Ethical, responsible, sustainable investing

Ethical, responsible, sustainable investing

I was not expecting the keynote address to be such a moving presentation. I was at a conference of investment managers after all!

However, as the courageous young woman on the podium spoke clearly and passionately about her pain and that of her family and her village, her words had a powerful impact: “Investors, are you satisfied that your bank balance growth has been achieved with the loss of so much blood?”

The woman was Amanda Andrade. She is from the village of Brumadihno in Brazil, where she works with the orphans left when the collapse of the tailings dam at Vale’s iron ore mine swept away their parents on a tragic day in January this year. About 250 people are known to have died, most while they ate their lunch in the staff cafeteria. Amanda lost her own sister in the disaster, but spoke of how her family at least had some closure as they found her body quickly and relatively intact. The families of many others are still looking and hoping, probably in vain, to find remains.

Tailings dams are formed from the waste that is dug out of the ground and the water used in the mining process. Usually, the waste is toxic. Sometimes, it’s radioactive. The damage done when such a dam collapses is huge. Not only the loss of human life, but the impact on the local environment is devastating. In this case, the sludge included very fine metal particles which have gotten into the river’s soil and most likely caused irreparable damage to the ecosystem.

The double-edged sword of mining

As well as working with the orphans, Amanda’s also been engaged in advocacy, speaking out about Vale’s inadequate response to the tragedy. She takes every opportunity to urge the global mining industry to take seriously the issue of safety at their tailings dams. On this occasion, Amanda was addressing a session at the annual conference of the Principles for Responsible Investment (PRI) organisation in Paris, which I had the privilege of attending in September. She was speaking to portfolio managers and strategists from global investment firms and representatives from mining giants like Anglo-American and BHP.

Amanda spoke of how the mine that had sustained their town and was a great source of pride, became an ongoing nightmare. Death and depression has followed, ranging from the extensive immediate loss of life, to the loss of a way of life. With sadness she shared how her father no longer pursues his former passion for going fishing once a week. The river was ruined as the sludge from the tailings dam swept through the valley.

Vale has done some work on environmental restoration, but none on human restoration. Au contraire, Amanda told us that Vale often has asked locals to work beside their workers only to find the mutilated body of a relative. “This is cruelty,” observes Amanda, who has financed her own medical treatment for post-traumatic stress, as Vale has contributed nothing.

The mood of the room was definitely that investors were not satisfied with earning returns from this sort of situation. All of us know that mining is important – it provides many commodities that we rely on for so much of our daily lives. But all of us also acknowledged that it has to be a safe industry that does not take a relaxed view of events like the Brumadihno disaster. There was discussion, led by the representative from Anglo-American, about the industry’s efforts to “re-imagine mining”, so that tailings dams are no longer part of the equation.

Solutions a priority

In the meantime, there’s the question of what to do about existing dams. No one is under any illusions that this task will be easy. For one thing, no one is exactly sure how many such dams there are in the world. It’s at least 3,500. Some are huge – the largest is in Alberta, Canada, and is 11 kilometres long and up to 88 metres high. And, more significant, no one is sure exactly what condition all the tailings dams are in. There’s a massive research project needed just to get data so that a strategy can be worked out. A colleague and friend of ours, Adam Mathews, from the Church of England Pension Fund in the UK, is leading a group of investors to press the mining companies to make this work a priority.

UFS is a signatory to the PRI, an organisation formed by the United Nations to mobilise investment capital to support responsible investment and sustainability. For us, signing up to the PRI soon after they were launched (we signed in 2009) was a no-brainer. Our counterparts in the US church, Wespath, had a key role in drafting the Principles, which are therefore strongly aligned with the Uniting Church’s Ethical investment policy. That policy reflects the core Christian value of loving our neighbour (Matthew 22:39 among others) and caring for the created world.

Although most of the other signatories to the PRI don’t have the same faith-based motivation, the strength of this organisation demonstrates that not all capitalists are greedy and focussed only on profit at the expense of people and the environment. In total there were about 1,800 delegates at the conference, who collectively manage many trillions of dollars of investment funds or work for some large corporations.

All are committed to mobilising the capital we invest in a way that strives to achieve ethical, responsible, sustainable outcomes. All are committed, therefore, to making money matter.

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