[miningmx.com] – SHAREHOLDERS in mining companies should put their money where their mouths are and stop investing in companies that neither comply with environmental laws, nor disclose their non-compliance to investors, said Tracey Davies from the Centre of Environmental Rights (CER).
Davies, who heads up the organisation’s Corporate Accountability and Transparency Programme, authored a report on blue chip companies’ environmental violations over the past seven years.
Mining companies African Rainbow Minerals, Anglo American, Anglo American Platinum, AngloGold Ashanti, DRDGold, Exxaro, Gold Fields, Harmony Gold, Impala Platinum, Lonmin and Merafe Resources were among 20 corporates, many of which breached environmental laws.
“The companies included in our study are regularly listed on the JSE’s Socially Responsible Investment (SRI) Index and many of them claim they are in full compliance with environmental laws in their annual and other shareholder reports. But the report shows this is not the case.”
Davies said that the JSE’s SRI index was clearly not fit for purpose, as the companies listed on the index weren’t monitored for environmental compliance.
“In South Africa, we’re supposed to be the global leader in socially responsible investing. We have the King codes, the SRI index and Section 28 of the Pension Funds Act and we’re happy to bask in the glory of these initiatives, yet I don’t know of any examples where there’s been concrete action taken against companies who are not playing by the [environmental] rules.”
She said that one wouldn’t expect that all large industrial companies should have a perfect compliance record, but when violations occur they should be taken seriously and the public and shareholders should be made aware of them and the consequences.
Each company which was assessed by the CER was given a month to respond to the findings before the report was published.
In some instances, the CEOs laid out plans to mitigate environmental breaches, some committed to rectify unlawful actions, while others flatly denied such occurrences.
“We have nowhere to turn except to appeal to asset managers and institutional investors – many of whom have adopted the Code for Responsible Investing in South Africa – to go beyond lip service and say: “You know what, maybe we’ll lose a small percentage of our returns this year, maybe not, but we’re going to draw a line in the sand and sell our shares if this company doesn’t sort out its environmental breaches.’
It just takes one brave investor and the economy won’t collapse if we do this.”
Bringing this to the attention of government won’t help much either, said Davies. “There are serious challenges with the Department of Environmental Affairs’ approach to compliance monitoring and enforcement, said Davies.
Moreover, the departments of Mineral Resources and Water and Sanitation which are charged with regulating the mining sector do not publicise non-compliances or enforcement action.
Failure to publicise their findings destroys any deterrent effects of enforcement. “There is no way of knowing who has complied and who hasn’t.”
It’s heartening though that the DEA is considering an administrative penalty system to prosecute environmental offenders.
“When we empower the department, or even an independent authority, to impose immediate monetary penalties that reflect the cost of the violations then there may be better compliance among South African corporates,” said Davies.
