Minerals and metals extraction

FIs should develop specific policies and procedures to address the most salient human rights risks in relation to minerals and metals extraction. 

Minerals and metals extraction policies and procedures should include a recognition of the corporate responsibility to respect human rights as set out in the UNGPs, including implementing human rights due diligence which reflects sector-specific risks. It should also include a commitment to human rights standards based on the International Bill of Human Rights and the ILO Fundamental Conventions. For financing where upstream value chains engage minerals sourcing, the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas establishes definitive guidelines.  

Policies and procedures can also include a commitment to key sector-specific standards, such as the ILO Convention 176 on Safety and Health in Mines, as well as to standards which address the most salient human rights issues in the sector. For the minerals and metals extraction sector, this will include ILO Convention 169 on Indigenous and Tribal Peoples, the UN Resolution on the right to a clean, healthy, and sustainable environment, the Paris Agreement, the Convention on Biological Diversity, Aarhus Convention, Escazú Treaty and the UN Declaration on the Rights of Indigenous Peoples (UNDRIP).  

Any commitments by FIs to these standards, or any concrete expectations for clients/investee based on these standards, should be accompanied by an explanation of how the human rights-related expectations embedded in these standards will be implemented at all mining stages and in the value chain. This can include human rights minimum criteria for the provision of financial services, such as:  

• Integration of human rights considerations into all relevant environmental and social documents, including the Environmental Impact Assessment (EIA), Resettlement Action Plan (RAP) or equivalent. Specific attention should be given to effluent and tailings treatment. 
• Requesting appropriate documents to address specific human rights risks, including ensuring free, prior and informed consultation and consent of Indigenous People (where applicable). 
• Ensuring that vulnerable groups are part of the consultation process, including through the establishment of a complaints mechanism for local communities and other relevant stakeholders. 

For further information, see ‘Taking Action – Strengthen human rights in FI policies’.

See also ‘Policy commitments and human rights’ for practical guidance on how to develop policy commitments which are consistent with the UNGPs, and how to integrate relevant human rights commitments in other policies and procedures.

Human rights screening and risk assessment should include contractors and sub-contractors, as well as other key entities in the value chain, for example clients’ business partners, as well as other co-financing FIs. FIs should screen their extractive portfolio to map and identity salient human rights risks, whether their clients’ activities in the minerals and metals extraction sector are likely to impact on vulnerable groups (workers and communities), and to evaluate the systems that their clients have in place to mitigate and prevent both risks and impacts.  

FIs can seek to ensure that screening and risk assessments reflect key contextual risk factors in the minerals and metals extraction sector: 

• Operational and geographical context: mine placement in conflict zones, areas of illegal mining, and regions with unmet basic needs of inhabitants, land disputes in mine locations, legal uncertainty regarding land ownership among Indigenous Peoples, inadequate controls over working conditions (child labour, forced labour, migrant labour) absence of practical protocols for implementing FPIC, international court judgments on the State’s failure to adopt preventive measures against human rights abuses in mining activities, known corruption practices in the sector.  
• Type of business relationships: significant contractor/sub-contractor workforce, use of security personnel, use of labour intermediaries, upstream value chain linkages to informal activities (including artisanal and small-scale mining). 
• Client specific risk factors: identify if the client / investee has any documented track record of causing, contributing to or being linked with human rights harms, including retaliation against human rights defenders. 
• Presence of vulnerable groups: this can either be in the community (remote or underserved regions, indigenous people, minority groups), or in relation to workers (for example, migrant workers).  

See ‘Taking Action – Strengthen FI risk management systems and processes’. See also ‘Human Rights Screening and Risk Assessment’ for practical guidance on developing risk screening and assessment systems and processes.

Throughout the financial cycle, FIs should gather information on how clients / investees are managing specific human rights risks and impacts relevant to minerals and metals extraction and, if relevant, propose alternative actions to prevent and mitigate the risks. This could include requiring clients / investees to provide information on:  

• Human rights claims or complaints: management of claims and protests from human rights and environmental defenders, particularly regarding land and cultural rights, and natural resources submitted by communities in the project’s influence zone, along with the measures adopted to address them.
• Labour incidents and/or worker complaints, as well as the mitigation/ prevention measures taken. This should extend to contractors and sub-contractors’ workforces.
• Land acquisition and use: how the company acquires land and ensures that land rights are respected, and how FPIC is implemented (where relevant); any land use agreements in place with local communities or indigenous groups – with particular attention to any terms related to land access and compensation. If relevant, this may also include identifying the type of land where project activities will be located, and measures in place in related to protected areas, indigenous reserves or other types of cultural heritage sites.
• List of suppliers: a complete list of suppliers, where possible including their locations, types of products provided, and the volume of business conducted with them. This should include any sourcing from artisanal and small-scale mining (ASM) sites.
• Supplier assessments: the company’s approach to assessing and monitoring suppliers’ compliance with human rights standards, including any measures implemented, including in relation to ASM sites.
• Environmental management systems: the company’s environmental management systems and certifications. This should also include their approach to waste and tailings disposal.
• Water use and pollution: the company’s approach to water management and pollution prevention, particularly in relation to the use of water in water-stressed areas.
• Consultation: approach to consultation with potentially affected groups and other relevant stakeholders, including processes, participants, findings and outcomes.

