The fourth chapter from the new spotlight report.
CHAPTER 4: CLIMATE CHANGE AND NATURAL RESOURCES
To live and develop, human beings are heavily dependent on the planet’s natural resources, including land, water, forests and minerals. Paradoxically, many of these resources have been gravely endangered and neglected for decades, and their use by local communities has been undermined. Fierce competition for access to these resources, and the maximisation of short-term returns from them, have aggravated the situation.
By using its present production and consumption model to sustain its economic development and growth objectives, Europe is made highly dependent on natural resources from outside, largely from developing countries. At the same time, it continues to be one of the major contributors to climate change, even taking into account the emerging economies’ recent ascent in the carbon emitters’ league. This has major impacts on people in other parts of the world, on their environment, and on their opportunities for development.
In terms of its ecological footprint, Europe requires 2.6 planets to support its current consumption pattern, which is unsustainable from the point of view of global demand or fair sharing within planetary boundaries. As dependence on imports increases, the environmental, climatic, social and human rights-issues relating to extraction and processing have been effectively outsourced from Europe to other countries, where environmental and social safeguards may be less stringent or where the challenges may be those of conflict and fragility. The direct and indirect consequences of this include climate change, human rights violations, conflicts, and corruption. And the heaviest price is paid by poor and vulnerable communities in many developing countries.
Despite commitments to greater “resource efficiency” in the Europe 2020 strategy, today’s policies lack ambition, and they continue to have negative impacts on the use, management and availability of natural resources by local communities in developing countries. In this chapter we will examine some incoherencies between development objectives and EU policies on climate change and natural resources.
SECTION 1: Climate Change
How the EU is impacting people’s lives
One of climate change’s most brutal impacts on humanity is likely to be increased hunger. Rising greenhouse gas emissions are driving up temperatures, shifting rainfall patterns and making extreme weather events more likely, with devastating consequences for food production. The impacts of climate change on global food security can already be seen in the livelihoods of the poorest people, who spend the majority of their income on food. Climate change typically magnifies existing problems of poverty, reduces access to productive resources and services and increases power inequalities, multiplying the risks for poor people.
Adoaga Ousmane is 45 and lives in Louga, a small village in Chad. She spends hours chewing on fruit stones, a common way of trying to kill hunger even though there is no fruit left on them. Adoaga depends on the fertility of the soil and on the weather: “When it rains a lot, the situation is good”, she says. “It’s when the rain doesn’t come or when it comes at the wrong time that problems start. If the rains are good, I ask my friends to lend me seeds. I grow sorghum and other vegetables. This year is really the worst because of the lack of rain.”
In 2012, over 18 million people in the Sahel region of West Africa were affected by a severe food crisis caused by drought, desertification, and consequent rises in food prices. Normally, a food crisis in the Sahel used to come once in a decade, but in the last 10 years three food crises have hit, leaving little time for people to recover before the next one arrives. Rainfall patterns in the region are highly variable, but there has been a significant drying trend since the 1950s. Droughts have become longer, and more intense.
Adoaga used to have meat once a week, on a Monday, but it has become too expensive to buy at the market. Extreme weather events in a single year can bring about price spikes comparable in magnitude to two decades of long-run price rises: in Chad, food prices in 2012 increased by an average of 40% more than in the pre-crisis period. Like many women in the village, Adoaga has had to resort to looking for seeds in anthills, an important sign of serious food insecurity. On foot, it is a five-hour round trip from Louga to the anthills. “When I dig the anthills, I search for the grains of wild grass that the ants have collected and stored away. I collect them and boil them in a pot for a long time until the dirt goes to the bottom and the grains are left floating on top.”
The stark situation of food insecurity in the Sahel is part of a bigger picture in which climate change and extreme weather events are jeopardising the lives of the most vulnerable people around the world. A 2011 report from U
NEP, OCHA and others indicates that temperatures in the Sahel already rose by up to 1.3°C in the 20th century, and it warns that climatic conditions in Africa will continue to worsen as a consequence of climate change. Both of Africa’s staple crops, corn and sorghum, are expected to be badly hit by increasingly severe weather, and it is small-scale farmers who will bear the brunt of these negative impacts.
