Proposed changes to SASB’s Metals & Mining and Coal Operations standards are now available on SASB’s website for review and public comment through March 17, 2021. The exposure drafts and accompanying basis for conclusions are outcomes of the standard-setting project exploring the management of tailings storage facilities in the Extractives sector, which was initiated in December 2019.
How did this project originate?
Since the devastating 2019 tailings dam collapse in Brumadinho, Brazil, investors have increasingly sought standardized, decision-useful disclosure on company management of tailings storage facilities. For example, in 2019, the Investor Mining and Tailings Safety Initiative wrote letters to more than 700 companies seeking information on their tailings facilities. Mining industries have also stepped up in defining best practices for safe operations of these facilities and formed the Global Tailings Review (GTR) group to establish a global standard for such practices. These developments signaled a strong need to re-evaluate the SASB Standards for relevant industries to ensure they provide effective disclosure on this issue.
What has been done thus far?
SASB has conducted an analysis of company disclosure practices, including how they have evolved, and engaged in extensive consultations with both initiatives mentioned above among multiple other tailings experts representing large and small mining companies, investors, and non-governmental organizations involved in responsible mining practices. SASB has also held two Standards Advisory Group engagements on this subject and the staff has explored the issue with the Standards Board during three public board meetings.
What has SASB learned?
We have learned that investors want to see detailed, standardized information on individual tailings storage facilities, because risks can become less apparent when data is aggregated at the enterprise level. The failure of a tailings facility is viewed as a tail risk for many investors—a high-consequence but low-probability event. Thus, investors told us that companies need to account for the probability of such risks and manage them safely in order to secure access to capital and to maintain their social license to operate. As a result, the failure of tailings storage facilities is more than an environmental issue—in the eyes of investors, it is also a social and a governance issue.
What changes has SASB proposed?
Based on SASB’s research and market consultation, the Standards Board has approved the addition of a new disclosure topic, Tailings Storage Facilities Management, to both the Coal Operations and Metals & Mining industry standards. In the hierarchical structure SASB uses to frame its standard-setting work, this topic is mapped to the Governance sustainability dimension and Critical Incident Risk Management general issue category.
The risk profiles of tailings facilities vary from site to site and from jurisdiction to jurisdiction. Consequently, companies indicated that they would like some flexibility associated with the disclosure they provide. Thus, guided by our Conceptual Framework, and informed by the Global Industry Standard on Tailings Management (released by GTR in August of 2020), SASB’s Standards Board has proposed a standardized approach to disclosure in the form of a tailings inventory table, slightly simplified from the one that the Investor Mining and Tailings Safety Initiative previously requested. SASB believes this approach will result in disclosures that are decision-useful, comparable, and representationally faithful. Presented alongside two discussion and analysis metrics, which companies can use to provide important context, SASB believes the inventory table will provide complete and standardized disclosure on the points of highest investor interest. (See the exposure drafts for the table format).
Previously, within the scope of the Waste Management general issue category, the SASB Standards for these industries called for companies to disclose a simple number of facilities they operated and the breakdown by hazard potential of those facilities. Going forward, given the addition of the new Tailings Storage Facilities Management topic, the Standards Board has also proposed reframing the existing Waste Management-related disclosure topics in the Metals & Mining and Coal Operations industry standards to provide more representationally faithful measurements on other waste related issues likely to have material financial implications for industry firms. The proposed metrics are aligned with the Global Reporting Initiative’s GRI 306 Waste Standard.
What is the goal of the public comment period?
SASB seeks public feedback on the proposed changes, including the usefulness and completeness of the proposed tailings inventory table and an open question regarding whether Waste Management issues in the Coal Operations and the Metals & Mining industries should be treated differently. Respondents will find these and other key questions outlined in the document containing the exposure drafts and basis for conclusions.
How can the public provide feedback?
The proposed revisions to the Metals & Mining and Coal Operations Standards, along with the rationale for the changes and questions for the public, are now available on SASB’s website for review and public comment. We encourage you to share your comments, questions, and concerns using the public comments form on the project page or by emailing comments to [email protected]. The 90-day public comment period will remain open through March 17, 2021.
To learn more about proposed revisions and how to provide feedback, register for a webinar on January 19th. You can also check the project’s history and current status by visiting the project page and reviewing recordings of previous board meetings and other relevant materials.
Ekaterina Hardin is a SASB Analyst and Sector Lead – Extractives & Minerals Processing.