1.
Extractive sector push for strong
climate deal
In the run up to the United Nations’
climate negotiations in Paris, 11
extractive firms came out saying their
boards supported a legally binding global
deal to cap greenhouse gas emissions.
The list includes oil and gas giants
Shell, Gazprom and Statoil and mining
companies Anglo American and BHP
Billiton.
The commitments were revealed in a
survey sent out by the investor-focused
data service CDP to the world’s largest
28 energy firms. Collectively, the group
is responsible for more than a quarter
(26%) of global greenhouse gas emissions. The
results follow an earlier study by CDP which
found that 46 of the world’s largest energy and
materials firms are now pricing their
carbon emissions internally in an effort
to evaluate their climate change risks.
Those pricing carbon at the higher
end of the spectrum include US oil
major ExxonMobil (at $80 per metric
tonne of carbon dioxide equivalent)
and Brazilian miner Vale ($50/tCO2
e).
Post COP21, many energy companies
have expressed frustration at the merely
oblique reference to carbon pricing in
the final agreement.
UK Modern Slavery Act now in force
Following in the footsteps of the US, Brazil and
CONTENTS
PAGE 01
Sector trends
PAGE 03
Data digest
PAGE 04
Activists and campaigning
PAGE 05
Q+A with Charlotte Wolff, Statoil
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LATEST TRENDS
Regulationandcommitments
intheextractivesector
Companies pushing for better rules and improved forward planning
Howtomanage
extractivesector
risks
MANAGEMENT BRIEFING: EXTRACTIVE SECTOR – JANUARY 2016
For full details about Innovation Forum’s sustainable extractives conference on 27th-28th April in London click here
Energy
companies
arefrustrated
atoblique
references
tocarbon
pricing
inCOP21
agreement

2.
MANAGEMENT BRIEFING: EXTRACTIVE SECTOR PAGE 02
Australia, the UK has now approved its
Modern Slavery Act which is designed to
address the crime of slavery, forced labour or
trafficking taking place in the supply chains
of big business, particularly in the extractive
industries and agricultural sector where it is
thought to be most prevalent.
The 2014 Global Slavery Index estimates
there are more than 35 million people living
in some form of slavery globally. According
to the International Labour Organization,
illegal profits from forced labour amount to
more than $150bn a year. In the UK alone,
1,746 cases of slavery were reported in 2013
– 47% more than in 2012.
So, the act demands that all large
businesses prepare a slavery and human
trafficking statement each year that clearly
outlines the steps being taken to ensure
that slavery and human trafficking are not
present in their supply chains or in their
own business.
With the act having taken effect from
October, organisations will have to produce
their first statement by their next reporting
period.
Wayward future projections risk
The non-profit Carbon Tracker Initiative
(CTI), which has been very successful
in exposing the risks associated with the
oil and gas sector’s so-called stranded
assets, has been at it again. This time, it is
challenging the energy sector’s ability to
project the likely future supply and demand
scenario by continuing to rely on past
assumptions.
The organisation’s latest report, Lost
in Transition: How the energy sector is
missing potential demand destruction,
claims that oil and gas company projections
– complemented by energy forecasters
such as the International Energy Agency
(IEA) and the US Energy Industry Agency
(EIA) – have failed to foresee the increasing
demand of renewable energy.
It points to the IEA’s solar capacity
forecasts, where actual installed solar
capacity in 2012 differed by 87.2% from the
IEA’s projections in 2000 and by 41.5% from
its 2007 projections.
While the likes of BP, ExxonMobil,
the EIA and the IEA all project
that global population will rise to
9.7 billion by 2050, CTI argues
that this growth is not entirely
certain. Instead, the report looks
at what would happen if the global
population followed the UN’s
lower growth trajectory and only
increased to 8.3 billion by 2050.
It found that fossil fuel demand
would be 17% less than what the
UN projects, with coal taking the
biggest hit in CTI’s lower population
projection as demand decreases by 25.5%.
FPIC commitments on the rise
The number of mining companies that now
have a policy or commitment to free, prior
and informed consent (FPIC) has nearly
tripled since 2012. That is according to
Oxfam’s 2015 Community Consent Index,
which looked into the policies of 38 oil, gas
and mining companies.
The campaign charity defines FPIC as
the principle that indigenous peoples and
local communities must be adequately
informed in a timely manner about projects
that are likely to affect their lands, free of
coercion and manipulation, and should be
given the opportunity to approve or reject
a project before any activity starts.