The EU spends millions of euros on food security and climate change adaptation programmes, and humanitarian crises, in the Sahel. But if the EU does not meet its PCD obligations, and shoulder the responsibility it shares with other polluting States to slash emissions drastically and stop causing runaway climate change, these commitments will not be enough to shield people in the Sahel from increasing climate impacts. Global greenhouse gas emissions continue to climb every year, with the result that the concentration of CO2 in the atmosphere has reached the milestone of 400 parts per million – the highest it has been for at least 800,000 years. Without urgent action, at current growth rates we will exceed – within the next few decades – the 2°C limit for acceptable global warming that world leaders set themselves in 2010.
How the EU can make its policies coherent for people’s development
The EU Climate and Energy Package
The 2009 Climate and Energy Package (CEP) marked the start of a comprehensive EU climate policy by setting three key climate targets for 2020: on greenhouse gas emissions, renewable energy and energy efficiency. At the Copenhagen Summit in 2009, where there was a commitment to mobilise US$ 100 billion annually by 2020, to help developing countries adapt to climate change and develop in low-carbon ways, the EU also agreed to pay its fair share. Among the problems with the 2009 EU climate deal are the fact that the emissions reductions target was inadequate, and that targets for transport fuels resulted in severely negative impacts on climate and people (see the section on biofuels in the food security chapter of this report).
Meanwhile, debates on the EU’s climate-related ambitions for 2030 have started. The outcome matters enormously, as it will determine whether the EU moves towards sustainable resource use (in this case, greenhouse gas emissions) and adopt carbon reduction goals in line with a fair share of the global carbon budget needed to keep global warming below 1.5-2°C. At the end of 2013 the European Commission (EC) will publish a Communication on a vision for climate policies for 2030, and European Heads of State have agreed to discuss their level of ambition in March 2014, in advance of a high-level UN summit later that year, called for by UN Secretary-General Ban Ki-moon to ramp up climate action globally. Discussions on the EU’s contribution to the US$ 100 billion commitments are taking place in parallel, but have so far not yielded the results that are needed to give developing countries confidence that this will be delivered. Both strands will influence the outcome of the international climate agreement to be concluded in Paris at the end of 2015.
The situation today is more complex than in 2008, when the first climate and energy package was negotiated. Today the economic and financial crises dominate, and energy security concerns are at the top of the political agenda. Climate finance is not being scaled up in line with expectations or needs, and the majority of climate finance is being met through aid promised from within the commitment to deliver 0.7% of GNI as aid.
Carbon-heavy industries try to exploit the situation by arguing for a reversal of climate policies. But this is short-sighted and dangerous, and ultimately even against Europe’s own interest. Failing to come up with ambitious goals for 2030 and scaled-up climate finance for developing countries will go against the principle of PCD, reduce Europe’s contribution to tackling climate change, and cause increased suffering and hunger across the globe. It will also reduce ambitions globally, as the EU’s climate commitments set the tone for the international climate ambitions due to be negotiated by 2015. If the EU does not deliver its fair share of emissions reductions and climate finance, it is unlikely that other major economies, which are now being asked to step up action, will deliver theirs. Finally, by not moving fast to a low-carbon economy Europe would be making a serious policy mistake. Tackling the social, economic and environmental crisis together will not only pay major dividends in terms of job creation, health and well-being, as well as weaning ourselves off volatile energy imports (all of which are major concerns of our and future generations): it is also a vital safeguard in order to prevent any negative effects outside of Europe. This is where the EU’s domestic interests meet its development objectives.
To help Adoaga Ousmane in Chad, and others, the world urgently needs to come together to reverse the climate crisis and stop exacerbating hunger and poverty. The EU has to play a key role in making the transition to a more sustainable economy: by delivering the post-2020 climate package on emissions targets, renewable energy (which does not rely on unsustainable first-generation biofuels, and meets social and environmental sustainability criteria that are strong and binding) and energy efficiency, as well as climate finance, in good time for the Conference of Parties in 2015.
