"A Missed Opportunity: The Consequences of Failing to Engage Rights-Holders Affected by Mining Company Activities", 24 October 2024

The policy brief A Missed Opportunity: The Consequences of Failing to Engage Rights-Holders Affected by Mining Company Activities authored by Lara Blecher focuses on the critical need for mining companies to engage meaningfully with rights-holders affected by their operations. It highlights the significant gaps in current legal frameworks that fail to mandate such engagement, which can lead to human rights violations and adverse impacts on communities. The brief argues that without effective engagement, mining companies not only risk harming the rights of individuals and communities but also expose themselves to operational, reputational, legal, and financial risks.

Key Findings:

1. Legal Gaps in Rights-Holder Engagement: While many countries have laws requiring consultations with affected rights-holders, these often do not align with international human rights standards. In the UK, for instance, the Companies Act 2006 mandates companies to consider environmental, social, and governance (ESG) issues, but lacks enforceable requirements for community engagement.
2. Consequences of Inadequate Engagement: The failure of companies like BHP and Vale to engage with rights-holders following the Samarco dam collapse illustrates the severe repercussions of neglecting this responsibility, in this case, resulting in a lawsuit against the company.
3. Emerging Legislative Frameworks: The European Union's Corporate Sustainability Due Diligence Directive (CSDDD) represents a step towards addressing these gaps by requiring companies to account for human rights and environmental practices in their supply chains. This law, along with similar initiatives in France and Germany, signals a growing recognition of the need for corporate accountability in transnational business operations.
4. Economic Implications of ESG Factors: Currently, investors engage primarily with mining companies rather than affected rights-holders, which limits the understanding of companies' true ESG performance.

Recommendations:

1. Legal Mandates for Engagement: The brief advocates for the inclusion of provisions in corporate law and mandatory human rights and environmental due diligence (mHREDD) legislation as the most effective mechanism for mining companies to engage meaningfully with affected rights-holders.
2. Strengthening Enforcement Mechanisms: To complement legal mandates, the brief calls for the establishment of effective enforcement mechanisms that can ensure compliance with engagement requirements. This could involve regulatory bodies that monitor and assess companies' engagement practices.
3. Promoting Stakeholder Consultation During Audits: The brief suggests that audits should include consultations with affected rights-holders to gather comprehensive information that informs mining companies' actions. This approach would help mitigate risks and enhance the effectiveness of human rights and environmental protections.
4. Encouraging Investor Engagement with Rights-Holders: Investors should be encouraged to engage directly with rights-holders to gain a more nuanced understanding of the social impacts of their investments. This engagement can lead to better-informed investment decisions that prioritize human rights considerations.

The full report can be accessed here.