Boosting Impact Investment in Natural Resources: Minerals

Editor’s Note: This is the second post in a three-part series examining how the global sustainability agenda will boost impact investment in natural resources. You can read the first post in the series here. 

By Marta Maretich

With sustainability a growth area for world markets—and a priority for many world governments—there is a new focus on impact investing in natural resources. This three-part series examines how the global sustainability movement is driving the markets in four key natural resource sectors: oceans, minerals, forestry and land.

Part II: Minerals

Mining—and its products, minerals—have a bad reputation in the world of sustainability. Mineral extraction is widely associated with human rights violations, environmental damage and conflict. For those reasons it remains a largely unexplored sector for impact and social investors.

In mainstream financial markets, mining is big business. With growth driven by demand from resource-hungry emerging economies like China, India and Brazil, as well as the electronics industry—demand that is not going away any time soon. This fact, plus the alluring possibility of helping to bring change to the mining sector, means that impact and sustainable investors should think again about minerals when looking for places to commit their capital.

The tools for change may already be in our hands. An excellent piece of research conducted by the International Institute for Environment and Development (IIED) charts the significant progress made in mining policy, oversight and governance over the last decade. Key players included the International Council on Mining and Metals (ICMM), a coalition of mining companies that has embraced sustainability standards and put issues like indigenous rights, community development and climate change on its agenda.

The IIED report indicates a rising awareness and acceptance of sustainability in the industry itself—a hopeful sign for the future. The challenge for the next 10 years, it concludes, will be implementing those standards we now have more widely. Such a move could transform the mining industry—and impact investors, with an insistence on standards and reporting, could play an important part in this transformation.

Groups like the Alliance for Responsible Mining (ARM), which works on behalf of an estimated 20 million small-scale and artisanal miners worldwide, are already hard at work bringing change. They have developed supply chains for sustainably mined products and created the Fairtrade and Fairmined gold standards for the industry. Deals have already been struck with jewelry manufactures and, like conflict-free diamonds before them, these ethical products should find favor with consumers as they hit the marketplace in the near future.

Conflict minerals

Conflict minerals have been a contentious issue for some time, and a measure of progress has been made in addressing the human and environmental costs of mineral extraction in places like the Congo. Electronics industry giant Intel has now moved to make all of its microprocessors free of conflict minerals. The industry pressure group, the Electronics Industry Citizen Coalition (EICC), has compiled a useful list of conflict-free smelters and refiners, while the NGO the Enough Project has ranked companies for their use of conflict-free minerals.

Yet the path ahead is not yet clear for sustainable mining—and this is another reason for impact and social investors to enter this market. A powerful coalition of business leaders recently petitioned a panel of federal judges to overturn a provision of the 2010 Dodd-Frank Act that requires companies to disclose their use of minerals from Africa. This would be a major setback for the movement for sustainable mining. However, the presence of more social investors and conscientious corporations in this resource sector could make all the difference to the way mining develops in the future.

Image credit: Clay Larsen, Flickr

Stay tuned for part three of this series – featuring impact investment trends in forestry and land.

Marta Maretich is Maximpact’s Chief Writer and Blog Editor. Maximpact is a free global portal for the social, impact and sustainability sectors. It operates as a secure web-based listing service that allows sustainability, philanthropy and CSR professionals, as well as entrepreneurs, intermediaries, and funds to share information about initiatives and impact investment deals, online. For more information on the platform or to review latest impact projects visit: www.maximpact.com. This article first appeared on Maximpact’s blog.