CONCORD, together with Climate Action Network Europe (CAN), calls upon the EU to raise the current inadequate 2020 target for greenhouse gas reduction to at least 30%, and to develop a set of ambitious post-2020 policies. These should include:
○ agreement on an ambitious and comprehensive climate and energy package in time for the UN summit in autumn 2014, with a domestic emissions reduct
ion target substantially higher than the low 40% target proposed by the Commission as part of the 2050 Low Carbon Roadmap. The package should also include two further complementary targets: a renewable energy target with a strong, binding social and environmental sustainability framework, and an energy efficiency target;
SECTION 2. Natural resources
How the EU is impacting people’s lives
Máxima Acuña Atalaya, a 42-year-old Quechua woman, lives in the small Andean mountain village of Tragadero Grande in the Cajamarca district in northern Peru. She is a spinner and weaver, the mother of four children, and her husband – Jaime Chaupe Lozano – is a farmer. Their house is the only one left in the community. All the other families sold their houses and land to the Conga mining project, but Máxima resists selling the family’s “chacra” and house. Máxima has become the symbol of the farmers’ movement that struggles protect the El Perol and Azul lakes which form part of a typical – and fragile – highland ecosystem in the Andes: the wetlands.
The Conga mining project is owned by Minera Yanacocha SRL, a joint venture between the American Newmont Mining Corporation and the Peruvian Compañía de Minas Buenaventura. The Conga mine, which consists of two giant pits, 1.5 km wide and 600 m deep, is an extension of the Yanacocha mine, the largest goldmine in Latin America and the second biggest worldwide. Developing the project infrastructure will entail destroying several lakes, which will be drained either to give access to the ore-bearing rock, for use as waste pits, or to provide water for the mine’s operations. The site will affect 32 communities of small farmers.
In 20 years of exploitation the Yanacocha mine produced more the 20 million ounces of gold. In 2011 it produced an astonishing 1.3 million ounces, worth US$ 2 billion. The Conga mine is expected to yield almost 12 million ounces of gold and 3.1 billion pounds of copper over its projected 17-year lifespan. Mining companies in Peru pay 30% tax on their profits, and although a large proportion of this tax is redistributed to the producing communities, the department of Cajamarca remains one of the poorest in Peru, with 56% of the population in living poverty, a number considerably higher than the country’s average (35%).
Many problems have been linked to Yanacocha in the last 20 years, most dramatically a mercury spill in 2000 leading to the poisoning of more than 900 people in a village. Shortly after the incident an internal audit showed 20 serious environmental violations at the mine. In 2004 more than 10,000 people protested against the extension of the Yanacocha mine, and the project was forced to suspend its activities. An environmental impact assessment (EIA) was carried out by Newmont, and in spite of controversies over the quality of the analysis a new Conga project was approved in 2010. An estimated 80% of the population of Cajamarca and the neighbouring communities oppose the new project. At least five people have died during protests in recent years, and several farmers and social leaders have been charged with causing disturbances and are awaiting trial.
Although the Conga project has recently been adapted, local farmers are continuing to protest against it. The local community argues that it has not been adequately informed about the pr
oject’s environmental impact: the consultation process has been confined to just one meeting, and the basic requirements of consultation based on the principles of “free, prior and informed consent” have not been met. On several occasions Máxima and her family have been intimidated and abused by members of the security forces contracted by the company.
This case of Máxima Acuña Atalaya, her community and the Conga mining is just one example of a trend of private sector investments in extraction of natural resources that has devastating impacts on the livelihoods and development potential of local communities. To curb this trend, strengthening corporate social responsibility and accountability will be paramount. With regard to European companies, the EU must ensure that its approaches to reporting requirements on EU-listed companies, and to conflict minerals, are fully coherent with development objectives.
How the EU can make its policies coherent for people’s development
1. EU non-financial reporting requirements
A clear opportunity for the EU to demonstrate greater policy coherence for development (PCD), and to improve its impact on climate change and on the natural resources of developing countries, is presented by the reporting of the non-financial impacts of private companies.