However, while 14 mining companies
now have public commitments to FPIC,
none of them offer a commitment to
withdraw from a project if a community
decides to withhold consent and none of
them has made a public commitment to
uphold FPIC for all affected communities,
beyond indigenous peoples.
The index also shows that oil and gas
companies are lagging well behind their
mining counterparts, with not one having
a public FPIC commitment. And the issue
of gender didn’t get a look in either, with
most of the 38 companies having
little or no mention of the importance
of women in any of the publicly
available policy documents or
guidelines.
Water scarcity challenge
solution: it’s at sea
Mining – particularly for precious
metals, diamonds, copper, and
nickel – demands huge amounts
of water. If water is scarce and
becomes unavailable, work
stoppages or mine shutdowns can become
a reality.
In Chile, the world’s biggest miner of
copper, a government-sponsored study
suggests that mining companies will be able
to satisfy half their water needs using ocean
water by 2026.
A strain on fresh water supplies in the
country’s arid north, where most of its
copper mines are located, has seen mining
firms increasingly turn to ocean water to
supply their operations. Chile’s state copper
commission Cochilco claims that seawater
consumption could reach 10.7 cubic metres
per second in 2026 – 4.3 times more than
the expected amount for 2015 because of
the use of seawater in new projects and
expansions of existing plants.
It is also thought that fresh water
consumption by copper producers will
total 10.8 cubic metres per second in 2026
– 19% less than the 2015 forecast, according
to Cochilco.
14mining
companies
havenow
madepublic
commitments
toFPIC
For full details about Innovation Forum’s sustainable extractives conference on 27th-28th April in London click here
ILO: illegal profits from
forced labour are more than $150BNAYEAR

3.
PAGE 03
Global Witness is putting pressure on
the Extractive Industries Transparency
Initiative (EITI), which boasts more than
90 of the world’s biggest oil, gas and mining
companies among its members, to make the
anonymous ownership of oil and mining
assets in a number of African countries a
thing of the past.
In a recent report, Global Witness
claims oil and mining assets worth $4bn
have been allocated to companies whose
ownership is “obscure”. The secrecy of
lucrative deals in Nigeria, Angola, the
Democratic Republic of Congo and the
Republic of Congo to award oil and mining
licences to private organisations could
be depriving states of revenue that might
be spent on health and education, argues
Global Witness.
While EITI has said it agrees that there is
“urgent need for a substantial increase” in the
levels of transparency being shown across the
extractives sector, it has yet to decide whether
it will mandate all countries involved in the
initiative to disclose the true owners of oil,
gas and mining companies or assets.
Amnesty International has turned its
attention to Colombia, which it says is not
doing enough to prioritise the rights of
indigenous people and afro-descendant
communities, and instead focuses purely on
economic interests.
It wants communities to decide how
their land is developed and, in a recent
report, argues that Colombia is doing too
much to support the efforts of companies to
exploit territories for profit.
The backdrop to this latest campaign
is the ongoing peace negotiations between
the government and the guerrilla group
Revolutionary Armed Forces of Colombia
(FARC). Many people that were forced
from their lands during the armed conflict
between the two are now looking to return.
Amnesty International predicts that the
civil war in Colombia has forced around six
million people from their homes since 1985
because of violence. Now, it says that any
peace deal is meaningless unless the rights
of indigenous people are protected.
So, companies are very much on the
charity’s radar right now as it highlights
displacement activity and what it sees as
the unfair granting of licences to mining
firms looking to exploit Colombia’s natural
resources, often without obtaining free,
prior and informed consent.
Despite a 2012 land restitution and
reparation programme being initiated for
some of the victims of the armed conflict,
few of those claiming their lands back have
been able to gain legal ownership over
them, making it easier for companies to
move in, Amnesty International says.
Did Shell abandon its drilling operations in
the Arctic because of mounting opposition
from environmentalists? The energy
business had been pursuing exploration
in the region, convinced of the enormous
hydrocarbon potential there. But, according
to some reports, executives within the
business have been “surprised by the
popular opposition it faced”.
Having made a discovery of oil and gas
in the Alaskan Arctic’s Chukchi Sea, Shell
said that it was not enough to continue
the search for the “foreseeable” future – a
move expected to cost the company around
$4.1bn in lost future earnings.
