission will be very much focused in on, on, on achieving that. Um, and again, I think that there, there's gonna be some really important steps around the responsibility of investors, the wider finance sector to align and we can devise a mechanism for that to be achieved, whether there's the infrastructure in existence today, which there's some areas where there is, but ultimately is there the infrastructure more broadly to ensure that you are seeing the support of that mine site application of standards? Speaker 2 00:14:19 I think in the work we're doing on tailings where you've got the global institute coming into existence, you've got the genesis of the kind of model that you could see, uh, more broadly applied, um, and equally looking at where there's that consolidation. So we are focused very much on practical implementation. Um, some of this will be about understanding and having that wider understanding, but actually having a plan through to 2030 to achieve, um, the, the, the vision that we hope will emerge, um, is, is gonna be a key output from the commission. Speaker 1 00:14:51 Okay. Adam, I wanna ask you, you know, you're talking about your vision and, and the goals that you hope to achieve. And my question is, are you collaborating with other international organizations to drive your goals? Speaker 2 00:15:05 Yeah, I'm Gregory look, that is that classic thing that we got no intention of, um, duplicating or, or replicating if, if things are being done well elsewhere. There's, there's just, I mean, I know it's like a, a hacken old phrase that people often say and then they go off and go and duplicate. Um, there, there really isn't that intention, um, where we, but we do need to take a look. Um, I'm very aware that there's efforts underway to consolidate between, um, a number of standards in certain areas. And from our perspective investors, we wanna be able to take a look at that. We wanna be able to acknowledge if it's, um, if it's a, a good thing, if it meets our expectations. And if it does, then reroll in behind. We don't go off and incentivize something else. So I think that there's a really important opportunity to take that broad spectrum view and then achieve a and then hopefully achieve that alignment of, okay, look, there's consolidation happening here, let's consolidate behind that and, and really have clarity for everybody that this is, this is what we're standing behind. Speaker 2 00:16:07 And I think that'll work equally to, um, the, the, the benefit companies in the sense that they will equally have the assurance that they can say, look, it's quite clear the investor communities aligned behind this, so we, we'll work to this, we'll report against this, we'll we'll implement against this standard, et cetera. So, um, there's, there's gonna be a lot of engagement with the different entities that we are aware of are, are operating in this space. And as I say, we will be transparent in terms of the steps we've taken. We will be seeking the input. Um, there's a secretariat that's been staffed to be able to support and ensure that there's that engagement, um, and agree that there's that focus on, on not duplicating, but consolidating. Speaker 1 00:16:45 Okay. So tell me, Adam, how is the global investor commission un mining 2030 being funded? Speaker 2 00:16:52 It's gonna, it's been funded basically by investors. So, um, there's contributions from, uh, a group of pension funds and also fund managers that are sourcing the secretariat to do the work that needs to be done. Um, we'll be transparent around who those contributors are. Um, but our pension fund is one of them, um, u s s, um, in the uk, the Swedish pension funds, et cetera. So we are all making a, a contribution to, to fund the, the work of commission. Speaker 1 00:17:19 Okay. One final question, Adam. How does anyone, uh, or any entity rather that is interested in maybe partnering or becoming part of this, of the commission get in touch with you? Speaker 2 00:17:34 Does a commission website? If you look at mine in 20 thirty.org, um, you can see datas around the commission and shortly we will be putting out a call for people to put themselves forward as commissioners. Um, and equally we will be, um, setting up a, a group of people that we want to have engaged in the whole process and a walk, walk alongside the work of the commission. So as to whether people are or organizations are actual commissioners or are engaged in the process, we're really keen that there is that outreach to them. So, um, look at the website and there is a secretariat that, uh, will be able to respond to people if they are particularly interested. Um, and we would encourage engagement with it. And as I say, we will be coming out to the wider, um, community of, of industry, other stakeholder groups to, um, share initial thinking, to get feedback and, and then to sort of deliberate further. Okay. But equally, we are focused, we, we, we recognize that there's enormous relevance to this whole agenda at this particular point, and we can't just sort of wait 15 months for some tone to arrive. This is something that we've got to be doing, um, at, at relative pace with good transparency and, and outputs as we move along that people can engage with. Speaker 1 00:18:47 Okay. Adam Matthews, chief Responsible Investment Officer at the Church of England's Pension Board. Thank you for joining us on Deep Insights today, and I wish you all the luck in achieving your goals. Speaker 2 00:19:00 Thanks very much. Speaker 0 00:19:02 Thank you for joining us. Please remember to subscribe to our podcast channel for more deep insights. Also for the latest news features and more from the African mining sector, visit mining review.com. Until next time, goodbye.

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