FIs can also engage directly with minerals and metals extraction clients / investees and use or build leverage to require, facilitate, and incentivize respect for human rights throughout the financing cycle. Effective client / investee engagement helps to build a common understanding of risks, gaps, and required actions. This ensures that measures can be adequately appropriated and implemented. This might include a focus on the following areas: 

• FIs can engage companies on developing approaches to integrating environmental, biodiversity, ecosystems and land concerns into HRDD. The revised OECD Guidelines call on businesses to carry out due diligence for adverse impacts related to the environment, including climate change, and to recognise that environmental due diligence will often involve taking into account multiple environmental, social and developmental priorities, including the imperatives of a just transition. They also highlight the importance of providing support to small-and medium-sized enterprises and smallholders.   
• Increasing client / investee’s visibility and transparency in relation to value chains. FIs encourage companies to create a comprehensive mapping of their value chains. This enables businesses to begin to understand the possible human rights-related risks to which they are exposed, based on the countries where different commodities are sourced from. Having visibility over the length and complexity of the value chain will also help clients / investees prioritise the actions needed to help identify, prevent and mitigate human rights risks.  
• Certification: For some raw materials, FIs can encourage or require clients / investees to participate in credible certification schemes. While the amount of certified material will likely not be enough to satisfy the entire demand, clients can set ambitious targets to improve the amount and share of certified materials in their upstream value chains over time. 

See also ‘Taking Action – Client / Investee Engagement’.

Contractual requirements are also a common tool to build leverage, and FIs should consider integrating human rights considerations into contractual clauses based on organisational human rights policies and commitments. Furthermore, FIs can use incentives to meet defined human rights related targets, for example to implement human rights due diligence processes/or to disclose information on human rights impacts.  

Pending financing modality, FIs can seek to use contractual leverage with clients to encourage the ‘cascading’ of human rights-respecting business practice along the value chain. This may commence with the requirement that the client / investee develops and implements a supplier of code conduct aligned with the international standards which responds to all identified human rights risks for a defined scope of the value chain. Where appropriate, specific risk mitigants and process requirements – including monitoring, reporting and stakeholder engagement – can be elaborated in the action plan and covenanted in contractual agreements. 

See also ‘Taking Action – Contractual provisions’.

Where risk assessments have identified potential human rights impacts action needs to be taken, the type of action will depend on the impact severity and likelihood, as well as on how the banks are involved with the human rights impacts. In some financial contexts, environmental and social action plans (ESAPs) are an important and common tool for developing specific mitigants and responses in view of risks. In other cases, particularly where greater risks are identified, specific additional plans might be required.  

FIs working with clients / investees in minerals and metals extraction can focus efforts in all the following areas: 

• Labour risks: In larger projects, a labour management plan which sets out requirements, roles and responsibilities for all parties to the project – including (sub)contractors – is an important tool to manage and monitor labour risks.  
• Emergency responses: Implementing emergency responses that aim to control and mitigate possible grave environmental and human rights damages caused during the operations’ development, in addition to early warning systems for authorities and the community that allow for rapid and efficient action. 
• GBVH: Enhancing awareness raising and promoting mitigation action at mining sites on Gender Based Violence and Harassment (GBVH) risks: this may include incentivizing portfolio companies to take various actions such as training staff on gender equality issues, designing a protocol for dealing with sexual harassment / GBVH, and disseminating the existence of a gender-sensitive grievance mechanism. 

For more general information, see ‘Taking Action – Action Plans and Specific Mitigations’.

In relation to minerals and metals extraction, this could include for example: refraining from providing financing to minerals and metals extraction companies/projects until free, prior, and informed consultation and consent of Indigenous Peoples have been conducted (where applicable); refraining from providing financing until an adequate site reclamation plan in accordance with environmental and social standards is in place; refraining from imposing time and cost conditions on project implementation that may impact the rights of workers. 

See ‘Taking Action – Avoid actions and omissions that facilitate or incentivise human rights abuses’.

FIs should work collaboratively with relevant stakeholders to inform their policies, identify risks, improve monitoring systems and grievance mechanisms, as well as to address entrenched human rights challenges in the minerals and metals extraction sector. This should Involve meaningful consultation with potentially affected groups and other relevant stakeholders, as appropriate to the nature and context of the operation. The relevant stakeholders for FIs financing the extractive sector would include: other banks and investors with similar portfolios, industry associations, regulators (such as Ministries/Secretaries of Production and Energy, and entities coordinating state-owned sector enterprises), multilateral organisations, NGOs working on human rights issues linked to the sector, trade unions, academics, and rightsholders affected or potentially affected by client / investee activities, including Indigenous Peoples and affected communities, and their legitimate representatives.  

