“The mining industry – both a blessing and a curse” – the seventh dialog event for banks and NGOs

Germany Corporate Responsibility

Mining is an indispensable element of a global economy that is consuming more and more resources. Often, though, it can have undesirable social and environmental consequences. The purpose of the seventh NGO-bank dialog event was to consider the necessary regulations for this booming sector.

Is coal a cheap source of energy? Not if various non-governmental organizations (NGOs) are to be believed: they claim that coal is only cheap because it is not the mining companies and their clients that bear the consequential costs, but the general public. The seventh dialog event for banks and NGOs on October 30, 2012, which focused on the subject of mining, dealt with these kinds of issues.

The COO of UBS Deutschland AG welcomed the nearly 50 participants to the event, which took place on the UBS premises in the Frankfurt Opernturm building for the first time. He reminded those present that they all had a responsibility to society, the environment, but also clients who are active in the mining industry or wish to invest in it.

Whether it is oil from the Gulf of Mexico, platinum from South Africa or copper from Peru, the consequences of extraction are often far-reaching. Mining can destroy arable land, fish stocks and forests, contaminate coastal areas and drinking water and infringe human rights. It can also cause social conflicts, for example if drinking water becomes scarce as a result of the mining. NGOs such as “urgewald”, the London Mining Network and Facing Finance all campaign for environmental causes. They see it as their task to lobby on behalf of those who do not have a voice, such as indigenous peoples, and represent those affected in the courts. They also try to raise public awareness of the problems.

The influence of banks cannot be underestimated

Banks play an active role in the mining industry as lenders, investors and consortium banks. Many mining projects would not be possible without the investment and loans provided by banks, and as a result, banks can exert a certain amount of influence on mine operators. This is exactly what the NGOs are focusing on: they advocate binding standards that the banks should oblige mining companies to meet before they finance a project. NGOs want the following points to be taken into consideration:

  • Due diligence – have all requirements been complied with?
  • Free prior informed consent – has the right of self-determination of indigenous peoples been respected and are these people receiving appropriate compensation?
  • No-go zones – is the project located in conservation areas or zones that are, for example, endangered by landslides, earthquakes or sandstorms?
  • Unacceptable forms of mining – does the project envisage using methods that are particularly damaging to the environment, for which there might be less harmful alternatives?
  • Water – does the project have an adverse impact on water supply?
  • Conflicts – is the project located in a conflict zone?
  • Retreat – are there guidelines in place for closure and renaturation?

The world's requirements for raw materials and energy are increasing with the growing global population, and it will not be possible to obtain a sufficient supply of energy without oil, gas and coal for the foreseeable future. As a result, no bank can afford to neglect mining, but the banks are also aware of its inherent problems. Speakers for the banks presented guidelines they have developed for the granting of credit, for example. These include carrying out a general check on a company if the financing has social or environmental risks. Planned projects for oil and gas extraction, mining, hydroelectric power, nuclear energy, forestry, agriculture and palm oil plantations are all checked, for example.

NGOs welcome the banks’ stricter guidelines

The guidelines enforced by the banks prohibit the dumping of toxic waste, forcible relocation of people, infringements of human rights (such as child labor and forced labor), breaching of local regulations and the infringement of protected zones from the outset. A special check may be necessary in certain circumstances, for instance if it is possible or foreseeable that the safety of drinking water will be threatened, a high level of environmental damage will occur or workers will be endangered. In order to check these points, banks like UBS make use of various data providers such as RepRisk, which collect and evaluate information on the social and environmental risks posed by companies.

The constructive dialog ended with the bank speakers inviting the NGOs to help formulate checking standards for mining projects – and some NGOs offering to do just that. If this ultimately helps to achieve what Martin Deckert urged all participants to aim for at the start of the event, namely “to respect the social benefits of mining and work together to improve the sector’s environmental footprint”, then the discussion between NGOs and banks will have been a success for everyone.

What is the NGO-bank dialog event?

Financially supported by the Deutsche Bundesstiftung Umwelt (German environmental foundation) and seven banks (including UBS), the NGO-bank dialog event aims to bring together representatives of NGOs (including Greenpeace, WWF and Amnesty International) and banks (including Credit Suisse, Deutsche Bank and Commerzbank) twice a year in a German-speaking country for a day of constructive dialog (on an issue that has importance for sustainability). On the NGO side, the German environmental organization “urgewald” organizes the dialog. The events take place at one of the participating banks in Germany; for the seventh NGO-bank dialog event, UBS was host for the first time.

Report from Corporate Communications

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Dr. Christian Leitz 
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Robert Ramer
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