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Mines and the environment; both sides of the story

Welcome back! Our fifth installment concerns the relationship between extractive foreign direct investment (FDI) and the environment.

Typically, mines are known for being the bogeymen of the environment. Not only do they exhaust non-renewable resources and wreak havoc on local environments, accidents caused by extractive operations can have catastrophic environmental impacts. We won’t soon forget the damage caused by the BP oil spill in the Gulf of Mexico.

As always, there is another side to this story. Mines have come a long way in terms of how they interact with the environment. Though it is impossible for mines to avoid impactful operating procedures, the extractive industry has taken an active role in protecting the environment.

Companies are now investing millions of dollars to attenuate their environmental footprints [1]. Organizations, including the International Council on Mining & Minerals (ICMM) and the Global Reporting Initiative (GRI), have established best practices to help reinforce the extractive sector’s commitment to the environment [2] [3].  Individual firms are also playing an important role. Many companies, including Anglo American and Rio Tinto, have established environmental policies that go beyond the laws of their host countries [4] [5]. Furthermore, companies are increasingly implementing local environmental projects. For instance, De Beers provides offshore biodiversity information from its coastal South African diamond mines to enable conservation planners to more accurately reflect the pressures that affect underwater ecosystems [6].

These initiatives are becoming increasingly important for extractive businesses. Richard Morgan, the Government Relations Advisor at Anglo American, has stated that good social and environmental practice is now viewed as part of companies’ comparative advantage [7]. Demonstrating an environmentally-conscience attitude helps provide extractive firms with a social license to operate. Unfortunately, these efforts do not entirely counteract the industry’s bogeyman persona. Many of the sector’s environmental regulations are implemented by the industry itself, leading to questions of accountability.

Furthermore, there are concerns over blind spots within industry-led environmental regulations. A notable example is climate change. Mining operations contribute to climate change through substantial greenhouse gas emissions [8] and through the degradation of forest habitats [9]. However, a survey conducted by KPMG found that mining organizations are adopting a “wait and see” approach to climate change [10]. KPMG also found that 60% of extractive organizations have not implemented structural changes to address climate change issues [11]. These results suggest serious oversights within the private sector’s environmental policies.

Where does this leave us? The mining industry’s impact on the environment appears to be improving in some ways, but in others it is more ambiguous. Though the changes being implemented by the extractive sector represent positive first steps, how much farther must they reach? Are industry-implemented standards enough, or are they merely window-dressings that promote unaccountable regulation?

[1] International Institute for Environment and Development. MMSD+10; Reflecting on a Decade. Rep. 2012. Print. Sustainable Development Discussion Paper. P 12.

[2] International Council on Mining & Metals. “Sustainable Development Framework.” ICMM. Web. <http://www.icmm.com/our-work/sustainable-development-framework>.

[3] Global Reporting Initiative. “Mining and Metals.” GRI. Web. <https://www.globalreporting.org/reporting/sector-guidance/mining-and-metals/Pages/default.aspx>.

[4] OECD. Environmental Impacts of Foreign Direct Investment in the Mining Sector in Sub-Saharan Africa. 2001. Rep. P 12.

[5] OECD, Environmental Impacts of Foreign Direct Investment, P 16.

[6] International Council of Mining & Metals. Mining and Biodiversity; A Collection of Case Studies (2010 Edition). 2010. Rep. P 21.

[7] International Institute for Environment and Development. MMSD+10; Reflecting on a Decade. Rep. 2012. Print. Sustainable Development Discussion Paper. P 7.

[8] “Mining Impacts.” Greenpeace International. 15 Apr. 2010. Web. <http://www.greenpeace.org/international/en/campaigns/climate-change/coal/Mining-impacts/>.

[9] World Diamond Council. “Diamond Mining and the Environment Fact Sheet.”. Web. <http://www.diamondfacts.org/pdfs/media/media_resources/fact_sheets/Diamond_Mining_Environment_Fact_Sheet.pdf>.

[10] KPMG International Cooperative. Responses to the Climate Change Debate: KPMG Mining Industry Survey. Rep. Switzerland. 2010. Print. P 4.

[11] KMPG, “Responses to the Climate Change Debate, P 4.

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