In this report, Swedwatch - at the request of Solidaridad Sweden-América Latina (Latinamerikagrupperna) - has reviewed the investments that the Swedish National Pension Funds have made in multinational companies that extract gold in Peru, Guatemala and Chile. All three companies have been linked to human rights violations and serious environmental problems associated with gold mining in Latin America.
The Swedish National Pension Funds are government bodies that manage the retirement money of the majority of the Swedish population. The Funds invest in thousands of companies around the world and the accumulated capital at the end of 2010 amounted to just over € 100 million (1).
Through investments made by National Pension Funds in a couple of thousand multinational companies, Swedish retirement money is linked to a variety of problem areas around the world. These are companies that, to a lesser or greater degree, can be linked to human rights violations, activities that destroy the environment or corruption. The Funds have been criticized by environmental and human rights organizations, whose recurring argument is that such investments go against the objectives and decisions of Swedish policy.
In this report, Swedwatch - at the request of Solidaridad Sweden-América Latina (Latinamerikagrupperna) - has reviewed the investments that the Swedish National Pension Funds have made in multinational companies that extract gold in Peru, Guatemala and Chile.
The ethical and environmental considerations of the Funds
In 2000, the National Pension Funds received directive from the Swedish government to consider ethical and environmental factors in their management, but "without losing sight of the general objective of high performance." The Funds' interpretation of such instruction is that the companies in which the Funds invest must not violate international conventions ratified by Sweden. Four of the National Pension Funds coordinate work on ethical and environmental issues through a common Ethics Council. The Ethics Council has established, on its own, dialogues with approximately 15 companies that are estimated not to comply with international conventions. The goal of such dialogues is to persuade companies to stop offensive activities, take responsibility for negative consequences, and prevent future violations.
This study examines three mining companies in which the National Pension Funds own shares: Newmont, Barrick Gold and Goldcorp. The National Pension Funds have invested a total of 1341 million crowns in these three companies. In the case of Goldcorp alone, some of the Funds have responded to criticism.
The first example presented in this report is that of the Newmont company and the Yanacocha mine in Peru, a company with evident problems in the areas of the environment and human rights, but which has been totally excluded from the ethical work carried out by the National Funds of Pensions Swedwatch conducted a field study there in August 2011 and found serious social problems and negative environmental impact as a result of mining activities. In addition, the investigator found signs of violence and direct abuses by the Yanacocha company against the local population. The problems have been going on for a long time; Likewise, they have received the attention of various organizations and the media abroad, but not in Sweden. The Swedwatch investigator was not allowed to enter the mine area or meet with company representatives.
Summary on Newmont
The National Pension Funds have invested a total of 465 million Swedish crowns in the US company Newmont Mining, majority owner of Yanacocha, the largest gold mine in Latin America. (2) The field study carried out by Swedwatch at the Yanacocha mine in Peru shows that there are indications that mining extraction has caused serious environmental damage and water shortages. The company's security work, the hiring of private guards, and the agreements with the police are questionable from the perspective of the rule of law. The mining company has repeatedly abused the local population; likewise, much indicates that opponents of the mine continue to be subjected to retaliation and harassment. The mining company plans to expand its extraction activities in the area, thereby increasing the risk of human rights violations. The fact that the mining company has decided to monitor and document Swedwatch's visit, instead of commenting on the information and answering questions, reinforces the image of a company that is not very transparent and reluctant to dialogue with interested parties.
Recommendations to the National Pension Funds regarding the Yanacocha mine and the Newmont Minas Conga project:
- Demand that a new independent study be carried out to find out how the mining operations of Yanacocha and Minas Conga affect water quality and access to it for residents around the mine.
- Demand that the rights of local populations are respected and that they be fairly compensated for the possible negative impact on their livelihoods caused by mining activities in Yanacocha.
- Demand that the company's security work be reviewed, so that it is carried out in accordance with the Voluntary Principles on Security and Human Rights.
- Demand that an independent investigation be carried out on the death threats directed at opponents of the mine, to find out if they can be linked to the security company hired by the mining company.
