Investors urged to avoid supporting mining in world heritage sites

1st October 2015


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Author

Sarah Morgan

Investors in companies extracting natural resources in world heritage sites face financial and reputational damage, according to a new report.

Analysis by WWF, Aviva Investors and Investec Asset Management found that the risk to Unesco world heritage sites in the natural list is higher than previously thought, with 70 of the 229 sites currently threatened by oil, gas and mining exploration.

Intrusion into natural world heritage sites is especially high in Africa, where 61% are subject to some form of extractive concession or activity, the research found.

Extractive activities can cause environmental damage, including reduced biodiversity, disturbed ecosystem services, habitat loss and fragmentation, and the introduction of invasive species and pollution. There are also indirect impacts from infrastructure, such as roads and railways in previously remote areas, and social impacts on communities in these areas, the report says.

Investors have a fiduciary duty to take account of environmental, social and governance factors when deploying capital, WWF says.

Traditionally, investors have lacked information and data on extractive activities in world heritage sites, which leaves their investment exposed to the risks faced by mining companies, such as litigation, compensation claims, shareholder divestment, loss of concessions and reputational damage, the report states.

Investors should ensure they are aware of whether any extractive companies they invest in operate within or next to natural world heritage sites, or if they plan to do so in the future, WWF recommends. It also advises investors to seek to persuade mining companies to change strategy and consider divesting if a firm does not comply.

The reports says financial backers should engage with the extractive sector at industry level to encourage better disclosure on the issue and the wider adoption of "no go" commitments, whereby they state that natural world heritage sites are out of bounds for exploration or extraction of natural resources. It also wants investors to demand improved data on extractive operations in world heritage sites.

WWF chief executive David Nussbaum said protecting iconic natural heritage sites is not only important in terms of their environmental worth; it is also crucial for the livelihoods and future of the people who depend on them.

"Investors have a unique opportunity, and indeed responsibility, to be stewards of capital and shape our future," he said.

Euan Munro, chief executive of Aviva Investors, said: "We place significant store on our portfolio managers taking wider environmental, social and governance issues into account in their investments. Mismanaged, these can lead to catastrophic loss of value for long term investors. This report provides the information we need to make better decisions and encourage others to do the same."

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