Background and current developments
Speaking to the needs of a broad range of stakeholders, voluntary mining and sustainability initiatives provide a bridge between international regulations and national laws. Representing either multi-stakeholder initiatives or, essentially, a means of industry self-regulation, these initiatives take up existing or anticipated future market and regulatory requirements with regard to mining and mineral supply chain standards. While international regulations related to responsible mineral supply chains established over the past decade tend to focus on human rights violations and due diligence procedures, frequently connected to social problems in the ASM sector, voluntary initiatives usually target a broader range of sustainability topics. These pertain to both the ASM sector and large-scale industrial mining, but global implementation is significantly more advanced in the latter sector. For this reason, this chapter largely focuses on initiatives in industrial mining, but supply chain initiatives partly connected to ASM suppliers are considered as well. Voluntary sustainability initiatives and their assurance schemes (respective standards established by initiatives that set sustainability practices and/or reporting and largely require certification or verification) may either focus on the level of mine sites or seek to provide assurance and information exchange among a larger number of up- and downstream supply chain stakeholders (Fig. 2). The following overview initially presents a selection of initiatives that pertain to the mine site level before moving on to initiatives that encompass the whole mineral supply chain.
Similar to international regulations, the mining sector is influenced by both cross-sectoral as well as sector-specific voluntary initiatives. Initially established in the late 1990s, internationally acknowledged cross-sectoral standards such as the Global Reporting Initiative (GRI 2020) or the Environmental and Social Performance Standards of the International Finance Cooperation (IFC 2012) are widely used for sustainability reporting and social and environmental risk management, respectively. Investors and lenders represent a key target audience for these standards, but other stakeholders and the general public may rely on them as well. With semi-regular updates, these standards incorporate a broad range of sustainability issues, including recent developments such as disclosure on carbon emissions. They are applied by a broad range of major mining companies worldwide, irrespective of commodity type.
High public concerns on the sustainability impacts associated with mining and, more recently, expectations towards mining companies to move beyond reporting and risk management have given rise to additional sector-specific sustainability initiatives. These are meant to enable a higher degree of transparency on operational performance, provide more specific information, and variably include an independent assurance process (Jenkins and Yakovleva 2006; de Villier et al. 2014). The momentum for voluntary sustainability initiatives and the associated development of guidelines specifically designed for the mining sector may be traced back to public discussions following a number of environmental incidents in the 1990s that spurred societal anti-mining movements (Franks 2015). One follow-up of these discussions was the founding of the International Council of Mining and Metals (ICMM) in 2001, leading to the first international industry framework to address negative social and environmental impacts in mining. Until today, the ICMM’s sustainable development framework with its ten principles, renamed to the ICMM’s Mining Principles, is the sustainability scheme which most major multinational mining companies have subscribed to.
Three years after the founding of ICMM, the Mining Association of Canada initiated the Towards Sustainable Mining (TSM) initiative, releasing a first TSM standard in 2004. To date, the TSM framework has been adopted by nine countries representing 26% of global mineral and metal production valueFootnote 3 in 2017. Unlike ICMM, the TSM approach, through its national platforms, involves not only large players in the mining sector but all mining companies operating in the country. This approach is based on the logic that the occurrence of major environmental or social incidents at a given mining operation does not only jeopardise this operator’s social license to operate locally, but threatens public acceptance of the mining industry as a whole. Promoting country-wide performance improvement in the mining industry has been a major driver for the uptake of the TSM model by all national mining associations that adopted the scheme to date. Additional reasons applying in some countries include enhancing societal acceptance, increasing assurance and transparency, and facilitating investment and economic growth (Table 2). These partial differences in expectations reflect the countries’ differing economic situation as well as variable exposure to investor and customer expectations. Interestingly, even for countries with an advanced and comprehensive national regulatory framework for mining, such as Australia, the adoption of TSM was motivated by stakeholder expectations to increase transparency and accountability in the mining industry.