- Demand that the company respect the right of employees to have acceptable working conditions, as well as the right to participate in unions without suffering retaliation.
- Demand that the company carry out a study on the impact of mining activity on the rights of indigenous peoples and develop a plan to protect these rights in accordance with Convention No. 169 of the International Labor Organization, the Declaration on the Rights of Indigenous Peoples and the company's membership in the International Council on Mining and Metals (ICMM).
- Demand that the company respect the efforts that have been made to create natural reserves in specific areas that must be protected and that are not suitable for the development of mining activities, in order to protect biological diversity.
- Demand that the company increase its transparency and openness.
2. Barrick Gold
The second example of the report deals with the Barrick Gold company and the Pascua-Lama project on the border between Chile and Argentina. There, the mine is in the installation phase and extraction has not yet started, but it has already been found that the installation work has caused the melting of the surrounding glaciers. The mine threatens to cause serious environmental damage and water problems. It is possible that it also implies a violation of the rights of the Diaguitas indigenous peoples, which is being investigated by the Inter-American Commission on Human Rights (IACHR). Barrick Gold has been criticized in the past, notably for the serious human rights violations involving the Porgera mine in Papua New Guinea (3) and, recently, the North Mara mine (4) in Tanzania. Pascua-Lama is an example of a case in which the National Pension Funds have the possibility to influence at a relatively early stage.
Barrick Gold Summary
The National Pension Funds have invested a total of SEK 583 million in the Canadian mining company Barrick Gold, the world's largest mining company. (5) The Pascua-Lama project is important for Chile and Argentina due to the job opportunities it generates in the region. However, the establishment of this huge mine, from its installation phase, has already had a significant impact on the environment and threatens an aquifer resource of great importance - glaciers. There is also the risk that the mine represents a violation of the human rights of the Diaguitas indigenous people. Barrick Gold has caused environmental problems before and is responsible for human rights violations in Papua New Guinea and Tanzania, among other places. The Pascua-Lama project represents one more case in which the company's behavior in the ethical and environmental areas is highly questionable.
Recommendations from the National Pension Funds regarding Barrick Gold's Pascua-Lama project:
- Demand that the company respect the rights of the Diaguitas indigenous people.
- Demand the preparation of a new independent study on the impact of the mine on glaciers, access to water and its quality.
- Demand a new assessment of the total environmental impact of the mine.
The National Pension Funds have repeatedly approached the media and defended their property in Goldcorp and the Marlin mine in Guatemala. The Ethics Council considers that the dialogue with the company is progressing. However, violations of the rights of indigenous peoples continue, as well as problems with contaminated water, violence and intimidation, conflicts over land and the lack of trade union rights. The third example of investments by National Pension Funds in problematic mining companies shows that there are no clear guidelines for conducting a dialogue and that it is difficult to assess the work that National Pension Funds carry out to persuade the companies.
Summary on Goldcorp
The National Pension Funds hold interests totaling SEK 293 million in the Canadian company Goldcorp, which operates the Marlin mine in Guatemala, through the subsidiary Montana Exploradora. (6) The Ethics Council of the National Pension Funds visited the mine in 2008. It was then found that the risk of human rights violations was considerable and a dialogue was established with Goldcorp. The Ethics Council writes in its 2010 annual report that the dialogue is believed to be progressing and that significant progress has been made. Therefore, they choose to continue the dialogue rather than sell their shares. However, new reports of human rights violations at the Marlin mine during 2010 and 2011, make the central questions to be how long it is reasonable to maintain a dialogue with a company and what is required to consider that a dialogue progresses.
Recommendations from the National Pension Funds regarding Goldcorp's Marlin Mine:
- Demand that activities at the Marlin mine be halted until all human rights violations have been thoroughly investigated and resolved.
- Demand that the company respect the local referendums held at the Marlin mine, in accordance with Convention No. 169 of the International Labor Organization and the Declaration on the Rights of Indigenous Peoples, before mining activity continues or increases.
- Demand the development of a new independent study on how the Marlin mine affects available water resources, water quality, the environment, as well as the health of both humans and animals in the area.
