New rules should be introduced that would increase the cost of capital for companies with controversial environmental and human rights records, according to one of Britain's largest investors.
Steve Waygood, chief of sustainability research and engagement at Aviva Investors, said: "If companies were forced to publish long-term data on the environmental, human rights and health and safety implications of their projects – and investors could vote on these plans at shareholder meetings – it would force businesses to become more responsible."
The comments followed last week's controversial Vedanta shareholder meeting, where the mining giant faced protests by investors and celebrity activists such as Bianca Jagger, Joanna Lumley and Michael Palin. The furore relates to plans for a new bauxite mine in the Orissa region of India.
Aviva Investors owns 0.3pc of Vedanta through tracker funds, but does not invest actively in the company because of ethical concerns. If detailed information is disclosed as part of a sustainable stock exchange initiative, Mr Waygood believes that better managed, more sustainable companies will have a lower cost of capital and find it easier to borrow money.
Conversely, unsustainable companies will have a higher cost of capital and find it harder to do business. It emerged on Friday that the Vedanta bauxite mine could be approved by the Indian government in a matter of weeks after four years of delays. Approval of the mine and the expansion of its Lanjigarh alumina refinery are vital for Vedanta to meet its ambitious expansion targets.
"I've been to the Nyamgiri Hills in Orissa and seen the forces of money and power that Vedanta Resources have arrayed against a people who have occupied their land for thousands of years," Mr Palin said in his blog. "The tribe I visited simply wants to carry on living in the villages that they and their ancestors have always lived in."
About 80m metric tonnes of bauxite has been found one or two metres below the surface of the hill.
The controversy has seen investors such as The Church of England, The Joseph Rowntree Trust and Dutch pension fun PGGM dump stakes in the company in the past few months.
A recent report from Amnesty International alleged the group's activities in Orissa, polluted rivers and damaged crops. The hills are home to 8,000 members of the Dongria Kondh tribe, who have claimed their health has been affected by Vedanta's activities.
However, Anil Agarwal, Vedanta's executive chairman, said: "India has stringent regulations for the approval of mining projects. Lanjigarh has been put through exhaustive scrutiny. Not a blade of grass has been touched at the site. We will commence only after receiving all approvals.
"Vedanta has a long-standing commitment to sustainability, and we believe that businesses will play an increasingly important role in driving sustainable development."
No comments:
Post a Comment