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Natural Resource Governance Institute

NRGI

NRGI envisions a world where natural resources enable fair, prosperous and sustainable societies—rather than undermine them.

Lobbying Activity

Meeting with Ditte Juul-Joergensen (Director-General Energy)

27 Aug 2024 · UN Secretary-General’s Panel on Critical Energy Transition Minerals

Meeting with Ditte Juul-Joergensen (Director-General Energy)

21 Jun 2024 · UN Secretary-General’s Panel on Critical Energy Transition Minerals

Response to Postponement of deadlines within the Accounting Directive for the adoption of certain ESRS

15 Dec 2023

NRGI envisions a world where natural resources enable fair, prosperous and sustainable societies, instead of undermining them. Given that Environmental, Social and Governance reporting is essential to this goal we have closely followed the development of the European sustainability reporting standards. While we understand the importance of streamlining reporting obligations and reducing administrative burdens, we are concerned about the recent proposal to delay the adoption of sector-specific standards, particularly for the oil and gas and the mining industries. These industries have several unique characteristics that necessitate sector-specific standards. They are the source of the climate crisis, via fossil fuels; and its solution, through transition minerals. Their good management is essential to the European Green Deal and REPowerEU. They are drivers of growth and prosperity, but they are also associated with land and water pollution, biodiversity loss, threats to human health and livelihoods, corruption, conflict and human rights abuses. These outsized impacts mean that precise comparable information about sustainability impacts and opportunities is needed as soon as possible. Moreover, recent policy developments relating to the Critical Raw Materials Act add further urgency for a sector specific standard on mining. Fast tracked projects under the Act have to demonstrate that they will be implemented sustainably. Delaying the sector specific ESRS may lead to the creation of stopgap measures resulting in a non-harmonized framework, which may jeopardize effective compliance with sustainability criteria in the long run. Overall, delaying these sector-specific standards will reduce clarity for companies, making it harder for them to adapt to the new reporting regime, while also starving investors of the meaningful information they need to make decisions. It will also place an unfair burden on the audit community who will effectively be asked to provide assurance without clear guidance from standards on typical sectoral issues. Investors and banks have been repeatedly calling for capital market regulators to improve and enhance the mandatory reporting framework for Environmental, Social and Governance reporting. We believe that this need remains most urgent for high-impact sectors, including the oil and gas and the mining industries. In line with other civil society organizations, we make the following recommendations for EU policy-makers: -- By the end of 2024 or early 2025 (depending on EFRAGs due process and the EU legislative calendar) the EU Commission must guarantee the adoption of the high impact sector standards that have been already worked on by EFRAG. This is feasible taking into consideration the technical work already produced by EFRAG on Oil and Gas, Mining, Road Transport and Textiles. -- By 2026, all high-impact sectors already identified by EFRAG should be covered. EFRAG has the capacity of delivering these standards if sector-specific work is prioritized again. Since there is a clear market need, a delay in delivering these standards would be based only on a political decision by the EU Commission, rather than for practical reasons. -- The EU Commission must provide a clear mandate for EFRAGs Sustainability Reporting Pillar to prioritize the development of proposals and consultation for the rest of the sector-specific standards over other work which the Commission requested from EFRAG. The standards must be developed as soon as possible, as already from 2024, companies must start applying sector-agnostic reporting requirements which include requirements to report sector-specific information.
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Meeting with Ruud Kempener (Cabinet of Commissioner Kadri Simson)

3 Mar 2023 · Importance of good governance provisions in the upcoming Critical Raw Material Act

Meeting with Justyna Petsch (Cabinet of Commissioner Olivér Várhelyi)

3 Mar 2023 · Proposal for a Critical Raw Materials Act which was scheduled for adoption by the College on March 8th

Meeting with Filip Alexandru Negreanu Arboreanu (Cabinet of Commissioner Adina Vălean)