- Demand that plans to close the mine are analyzed, and that sufficient resources be allocated to ensure the safe storage of environmentally hazardous mining waste.
- Demand an investigation to clarify how people who have been victims of human rights violations should be compensated, as well as the negative impact on the living conditions of the local population.
4. Criticisms of the Funds
The Swedish National Pension Funds have been regularly criticized for their weak ethical and environmental performance. Currently, the Funds use only a couple thousandths of their administrative expenses for ethical and environmental work. Criticism has been voiced by environmental and human rights organizations, and a recurring argument is that there is disagreement with the decisions and objectives of Swedish policy.
Similarly, criticism has been voiced elsewhere, including in a government investigation and by investigators in the SIRP international research program. The Funds have also been criticized for the United Nations' new principles on business and human rights, in which government authorities are assigned a special guiding role in the defense of human rights.
During the writing of this report, Swedwatch has been in contact with several of the National Pension Funds, the Ethics Council, researchers on responsible investment, and the Swedish Ministries of Finance and Foreign Affairs. Swedwatch's recommendations to the Swedish parliament and government, as well as to the National Pension Funds themselves, are based on the fact that the Funds are Swedish authorities, so it is part of their responsibility as administrators to act in accordance with the interests of Swedish savers. . Through parliament, it has been established that the Funds must carry out credible and sufficiently extensive ethical and environmental work to regain the trust of citizens. This report, as well as other critical voices, shows that the Funds do not achieve these goals.
Swedwatch recommends to the parliament and the government that the requirements for the ethical and environmental work of the Funds are more rigorous and clear. To this end, a committee made up of representatives of relevant organizations must be appointed, whose task will be to specify the responsibility as administrator of the Funds, as well as the guidelines for ethical and environmental considerations. One of the requirements must be that the National Pension Funds must show that their persuasion work is reliable, in order to maintain their investments in companies that contribute to serious violations of international conventions and norms. Current regulations limit ethical and environmental work by emphasizing that it should not negatively affect economic performance. This is also expressed by the Funds themselves, despite the fact that research in this field has shown that responsible companies represent, in many cases, a better investment. However, in some cases, it must be reasonable to dispense with financial return if the alternative is that the pension money for the Swedish people contributes to unsatisfactory situations. A similar ethical priority is being pursued by Swedish county councils and municipalities in public procurement. The management of other types of public resources, such as pensions, should be no different. Swedwatch also recommends that the State set clear objectives and annually evaluate the ethical and environmental work of the Funds. Like the Norwegian Pension Funds, an Ethics Council should be formed that independently evaluates and makes recommendations on the Funds' performance in different cases.
Swedwatch recommends that National Pension Funds develop broader working methods on ethical and environmental issues, taking total holdings as a starting point. Among other things, the Funds should include more companies, integrate social and environmental factors into the investment process, and increase the transparency of guidelines and work processes. The Funds must also develop strategies to resolve situations in which neither local courts nor international organizations verify complaints of anomalies, when there are reliable reports on such anomalies.
With respect to the three companies mentioned in this report, the National Pension Funds must develop action plans to act responsibly as owners in the companies. Clear goals and defined deadlines must be included, as well as concrete measures in case companies do not comply with the requirements. The Funds must render accounts, openly and regularly, on the requirements presented and the development of the persuasion work.
This is a Summary of the Swedwatch sent by the Andean Coordinator of Indigenous Organizations - CAOI - www.minkandina.org
(1) Annex 8 of the government document 2010/11: 130 and on the website of the Seventh National Pension Fund.
(2) Lists of economic participations of the National Pension Funds, on 12/31/2010.
(3) Human Rights Watch 2010, “Gold's costly dividend - the Porgera joint venture”.
(5) Lists of economic participations of the National Pension Funds, on 12/31/2010
(6) Lists of economic participations of the National Pension Funds, on 12/31/2010
Vertical photo: Máxima Acuña and her family tell how they were evicted and mistreated by the Yanacocha mining company, the security company and the police.