On 5 April, London Mining Network together with several of its member groups and other supportive organizations wrote to the Chief Executive of the new Financial Conduct Authority, urging it to take a tougher line against mining companies responsible for environmental and human rights abuse overseas. The text of the letter is below.
Martin Wheatley,
Chief Executive,
Financial Conduct Authority,
25 The North Colonnade,
London E14 5HS.
5 April 2013
Dear Mr Wheatley,
Just over a year ago, London Mining Network published the enclosed report, UK-listed mining companies and the case for stricter oversight. The publication was timed to contribute to debate on the Financial Services Bill, in the hope that the Bill might be amended to ensure that the new Financial Conduct Authority would be enabled to take human rights and environmental matters into consideration in its oversight of companies listed, or wishing to list, on UK stock exchanges.
The Treasury did not accept amendments proposed by, among others, Lisa Nandy MP and John McDonnell MP. In doing so the Treasury took the view that these matters fell outside the remit of the Bill. The Financial Secretary to the Treasury at that time, Mark Hoban, recommended in May 2012 that London Mining Network should seek a meeting with the Minister responsible for corporate governance. We have sought such a meeting, but despite the help of John McDonnell MP, we have so far not been successful. Mr Hoban also recommended at that time that we should contact the Financial Reporting Council, which we did in February of this year – so far without receiving a reply.
One of the problems that we have encountered in our quest to ensure that mining companies listed on UK stock exchanges are subject to sufficiently strict oversight of their human rights and environmental impacts is that no one body appears to have, or to believe itself to have, the authority to exercise such oversight.
We believe that the FCA, as the UK Listing Authority, has a key role. We hope that you will use such powers as the FCA has to ensure that UK Stock Exchanges do not continue to act as a haven for those mining companies whose human rights and environmental records leave so much to be desired. We hope that, where the powers currently vested in the FCA fall short of what is needed to ensure that such companies are compelled to improve their behaviour, you will seek sufficient powers to do so.
We believe that if the FCA is to function effectively as the UK’s new listing authority, its operational objectives must include enforcing good conduct on all UK-listed companies. As the case studies in our report demonstrate, even obedience to UK law has not in the past been effectively enforced by the UKLA.
Specifically, we recommend the following:
1. London-listed companies and their directors must obey the law in the UK and in the countries where they operate and face appropriate sanctions when they do not obey the law. This must include compliance with national regulations concerning biodiversity, ecological and environmental protection.
2. UK-listed companies should be legally required to note in their corporate reports all findings of non-compliance with IFC and OECD standards, and of UK and non-UK regulation concerning biodiversity and environmental protection, as well as convictions in UK and non-UK courts.
3. The FCA should have powers to enforce the corporate reporting requirements relating to environmental and social impacts contained in section 172 of the Companies Act 2006, with sanctions for failure to comply.
4. The FCA should ensure that UK-listed companies recognise and respect international human rights and environmental standards to which the UK is a signatory, including, inter alia, the Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights, the UN Convention for the Elimination of All Forms of Racial Discrimination (UNCERD), the UN Declaration on the Rights of Indigenous Peoples and the Convention on Biological Diversity, and implement the highest environmental, social, cultural, labour, and health and safety standards.
5. The FCA’s oversight needs to extend beyond the financial services sector to include vigilance over the behaviour of all companies listed on UK-registered investment exchanges. This will require sufficient funding for the FCA to be able to call on the expertise necessary.
6. The UK Government should back strong reporting rules for EU-listed and EU-based unlisted mining and other extractive companies. These rules should be based on current European-level proposals requiring extractive companies to publicly report payments to governments and other financial data on a country-by-country and project-by-project basis. EU rules should be at least as comprehensive as listing requirements for mining companies on the Hong Kong Stock Exchange and those proposed under the US Dodd-Frank Wall Street Reform and Consumer Act.
7. Present regulation of AIM is not sufficiently rigorous to prevent harm and should be improved to ensure that AIM-listed companies fully comply with the human rights, social, cultural, labour and environmental laws, regulations and conventions noted above.
8. The FCA’s governing body needs to include people with expertise not only in financial matters but also in human rights and environmental protection if it is to exercise its function in a competent manner.
9. People and organisations with well-founded concerns about the conduct of UK-listed companies should be able to make their concerns known to the FCA through an accessible and transparent procedure. The FCA should take account of, and respond to, these concerns, in compliance with legal obligations, and respect guidelines concerning meaningful public participation in decision-making.
We would welcome an opportunity to meet with you to discuss our concerns. We look forward to hearing your responses to our recommendations.
Yours sincerely,
Richard Solly, Co-ordinator, London Mining Network.
The following individuals and organizations wish to record their support for this letter:
Andy Higginbottom, Colombia Solidarity Campaign, PO Box 8446, London N17 6NZ.
Cathy Scott, Down to Earth, Greenside Farmhouse, Hallbankgate, Cumbria CA8 2PX.
John Arnold, Ecumenical Council for Corporate Responsibility, PO Box 500, Oxford OX1 1ZL.
Tom Griffiths, Forest Peoples Programme, 1c Fosseway Business Centre, Stratford Road, Moreton-in-Marsh GL56 9NQ.
Liz Hosken, The Gaia Foundation, 6 Heathgate Place, Agincourt Road, London NW3 2NU.
Andy Whitmore, PIPLinks, Finfuture, 225-229 Seven Sisters Road, London N4 2DA.
Kevin Smith, Platform, 7 Horselydown Lane, London SE1 2LN
Alex Scrivener, World Development Movement, 66 Offley Road, London SW9 0LS.