Is it possible to responsibly invest in mining?
The mining sector along with oil and gas until recently represented 30% of the value of the FTSE All-Share. Looking back over Socially Responsible Investment’s (SRI) 30 years mining has a controversial history for unacceptable environmental and social impacts.
Accordingly, Ethical/Green/Responsibility funds have before now avoided the sector. But just as there is a catalogue of bad practice in the past, there are examples of where mining companies have been, on balance, positive for their host communities and countries.
The biggest companies have learned from accusations and now subscribe to internationally recognised standards on the environment and human rights. There’s also no escaping that modern life is highly dependent upon the raw materials mining provides. Some mining companies can help create a greener world. Platinum and related metals, for instance, are used in catalytic converters and fuel cells. This and the resurgence of commodities prices (though now falling back in the global downturn) has led many investors with ‘ethical’ or ‘responsible’ mandates to reconsider whether the cons still outweigh the pros.
Is there such a thing as a responsible mining company? Should investors support companies that provide materials that end up in environmentally beneficial technologies? Some ethics-conscious customers may accept investing in only the mining companies with the best records on responsibility or who supply materials with environmental benefits. Asset managers also have to consider their customers’ willingness to accept certain company activities as at least acceptable - if not ‘ethical’.
For others, investing in mining will always be beyond the pale (however attractive the returns). The fact is that no one knows for sure how much attitudes among the ethical investing public have changed towards mining. What is your view?
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