Some reports suggest that continued
exploration in the Arctic was undermining
the company’s attempts to influence the
debate about how climate change might
be tackled. It had recently been forced to
exit membership of the Prince of Wales’
Corporate Leader Group – a group it helped
to found – because of its drilling activity.
The likes of Greenpeace have been quick
to claim responsibility for Shell’s decision,
saying that it was a “big nod” to the global
opposition to the company’s Arctic drilling
plans, and especially the seven-million-
strong Save the Arctic movement.
RESEARCH
Extractivesectordatadigest
By Oliver Balch
Global Witness uncovers African transparency concerns, FPIC in Colombia and why Shell halted Arctic activity
Asset ownership secrecy depriving
states of revenue
Colombia should prioritise people
over profit
Shell gives up drilling in the Arctic
MANAGEMENT BRIEFING: EXTRACTIVE SECTOR
Greenpeace has been quick to claim
responsibility for Shell’s decision
Oil and mining assets worth $4bn have
been allocated to companies whose
ownership is ‘obscure’
For full details about Innovation Forum’s sustainable extractives conference on 27th-28th April in London click here

4.
PAGE 04
ArcelorMittal to bring coke plant
up to speed
Environmental impacts for the
minerals industry are not just a
coalface phenomenon. The world’s
largest steelmaker, Luxembourg-based
ArcelorMittal, says it is working with state
and federal regulators in the US to bring
its Pittsburgh-area coke plant into line
with environmental laws. ArcelorMittal’s
US subsidiary is currently the subject
of a lawsuit brought by the local green
non-profit PennEnvironment.
The group alleges that ArcelorMittal
USA’s Monessen Coke Plant has clocked
over 226 violations of the Clean Air Act by
emitting excessive volumes of hydrogen
sulphide, sulphur and particulate matter.
Mining companies facing lawsuits in
Africa and Brazil
A group of 32 mining companies in South
Africa is facing legal proceedings for the
industry’s role in workers’ historical health
problems. The class action lawsuit covers
silicosis, tuberculosis and other respiratory
illnesses suffered by as many as 190,000
South African gold mineworkers and 84,000
migrant workers between 1965 and 2005.
In 2014, a coalition of large gold
mining companies, including AngloGold
Ashanti and AngloAmerican South Africa,
proposed establishing a compensation
fund as an alternative to drawn-out legal
proceedings.
There is a broader shift change in
which transnational mining companies are
being increasingly held to account for their
actions in the global south. As a further
example, African Mineral Limited was in
court recently in a million dollar lawsuit
over allegations of violent treatment of
workers and villagers living near a mine in
Sierra Leone.
This of course is surpassed by the
potential damages being sought from BHP
Billiton and Vale – initially $5.2bn – in a
Brazilian government-led suit following the
collapse of a wastewater dam at an iron ore
facility in late 2015 that polluted the Doce
river basin.
Coal hit by divestment campaign
success
Momentum behind the fossil fuel
divestment campaign, one of the highest
profile themes for environmental activists
over the last 12 months, appears to be
growing. The University of California
became the latest American educational
institution to shift $200m from its
endowment and pension fund holdings
(about 10% of its total portfolio) out of coal
and oil sands companies.
The move comes after the California
state legislature ordered the state-controlled
pension funds – CalPERS and CalSTRS – to
divest from coal mining companies. The
University of California is also following
on the coattails of Stanford University
and the University of Maine. In a separate
development, global public relations firm
Edelman has reportedly come out and said
it will no longer work with coal companies
and firms that actively lobby against
prevailing climate science.
Deepwater Horizon still proving costly
for BP
More than half a decade after the Deepwater
Horizon oil spill, BP is still counting the
cost of its major safety breach in the Gulf
of Mexico. The UK energy major recently
agreed to pay $20bn to settle claims arising
from what the US Attorney General Loretta
Lynch called “the worst environmental
disaster in American history”. The funds
will be used by the five affected states –
Texas, Louisiana, Mississippi, Alabama
and Florida – to remediate environmental
damage. The settlement, which is the
largest the US government has ever made
with a single company, still requires court
approval.
ACTIVISTS & CAMPAIGNING
CorporatetargetsunderNGOfire
By Tom Idle
Extractive companies held to account, and growing pressure for fossil fuel divestment
BHP Billiton and Vale facing $5bn lawsuit in Brazil
ArcelorMittal is cleaning up its Monessen facility
MANAGEMENT BRIEFING: EXTRACTIVE SECTOR
For full details about Innovation Forum’s sustainable extractives conference on 27th-28th April in London click here

5.
