For many mineral-rich countries, the mining sector can be a key engine to drive and achieve the Sustainable Development Goals (SDGs). When well managed, the sector can create jobs, support local businesses, build much-needed infrastructure, support investments in health and education, and generate much-needed revenue for governments.
Ensuring that mining is socially and environmentally sound and contributes to the SDGs will require concerted efforts from policy-makers, the private sector and civil society. Responsible supply chains for metals and minerals are one important tool for optimizing the mining sector’s contributions to sustainable development. Voluntary sustainability initiatives’ (VSIs) contribute to responsible sourcing by complementing, aligning with and, in some cases, bolstering government regulations, helping to support public policy and increase transparency in the mining sector.
We spoke with Laura Turley, IISD Associate and author of Standards and the Extractive Economy, to learn more about the challenges and opportunities of VSIs in mining.
What are responsible supply chains?
Responsible supply chains, or responsible sourcing, represent an effort by companies to ensure their supply chains, from the site of extraction to the end user, promote key sustainable development principles, such as peace, the protection of human rights and environmental stewardship. Companies can either undertake this process voluntarily or can do so in response to government regulations. The process itself can be complex, involving a host of global actors across supply chains and sectors. But its importance cannot be overstated.
You mentioned that some of these initiatives may be voluntary. Can you explain these commitments?
VSIs are, in a general sense, guidelines for producing, selling and purchasing products in a sustainable manner. Those who sign up to participate in a VSI commit to delivering on certain environmental, social and economic standards. These market-based initiatives in turn give assurances to actors across the supply chain: manufacturers and retailers get information about the reliability and safety conditions behind a product, while consumers get information about sustainability efforts undertaken during the product’s life cycle.
The end goal of VSIs is to have a positive impact on communities, the environment and the economy.
In the mining sector, examples include the Mining Association of Canada’s Towards Sustainable Mining initiative, the Initiative for Responsible Mining Assurance’s Standard for Responsible Mining, the Organisation for Economic Co-operation and Development’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and the International Finance Corporation’s Environmental and Social Performance Standards, to name a few.
VSIs for mineral supply chains have, to date, outpaced government regulations. However, we’re now seeing a mix of the two becoming increasingly common, as voluntary and obligatory approaches are designed to complement each other.
What are some of the challenges to ensuring responsible supply chains?
There are over 400 VSIs operating globally, across all sectors. With a number of these initiatives present in the mining sector today, it can be difficult for stakeholders to stay informed of best practices.
Cost is also an issue. The costs of complying with some initiatives are also often concentrated at the upstream end of the supply chain, limiting the participation of small-scale producers or artisanal miners already operating on thin margins.
What opportunities do VSIs present?
We’re seeing industry stakeholders increase alignment between initiatives, both upstream and downstream in the value chain, as well as across different sector-focused schemes. This leads to responsible sourcing initiatives that are complementary and supportive of each other, through improved coordination and rationalization efforts.
For governments, regulation can be a driver in the uptake of responsible supply chain initiatives in mining. Where good policy or regulation is lacking, voluntary initiatives can fill the void, advancing sustainable development goals and acting as de facto regulators, establishing rules, and monitoring actions and performance.
Governments can also use VSIs as a platform for dialogue with industry members on key mining issues, to serve as models to be incorporated into regulations on responsible sourcing, to build trust and to act as tools to broaden support for policy initiatives on responsible business conduct.
Why would a mining company invest in responsible supply chains?
Companies may decide to commit to a VSI for a number of reasons. There may be strategic considerations involved in the decision to achieve social and environmental standards, or a company may wish to build or protect its reputation and brand value. Doing so may help reduce social or environmental costs and risks to their operations, or within their supply chains.
Companies may also adopt a standard in response to consumer, employee, shareholder or investor demand, to collectively address systemic issues such as child or forced labour, or to establish or strengthen their social license to operate. Achieving a voluntary standard may even justify an increase in product pricing.
The result is that, through strong resource governance, sustainable development and responsible management, the mining sector across the whole value chain can generate significant revenues for national budgets, create jobs, spur innovation, support entrepreneurs and business development, and improve infrastructure.
Read our report, Standards and the Extractive Economy, for a deeper dive into sustainability initiatives in the mining sector.