Improving relationships with communities is a major driver for engaging in sustainability schemes (Mori Junior and Ali 2016). However, the aim to increase trust and societal acceptance of the mining industry is difficult to achieve. For example, a gap in “localising” transparency and benefits for local communities was identified for the Extractive Industries Transparency Initiative (EITI), a voluntary international standard for disclosing company payments and government revenues (Wilson and Van Alstine 2014). An analysis of the TSM approach implemented in Spain and in Finland shows that, so far, the process has not led to increased societal acceptance of mining (Lesser 2021). This may reflect an insufficient time period to achieve sufficient implementation progress, but may also be related to the need for a joint effort including society and governments as well as a continuous dialogue to build credibility and trust. This challenge might be reflected in critical views on the TSM approach where mining companies may choose on their own on what to report and addressing only corporate policies and management systems while excluding actual operational performance (Kuyek 2019). Recent developments within the TSM framework have taken up this criticism, for instance by introducing an external verification mechanism in 2021.
Moving beyond the mine site level, the earliest engagement of downstream supply chain stakeholders, from manufacturers to end producers, took place in the jewellery sector, referring to diamonds and gold in particular. Initiatives in this and later on other sectors emerged on the backdrop of early international debates on conflict financing and severe human rights violations associated with mining and mineral trade. In 2003, the Kimberley Process Certification Scheme, designed to exclude so-called “conflict diamonds” from the market, was the first scheme to encompass the whole mineral supply chain. However, beyond documentation of origin and demonstration of conflict-free status as far as non-state actors are concerned, it did not impose any additional sustainability requirements. Soon thereafter, in 2005, the Responsible Jewellery Council was formed, with an objective to provide assurance for a broad scale of social and environmental requirements in the jewellery supply chain (in particular gold and precious stones) from industrial mining to manufacturing. In parallel, an initial Fairmined Standard for Gold was presented in 2004, targeting the certification of ASM operations against environmental and social standards, with a view to marketing certified artisanal gold in jewellery supply chains.
Initiatives addressing human rights in conflict-affected and high-risk areas in mineral supply chains for other commodities than precious stones or precious metals only emerged around 2010, related to the intensifying debates on conflict financing and human rights violation in the DRC and the increasing pressure from emerging regulations and guidelines at that time (see “Responsible sourcing and supply chain due diligence regulations”). One of the earliest industry schemes, the Conflict-Free Smelter Program, later on rebranded as the Responsible Minerals Assurance Process (RMAP) and aligned with the OECD due diligence guidance (OECD 2016), was initiated by the electronics industry around 2009. The scheme is a flagship program of the Responsible Minerals Initiative (RMI), managed by an industry body, the Responsible Business Alliance. Itassesses RMAP standard compliance through third party audits at the smelter or refinery level, as this location naturally represents the choke point of metal supply chains. The RMI has identified around 330 smelters and refiners of so-called conflict minerals worldwide, out of which about 250 were participating in the RMAP program at the time of research (RMI 2021). In 2018, following reports on child labour in artisanal cobalt supply chains from the DRC, RMAP adopted an additional standard for cobalt refiners. When the London Metal Exchange (LME) announced the introduction of responsible sourcing requirements in 2019, this increased the momentum for the development of additional initiatives covering LME-listed brands, and the uptake of the related due diligence requirements for relevant commodities such as aluminium and copper (ASI 2020; The Copper Mark 2021).
Whereas the upcoming LME requirements for listed brands mainly relate to compliance with the OECD due diligence guidance as well as ISO 14001 (environmental management) and OHSAS 18001/ISO 45001 (operational safety and health) certification, ongoing discussions on supply chain regulations and ESG requirements are driving a trend towards including a broader range of social and environmental issues. One of the latest developments, in 2021, is RMAP’s formulation of voluntary ESG standard criteria for smelters and refiners that wish to demonstrate compliance beyond minimum human rights due diligence requirements. This may help them preparing for anticipated regulatory requirements as well as meeting the current social and environmental requirements expected for LME brands from 2022 onwards (LME 2021).