1 Mar 2023 · Critical Raw Materials Act

Meeting with Hanna Jahns (Cabinet of Commissioner Johannes Hahn), Kyriacos Charalambous (Cabinet of Commissioner Johannes Hahn) and EUChanger

28 Feb 2023 · Critical Raw Materials Act

Meeting with Caroline Boeshertz (Cabinet of Executive Vice-President Valdis Dombrovskis)

21 Feb 2023 · Critical Raw Materials Act

Meeting with Dimitri Lorenzani (Cabinet of Vice-President Maroš Šefčovič) and EUChanger

20 Feb 2023 · Critical raw materials

Meeting with Santina Bertulessi (Cabinet of Commissioner Nicolas Schmit)

20 Feb 2023 · Upcoming EU Critical Raw Materials Act

Response to Modernising the EU’s batteries legislation

1 Mar 2021

The Natural Resource Governance Institute works in mineral-rich countries globally to promote accountability. We welcome the Battery Regulation proposal including its requirement for economic operators to establish due diligence policies in line with international standards for rechargeable industrial and electric vehicles batteries. This law could significantly enhance the supply chain and lives of people in mineral-producing countries. We offer two recommendations to strengthen the proposal and align with best practice on sustainable mining in developing countries. First, we recommend that “corruption” is added to the risk categories in Annex X, point 2. Extractive industries are prone to heavy corruption—the OECD’s Foreign Bribery Report found that 20% of all transnational bribery cases worldwide were in this sector. Some of the world’s highest-profile corruption investigations in recent years involve allegations connected to critical minerals, including in the DRC. Corruption, including bribery, conflicts of interest, misappropriation and other forms, is one of the most pernicious obstacles to supply chain sustainability. Corruption impedes regulation of mining: handing contracts to unscrupulous actors unable to develop resources efficiently, obstructing environmental oversight, fomenting community distrust, and diverting funds away from responsible businesses and public coffers. It undermines human rights, by disrupting vital services and enabling violators to flourish without sanction. Recital 67 notes the importance of “instruments in… the operator’s business structure to fight corruption and bribery.” By excluding corruption from the list in Annex X, however, the proposal does not explicitly require operators to identify or assess corruption risks (per Article 39(3)(a)) or implement a plan to respond to them (39(3)(b)). We recommend that the text of Annex X be adjusted to ensure that corruption risks figure directly into these requirements. Second, we note that the proposal is out of step with evolving global best practice on transparency in mineral supply chains. The proposal would require operators to adopt “standards consistent with… Annex II to the OECD Due Diligence Guidance.” Annex II, in turn, guides companies to “commit to disclose [payments to governments] in accordance with the principles set forth under the Extractive Industry Transparency Initiative.” In the years since the 2016 publication of the OECD’s Annex II, however, the EITI Standard (last updated in 2019) has evolved significantly, in recognition of the importance of publication of information beyond the narrow limits of payments, to include: • Beneficial ownership of companies participating in the mining sector (Requirement 2.5), necessary to reduce the award of contracts to shell companies concealing disqualified or politically-exposed actors. Emerging practice suggests the need to disclose beneficial ownership of supplier companies. • Mineral contracts/licenses (2.4), necessary to support effective oversight of social, environmental and fiscal rules. • Commodity sales values and volumes (4.2), especially important for critical minerals traded in high volumes. The proposal would avoid being outdated from the outset if it obligated economic operators to abide by the requirements of the EITI Standard. More broadly, the proposal does not require economic operators to publicly report on the steps taken to manage supply chain risks or track performance. This is out of step with the EU’s non-financial reporting directive (recital 6) and expected upcoming enhancements to the NFRD, and recommendations of the OECD, which guides companies to integrate “additional information on due diligence for responsible supply chains” into annual reporting. These shortcomings could be addressed by mandating adherence to the OECD’s Supplement on Tin, Tantalum and Tungsten (as could be applied to the minerals listed in Annex X, point 1), in addition to Annex II.
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