For developing countries that are rich in them, natural resources offer both an opportunity and a challenge. World Bank scenarios anticipate that, until 2025, real prices for most metals and energy resources will remain well above those of the 1990s, and according to the 2013 Africa Progress Report commodity prices have contributed considerably to the recent growth surge of African economies. Resource-rich countries in the South have the potential to boost their development, as their resources are poised to provide large revenue flows that will dramatically change the level of domestic resources available to them and will give governments opportunities to put in place the necessary investment in human development. Unfortunately, this potential is seldom fulfilled, thanks to tax dodging by transnational companies, as shown in this report in the chapter on financing for development.
Good governance of the extractive sector and of revenues is crucial for attaining the anticipated social and economic goals. In 2012, by approving disclosure requirements for all kinds of payments to governments for stock listed, and for all large companies operating in the extractive sector around the world, the European Union sent out a strong message that it is willing to help create the environment needed for better governance in this sector. Improving transparency is a good example of how different EU policy areas can contribute to greater PCD.
In addition to their economic potential, however, extractive industry operations come with significant social and environmental impacts, as in the case of Máxima Acuña Atalaya and her community. Through the work of the United Nations Special Representative for Business and Human Rights from 2005-2011, John Ruggie, the requirement of human rights due diligence for the private sector has been firmly established. Due diligence means that businesses are expected to identify and address the human rights impacts of their operations and supply chains proactively. In practice, however, human rights due diligence analyses and reporting are still often weak or non-existent. On the environmental side, although companies have to submit environmental impact assessments before their projects are approved, these studies often contain serious loopholes, and the actual impact may differ considerably from what is expected or presented. Even more importantly, there are governmental obstacles to putting in place appropriate regulations and enforcing the implementation of measures to mitigate adverse social, human rights and environmental impacts. As a result, conflicts relating to extractive industries are increasing at disturbing speed, and in several countries they are the main source of social discontent and human rights violations. In countries affected by armed conflict, the risk that extractive industries may exacerbate those conflicts is an issue increasingly highlighted. There are tools, however, that companies can use to analyse and mitigate their potentially negative impact on conflict – e.g. consulting local people on the social and economic effects of the exploitation project, fair compensation for forced displacement, and significant returns that improve the local economy and people’s livelihoods.
More action is needed to hold companies to account for the social, human rights, conflict and environmental impacts they produce. In April 2013 the Commission launched a revision of the requirements on companies to report non-financial information, with an emphasis on their social and environmental impacts. This is an opportunity to make significant progress with corporate social responsibility and accountability, bearing in mind th
at at present only 10% of European companies actually disclose information on sustainability aspects, and that these reports are all too often both inconsistent and lacking in information relevant to those affected by the companies’ activities. The Commission’s legislative proposal includes a requirement for companies listed on European stock exchanges, and other big non-listed European enterprises, to publish additional information in their annual reports on (at least) environmental, social and employee-related matters, human rights, anti-corruption and anti-bribery aspects. Within these areas the reporting has to include a description of the companies’ policies, the results of these policies and risk-related aspects.
Nevertheless, the proposal contains serious weaknesses: by taking a “comply or explain” approach, it gives companies excessive flexibility in choosing which aspects to report on and which existing international, European or national framework to use. Such weak requirements are liable to produce the same shortcomings as the sustainability reports currently published on a voluntary basis by a number of companies. Moreover, information will remain oriented primarily to investors’ needs – focusing on the risks to companies rather than those that could affect people or the planet – with a tendency to “green washing”. Another critical loophole in the proposal is the lack of a mechanism for enforcing compliance with the new regulation, or checking the veracity of the information published.
What is needed is information about the risks to local people and ecosystems, and about companies’ long-term strategies for addressing and reducing these risks and contributing to sustainable development. Disclosure has to be robust, and cannot be left to discretion of the companies. More guidance is needed from the Commission on what has to be reported, and how.
Taking into account the (considerable) specific risks that extractive industries cause to the ecosystems, livelihoods and social relations of local communities, and in particular indigenous people, under EU legislation the reporting requirements for this sector should also be specific. Reports should include detailed information on environmental and human rights matters, risk management, policies implemented and results obtained. For the protection of communities like that of Máxima Acuña Atalaya, guidance should be provided on reporting within the extractive sector, and should be based on a combination of specific guidance standards and principles relating to business in highly vulnerable environments such as conflict areas and countries with failing governance.