So far, commodity-specific schemes that encompass the whole supply chain including recycling are rare and currently limited to the Responsible Jewellery Council’s Code of Practice and the Aluminium Stewardship Initiative. However, apart from responsible supply chains, resource efficiency and circularity are major pillars of raw material sourcing and diversification strategies, especially with regard to critical raw materials (e.g., European Commission 2020b; The White House 2021). Therefore, it may be expected that the life cycle approach will gain more relevance in the development of current and new sustainability initiatives. This particularly applies to those initiatives that are relevant for strategic and critical raw materials, such as the rare earth elements or battery metals. For example, on-going European legislative developments that address the life cycle of batteries might drive initiatives to include life cycle approaches in the future.
The major drivers of sustainable supply chain management, including in mineral supply chains, comprise (1) legal demands and regulations (as discussed in “Responsible sourcing and supply chain due diligence regulations”), (2) customer demand, and (3) response to stakeholder demands (Seuring and Müller 2008; Young et al. 2013; Potts et al. 2018). However, based on general guidance documents such as those provided by the OECD, most initiatives tend to focus on a risk-based approach in supply chain management, in particular as far as human rights violations and, to a lesser extent, health and safety are concerned. Other sustainability issues such as local value generation and local development are less addressed by these initiatives (Franken et al. 2020), and indeed, local stakeholders are frequently underrepresented in international standard development and governance. This lack of local ownership is reflected in the findings of the yearly reports of the Responsible Mining Foundation, where companies overall score lowest on the issue of community wellbeing, in contrast to environmental or safety issues (RMF 2020).
Implementation challenges and impacts
Most major international mining companies are members of voluntary sustainability initiatives (Table 3) and have subscribed to their respective reporting and assurance requirements. A result of these activities is enhanced transparency on selected sustainability parameters, initially at the corporate level and increasingly at the project level and along the supply chain as well (e.g., UNEP 2020). A range of initiatives have started disclosing performance results at the level of individual certified or assessed operational sites (e.g., IRMA, TSM, and ASI). Furthermore, reporting based on monitoring frameworks increasingly includes the site level as well, as exemplified by the Responsible Mining Index or the Global Tailings Review, an international monitoring initiative founded by ICMM, the United Nations Environment Programme and the Principles for Responsible Investment in 2019. As far as the supply chain is concerned, a lack of transparency has been identified as a major obstacle for downstream actors to assess responsible sourcing practice among their suppliers (e.g., Amnesty International 2017; van den Brink et al. 2019). Significant progress in this regard may be observed in the conflict mineral sector. The implementation of due diligence initiatives in the sector has improved transparency, enabling downstream companies to identify smelters and refiners in their supply chain (Young 2015) while international trade data have become increasingly consistent (Schütte 2019).
Notwithstanding selective progress in terms of sustainability disclosures, challenges remain. On the one hand, this concerns the degree of granularity and dissemination of reported results. Better access to data and to the detailed results of assurance processes could help to increase transparency further (Mori Junior and Ali 2016). On the other hand, the level of disclosure in reporting frameworks (e.g., GRI) and in sustainability initiatives (e.g., ICMM) does not always reflect the level of generated impact. While there is some progress, site-specific reporting is not yet the norm and most disclosures still take place at the corporate level. Since environmental and social impacts mostly occur at the site level, this may lead to a mismatch of information (Mancini and Sala 2018). Also, most initiatives formulate management rather than performance requirements which make it difficult to assess impacts and sustainability contributions (Mori Junior et al. 2016). Consequently, the broad uptake and more standardised sustainability reporting and disclosure in the mining industry do not necessarily serve as a sufficient indicator for company performance and actual sustainability impacts (de Villier et al. 2014). Some initiatives, such as TSM, envisage to eventually increase performance across the whole mining sector. For these initiatives, there may be a certain incentive to increase their membership base and thus not to be too hard on low performers at the entry stage, allowing for more time to achieve certain compliance levels at a later stage (Mori Junior and Ali 2016). This approach is mirrored by some certification schemes such as the Initiative for Responsible Mining Assurance (IRMA 2018) that introduced later on progressive performance levels to facilitate participation of mining companies.
Most sustainability initiatives have been developed and applied by mining companies headquartered in OECD countries. Chinese companies, on the other hand, operating as major mining producers in China or abroad, are currently not often participating in these schemes, with few exceptions (e.g., in the gold sector). This also applies to some other non-OECD jurisdictions. As a result, information on environmental and social standards applied in the large Chinese mining sector is, for the most part, difficult to obtain for international supply chain stakeholders. In contrast, Chinese companies involved in mineral processing and further downstream seem to engage more frequently in supply chain schemes such as the RMAP and cobalt sourcing initiatives.