In particular, FIs can engage with credible multi-stakeholder initiatives that promote human rights principles and standards in the minerals and metals extraction sector – see ‘Sectoral initiatives and partnerships’. For instance, the ICMM Mining Principles require public support for the implementation of the Extractive Industries Transparency Initiative (EITI). 

FIs should ensure that clients / investees in the minerals and metals extraction sector engage with community stakeholders – including local communities, indigenous Peoples and civil society organizations – at all stages of project development by establishing mechanisms for ongoing dialogue and consultation. Affected communities should have a right to participate in decisions regarding mine development, operations and mine closure and post-closure activities, as well as access relevant information about environmental and health risks.  

See ‘Taking Action – Stakeholder engagement and collaboration’. See also ‘Stakeholder engagement’ for guidance on collaborating, engaging and pursuing collective action.

FIs can enhance transparency and disclosure practices by providing stakeholders with access to sufficient, relevant and frequent information about finance and investments in the minerals and metals extraction sector, including potential human rights impacts, mitigation measures, and grievance mechanisms. FIs can also develop and publish reports against clear indicators reflecting a human rights perspective, including salient issues, measures, and results.  

FIs can enhance their own transparency by disclosing information about the projects they finance, as well as in the risks and impacts detected, and measures implemented. 

FIs should encourage minerals and metals extraction companies to disclose sustainability data at the mine-site level to the communities affected by the project; and to report granularly on human rights impacts at the mine-site level, taking into account the needs of the affected communities, and obtain independent third-party verification of the reported data. FIs should also encourage companies to disclose information on payments made to host governments (such as royalties, taxes, and profit sharing). 

See also ‘Taking Action – Transparency and disclosure’.

In relation to minerals and metals extraction, FIs can provide training and capacity building for FI staff on key human rights issues the identification, prevention, and mitigation of human rights abuses in the minerals and metals extraction sector. 

FIs should also ensure that clients / investees have sufficient technical, financial and logistical resources available, including an interdisciplinary team that includes qualified with human rights expertise and knowledge on the local context. This might include working with clients to provide human rights trainings for relevant employees at corporate and/or operational level, relevant security personnel and contractors on human rights policies and procedures.  

See also ‘Taking Action – Capacity building and training’.

FIs can work with clients / investees to establish robust monitoring and evaluation mechanisms to track the effectiveness of measures taken to prevent and mitigate human rights abuses at the portfolio level. This should focus on mechanisms which allow for continuous feedback and improvement, ensuring that the FI’s human rights practices evolve based on sector- and region-specific lessons learned and emerging best practices. The complaints received through the grievance mechanism should also be used as input to evaluate the effectiveness of the measures implemented.

At the operational level, FIs can support clients / investees to adopt monitoring mechanisms that are appropriate to the level of risk, and led by teams with relevant skills and expertise. In relation to minerals and metals extraction FIs can focus on:   

• Working with clients / investees to establish robust monitoring and evaluation mechanisms and explore the use of modern technology for real-time monitoring of environmental and health and safety data. For example, real time monitoring and predictive analytics can play a transformative role in improving occupational safety and health outcomes. 
• Encourage clients / investees to implement participatory environmental and social monitoring committees integrating different stakeholders. 

FIs should ensure that accessible and effective grievance mechanisms are in place to enable affected stakeholders to raise concerns and seek redress for any alleged human rights abuses related to their investment or lending activities in minerals and metal extraction transactions and investments. This includes requiring clients/investees to have in place or to participate in a grievance mechanism aligned with Principle 31 of the UNGPs.   

FIs can set up their own grievance mechanisms, participate in one or more grievance mechanisms established together with other FIs, or participate systematically in clients’ / investees’ grievance mechanisms.  In relation to workers, note that grievance mechanisms established by existing industrial relations systems and collective bargaining agreements can constitute effective and credible mechanisms to respect labour rights. 

FIs should enable the provision of remedy for victims of minerals and metals extraction -related human rights abuses: by including clear expectations on minerals and metals extraction companies to have in place an individual operational-level grievance mechanism or participating in collective platforms in line with the UNGPs’ effectiveness criteria.  

In cases of disasters related to minerals and metals extraction activities, financial institutions must ensure that the registration of affected individuals is conducted with a human rights approach, including the dissemination of the registry, consideration of the special vulnerability of the victims, accessibility, among other aspects.  

In primary phases of the upstream minerals and metals value chain, human rights grievances are typically related to adverse impacts on workers, Indigenous Peoples and local communities, and human rights defenders. Particular attention should be given to gender-sensitive mechanisms and procedural rules, with a particular focus on addressing the challenges faced by women experiencing harassment and violence either in the workplace or in the community. 

See ‘Taking Action – Improve and support the effectiveness of grievance mechanisms to ensure and enable remedy’.