Organisations are under increasing pressure to stamp out human rights abuses – including violations against indigenous peoples, minorities and women – from global supply chains. Taking a sector-specific approach to human rights due diligence is one step an organisation can take to better assess its risk exposure.
Our Industry Risk Analytics dataset, which measures 51 different ESG and political risks for 198 countries across 80 industries, shows that mining is the worst performing industry in terms of exposure to indigenous, minority and gender rights risks; complicating the ethical procurement of a host of minerals that are vital to global trade and raising questions around the social impact of the transition to a low-carbon economy.
Indigenous rights an inherent challenge for mining operators
While operators often employ sophisticated corporate risk mitigation measures, the tight link between mining operations and local communities, often in frontier locations, means that the extractives sector is inherently more exposed to rights violations. Take indigenous peoples’ rights, where mining stands out as the worst performing industry covered by the dataset, and one of only two, alongside agriculture, that receive an extreme risk rating globally.
Operators working on or close to indigenous lands will typically conduct free, prior and informed consent (FPIC) processes to mitigate their risk exposure. But when FPIC processes are inadequate, or not conducted at all, the potential for rights abuses stemming from the destruction of cultural heritage, the contamination of local ecosystems or violence at the hands of state and private security forces climbs.
Figure 1: Risks abound in top mineral-producing countries
Breaking the data down further shows that mining receives an extreme risk rating in 38 of the 83 countries covered by our Indigenous Peoples’ Rights Index. This includes Indonesia, Brazil, Russia, Chile and South Africa, five of the 10 largest mineral producing countries by production value (see Figure 1). DR Congo, a major player in the production of critical minerals including cobalt and copper, is also rated extreme risk.
While indigenous rights are a particular issue for mining operators in developing and emerging markets, developed markets are far from immune to abuses. Australia, Canada and the US, collectively responsible for USD267 billion of global mineral production value in 2018, are all rated high risk for mining-related indigenous rights abuses.
Abuse of women and minorities rife in mining areas
Association with women’s rights abuses, ranging from trafficking and sexual exploitation to violence and gender-based discrimination, is a persistent problem for operators within the mining sector. Indeed, mining is rated extreme risk in 83 countries on our Women’s and Girls’ Rights (WGR) Index.
Exposure to these issues is particularly high in sub-Saharan Africa, where mining is rated extreme risk for WGR in 41 of the region’s 49 countries. The severity of the problem was outlined in a 2020 report by the German Agency for International Cooperation (GIZ), which noted that women living close to artisanal mines in eastern DR Congo – which feed into global supply chains when artisanally produced minerals enter the wholesale market and mix with responsibly sourced materials - are at higher risk of both partner and non-partner sexual violence than women in non-mining areas. The study also noted that 18% of women in South Africa’s platinum mining belt had experienced non-partner rape.
The sector is similarly exposed to minority rights risks. Mining is rated extreme risk for minority rights violations, such as persecution on ethnic, racial and/or religious grounds, in 77 countries. This includes Indonesia, China, Brazil and Russia, countries that were collectively responsible for USD339 billion in mineral production value in 2018.
Industry lens key to strengthening human rights due diligence
Growing consumer and investor awareness of indigenous, women’s and minority rights, alongside new legislation governing human rights in supply chains, raises the reputational, operational and legal stakes for organisations operating in or sourcing from high risk locations.
But with risks widespread across major producing countries in a host of key industries, sourcing responsibly is no easy task.
By proactively examining abuses and where they lie, organisations can enhance their human rights due diligence measures and bolster their protection against reputational risks. Those that act quickly to understand their risk exposure can secure a competitive edge over industry peers.