The role of industry-led sustainability or responsible sourcing initiatives for supporting companies to conduct due diligence in their mineral supply chains is acknowledged and referenced in the OECD due diligence guidance and the EU regulation on conflict minerals (OECD 2011; European Commission 2020a;). It is important to note, though, that the OECD due diligence guidance defines company participation in such initiatives as a supporting measure which does not exempt a given company from conducting its own due diligence process. The company itself always bears the ultimate responsibility for its operations and supply chains and their compliance with national and international regulations. This mirrors a common concern raised by civil society, emphasising that the mere participation in sustainability initiatives is not sufficient for a company to address its social and environmental risks (Sydow and Reichwein 2018). This is exemplified by the Brumadinho tailings dam breach in 2019, the most disastrous accident in the Brazilian mining sector to date (Silva Rotta et al. 2020). Although the operator, Vale, had subscribed to a relevant sustainability scheme (in this case, ICMM’s Mining Principles) that included third-party auditing, corporate risk assessment and management of environmental and social risks were apparently not prioritised as needed in order to optimise short-term financial performance (Macchione Saes and Muradian 2021). This did not only lead to dam failure and its tragic consequences but also resulted in a massive destruction of shareholder value in the end, the operating result being 8.543 billion US$ lower in 2019 compared to 2018 (Macchione Saes and Muradian 2021). An analysis of 50 mining and hydrocarbon projects supports the finding that actual or anticipated negative social and/or environmental impacts can induce local conflict and lead to substantive business costs, which are often not factored in adequately into business risks (Franks et al. 2014).
Being effective, transparent and accountable may be regarded as a prerequisite for initiatives to be successful, but they also need to demonstrate positive social, environmental and economic outcomes (Mori Junior et al. 2016). When it comes to moving beyond risk management and inducing local development the possible limitations of sustainability initiatives become evident (Stark and Levin 2011; Hilson et al. 2016). Similarly, although the Sustainable Development Goals are today widely taken up in company reporting, policies and government frameworks, there may still be a need to turn the risk mitigation agenda into a more development-oriented agenda (Ivic et al. 2021). In line with this notion, there is frequently a gap between comprehensive sustainability reporting and local implementation efforts (RMF 2020). As early as two decades ago, Hilson and Murck (2000) stated that companies need to put sustainability strategies more into practice. Until today, sustainability efforts in the mining sector, be it by corporate action or through international initiatives, are perceived as creating insufficient benefits for local communities (Frederiksen 2018).
This finding is supported by the high relevance of the “Social License to Operate.” The latter is considered as the most pressing social issue from a mining industry perspective, as reflected in annual ratings by advisory service providers (EY 2020). Indeed, pursuing a Social License to Operate has been at the heart of mining industry strategies during the last two decades (Humphreys 2000; Joyce and Thomson 2000; Thomson and Boutilier 2011). And yet, it seems that social challenges are often far from being resolved and the concepts employed so far might not have been sufficiently successful in reducing negative social impacts. Although there has been some progress with regard to corporate social responsibility, that is, contributing to sustainable development beyond regulatory requirements at a local level, the global dimension of managing and demonstrating sustainable practise is only progressing slowly (Rodrigues and Mendes 2018).
However, national and local governments play a major role in this process, as they set the legal and fiscal frameworks as well as national and local development strategies. Confidence in national government institutions and their regulatory capacities plays an important role in moderating impact factors influencing the acceptance of mining (Zhang and Moffat 2015). Transparency and accountability, enforcement of governance frameworks as well as combatting corruption are key elements to generate sustainable development in the extractive sector (Pedro et al. 2017). The IGF’s mining policy framework assessment indicates that half of the 14 investigated countries had low preparedness for the issue of generating socio-economic benefits through their national framework while the other half was only rated at medium level (IGF 2021). This finding points to the mutual influences of implementation challenges between national and international sustainability efforts in the mining sector.