PAGE 05
successfully implement that and ensure
people’s voices are properly heard?
In preparing our human rights policy, we
engaged dozens of external stakeholders in
our drafting – and FPIC was raised a few
times as an important issue.
Managing local expectations and
conducting and facilitating meaningful
engagement is important – and something
we are committed to in all of our projects
and operations. Ensuring that these
requirements are well understood,
hardwired into our management systems,
and implemented skilfully is something we
invest in.
What’s likely to keep you most busy as we
go into 2016?
We will continue to work on climate-related
issues and linking this work with the UN
Sustainable Development Goals, as well
as evolving our business in line with our
company vision of shaping the future of
energy by transforming the oil and gas
industry, and providing energy for a low
carbon future, while remaining competitive
at all times.★
Putting a price on carbon will
be crucial for Statoil as it prepares
to remain competitive in the
new economy, says Charlotte
Wolff, the company’s vice-president
of sustainability. Interview by
Tom Idle.
What is the number one priority for Statoil
right now?
Climate change. As the world’s population
grows, we need to provide more energy to
more people. Climate science makes it very
clear that we need to transition towards a
low carbon future – and we’re committed to
evolving our business to respond.
How will you do that?
Well, it is a combination of proactive
climate advocacy and engagement as well
as real industrial achievement to reduce
carbon emissions and to increase our
renewables portfolio.
We know that putting a price on carbon
works. Our Norwegian operations have
been subject to a carbon price since 1991,
which has led to the company having only
half the carbon intensity compared to the
industry average.
We have also been publicly advocating
for a legally binding and effective agreement
in Paris at COP21 to limit global warming
below 2C.
We’re committed to reducing our
own emissions too, promoting the use of
natural gas as a suitable source of power
for the transition towards lower carbon,
fully aligned with the recommendations of
the IPCC 5th assessment report. For our
Norwegian operations, we will meet our
2020 carbon emissions reduction goal of
800,000 tonnes CO2
almost four years early
– and we are now committed to increasing
our target by 50% to 1.2 million tonnes
CO2
.
How has your stakeholder base –
particularly investors – changed in terms
of their demand for more disclosure and
transparency on sustainability issues in
recent years?
Investors want to have the confidence that
management can manage risks effectively,
while undertaking profitable business.
Every year we strengthen our sustainability
reporting as well as our disclosures in other
media.
What are the implications of new, stronger
human rights legislation on your business
operations?
We have worked proactively on human
rights issues for years – and we recently
brought our commitment to the fore
through a standalone human rights policy.
We have an internal human rights steering
committee and engage our board of
directors regularly on the topic. For new
legislation, such as the UK Modern Slavery
Act, we inform our practices with the
support of internal and external resources
and stakeholder engagement.
We are currently carrying out human
rights assessments of a select group of
suppliers. And these will be followed up
through improvement plans and the results
are also shared with our corporate executive
committee.
Is there still a gap between the concept
of enabling communities to have free,
prior and informed consent (FPIC) of new
developments and projects – and ways to
Q&A – EXPERT VIEW
ClimatechangetopofagendaforStatoil
Charlotte Wolff is Statoil’s vice-president for sustainability. She will be speaking at Innovation
Forum’s sustainable extractives conference in London on 27th-28th April.
Manage local
expectation and
conduct meaningful
engagement
MANAGEMENT BRIEFING: EXTRACTIVE SECTOR

6.
MANAGEMENT BRIEFING: EXTRACTIVE SECTOR PAGE 06
What’scomingupatInnovationForum
SUPPLY CHAIN RISK
& INNOVATION
Supply Chain Risk
& Innovation is the
new subscription
publication for
business from
Innovation Forum.
It’s packed with
concise, practical
insight into global supply chains. It is
published ten times a year and is required
reading for senior management, buyers
and procurement executives and business
sustainability professionals.
Each issue contains the essential key
trends, information, data, research and
practical case studies, presented in a clear,
analytical format.
UPCOMING EVENTS
Sustainable drinks – strategy and
collaboration in spirits, beer and wine
15th March 2016, London
How business can build resilience
for smallholder farmers
22nd-23rd March 2016, London
How business can tackle deforestation
6th-7th April 2016, Washington, DC
Sustainable apparel forum
19th April 2016, London
Sustainable extractives forum
27th-28th April 2016, London
Withfocuseddebatesandpractical
workingsessionson:
 Doingmorewithless:how to
be more strategic in terms of
sustainability and CSR activities
and yield greater impact from
actions
 Localcontent:what best
practice looks like and advice on
how to reach sustainable local
content agreements
 Thepost-2015development
agenda:how can extractive
companies play a role, individually
and collaboratively, in the
achievement of the SDGs?
 Achievinggoodresource
governance:lessons learned from
successes and failures in efforts to
drive greater transparency
 Localcommunityengagement:
what role can business play in
ensuring community welfare in the
long-term?
 GrowingexpectationsfromBig
Finance:the role of investors in
driving environmental and social
sustainability performance among
extractive companies
Hearfromtheseleading
experts:
Cynthia Carrol, chairman
VedantaResourcesHoldingsLtd
Eddie Rich, deputy head
ExtractiveIndustries
TransparencyInitiative
Christian Spano, global lead for
socio-economic development
AngloAmerican
Janina Gawler, global practice leader,
communities and social performance
RioTinto
Brian Sullivan, executive director
IPIECA
Julie Vallat, head of ethics and
human rights unit
TotalS.A.
John Clarke, CEO
BanroCorporation
Veronica Nyhan Jones, head of advisory
services, infrastructure and natural
resources department
IFC
Stephane Brabant, partner
HerbertSmithFreehills
Nicky Black, head of social performance
DeBeers
SUSTAINABLE EXTRACTIVES FORUM
Howtomanageriskandnavigateuncertainty
27th-28thApril2016
CONTENTS
WHAT'S NEW
01 What you need to know –
all the news and analysis
06 Data digest – all the
best research sifted and
analysed
CORPORATE INSIGHT
09 Innovation of the month –
Toyota’s hydrogen supply
chain
10 Corporate comment –
Carlsberg
11 Corporate targets versus
achievements – Mars
13 Corporate case study –
AkzoNobel’s search for
sustainable suppliers
NGOS AND CAMPAIGNS
15 NGO campaigns – who’s
targeting whom and why
18 Activist Q+A – Greenpeace
SUPPLY CHAINS IN FOCUS
19 Sector snapshot – palm oil
22 Supply chain collaboration
– can it really work?
WHAT'S NEXT
26 Preview of what to look out
for in the coming weeks
Anew online information-
sharing platform set up
by the global chemicals giant
GlaxoSmithKline (GSK) is
expected to result in emissions
reductions within the supply
chain of 25%.
So far, 500
suppliers have
been invited to join
the GSK Supplier
Exchange which they
will be able to use to
share best practice
on energy efficiency
and reducing
environmental
impacts.
The British
business, which sells
healthcare products
like Nicorette,
Sensodyne and
Panadol, spends
more than £2bn a year buying
materials. And more than 40% of
the company’s carbon footprint
comes from the procurement of
those materials.
The company’s head of global
NOVEMBER 2015 // ISSUE 01
risk&innovation
risk innovation
risk innovation
Essential insight
• GSK’snewsupplierinformation
exchangeisexpectedtocut
valuechainemissionsby25%.
• Working conditions remain
the top supply chain priority
for business.
• While human rights is a key
concern for companies, less
than half have measures
in place to deal with it
internally.
• More food and drink
companies are aware of their
climate-related exposure in
the supply chain – but less
than a quarter are disclosing
supply chain emissions.
• Nespressoisgamblingon
newproductioninwar-torn
SouthSudan–whichcouldbe
a$10mcoffeeexportmarket
withintenyears.
• Coca-Cola “on target” to
replenish 100% of the water
it uses in its production and
products by 2020 through
water stewardship projects.
THIS MONTH
Whatyouneedtoknow
environmental sustainability, Matt
Wilson, says that the business
established that 65% of suppliers
did not have an active programme
in place to reduce energy costs
– and no one single supplier
has more than a 1%
impact on GSK’s carbon
footprint, making the
task seem huge.
So, it sees the
Supplier Exchange as
the most efficient way
of helping multiple
suppliers – getting them
to talk to each other via
a Facebook-like online
network and share
information, case studies
and documents that will
enable them to make
investment and business
decisions.
In the past 12 months,
GSK has been running energy
reduction workshops at a
number of its supplier sites and
has identified opportunities to
save 5,000 tonnes of CO2
and
reduce energy costs by 20-30%.
500GSK
suppliers
sharebest
practice
onenergy
efficiency
andreducing
impacts
GSK expects supplier information exchange to cut value
chain emissions by 25%