CONCORD calls on the EU to use the revision of the non-financial reporting directive to ensure:
○ more stringent reporting requirements for companies in general, including country-by-country reporting on tax payments, production volumes and values, and number of employees (for details, see chapter on financing for development);
○ reliable information provided by companies, with mechanisms for independent verification and sanctions;
○ specific, stringent reporting requirements for the extractive industries sector. These requirements should be based on the standards for the environmental impact assessments for mining and oil exploitation, the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.
2.Towards an EU initiative on conflict minerals
The EU also has an opportunity to improve the impact its consumption of minerals has on security issues in developing countries, thereby addressing a current incoherency within EU policies. As a follow-up to its Communication on Trade, Growth and Development the Commission, together with the European External Action Service (EEAS) and other relevant departments, is expected to put forward a legislative proposal before May 2014 addressing the “conflict mineral” issue in developing countries.
For nearly 20 years events on the African continent have turned the spotlight on the link between the exploitation of minerals and the dynamics of conflict (civil wars, armed rebellions, etc.), the case of “blood diamonds” in Sierra Leona and Liberia being one of the most relevant. Today the focus is on the so-called “three T’s” (tin, tantalum and tungsten) and gold illegally traded by armed groups based in eastern Democratic Republic of Congo (DRC). But some evidence suggests that Africa is not the only continent to be concerned about: Latin America (Colombia) and Asia (Myanmar) are also affected by the “conflict minerals” phenomenon. For years, CONCORD and several other European NGOs have advocated for more responsible trade policies on the supply of minerals, targeting in particular the EU Raw Materials Initiative.
In April 2013 the Commission launched a public consultation on a possible EU initiative on the responsible sourcing of minerals originating in conflict-affected and high-risk areas. In CONCORD’s view, the initiative must take the form of legislation (a regulation or directive), so that due diligence in mineral supply chains becomes mandatory for companies. Business strongly opposes the mandatory scenario, arguing that it does not need a legal incentive to act. The Commission remains divided on the mandatory nature of the EU initiative, with opponents fearing negative effects on the security of mineral supplies for EU companies, in the context of competition with emerging economies, such as China, that at the moment do not look too closely into the origin of the minerals. These arguments do not
, however, counteract the EU treaty obligation to ensure PCD, the States’ duty to protect, or the companies’ duty to respect human rights.
While EU legislation on its own cannot, in CONCORD’s view, be regarded as the only way of increasing conflict sensitivity in the extractives sector, if conceived in a well-defined way and implemented properly it will undoubtedly help to break the vicious circle of conflict financing and the illegal enrichment of military elites through mining. Greater transparency in supply chains can prevent companies operating in the EU market from contributing to the war economies around the world and fuelling conflict in cases like that of Máxima Acuña Atalaya and her community.
To this end, CONCORD calls on the Commission to come out with a proposal that:
○ makes the five steps of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas mandatory for companies;
○ applies this obligation to all (EU and non-EU) companies and manufacturers placing minerals or products containing minerals on the EU market;
○ has a broad geographical scope, going beyond Central Africa, based on a comprehensive definition of “conflict and high-risk areas”;
○ applies to materials other than the 3 Ts and gold, expanding the OECD’s above-mentioned five steps to include other minerals from conflict and high-risk areas;
○ provides a sanctions mechanism that enforces reporting requirements on due diligence.
To fulfil its PCD obligation and help Adoag
a in Chad, Maxima Acuña Atalaya in Peru and communities in other developing countries, the EU must adapt its policies on climate and energy, non-financial reporting by European companies and conflict minerals. That is how it can ensure that, in the future, it will not harm local communities in developing countries by impacting negatively on the use, management or availability of their natural resources.
 WWF (2012), Living Planet Report.
 European Commission Communication on a resource-efficient Europe – Flagship initiative under the Europe 2020 Strategy, COM(2011) 21, 26.0.2011.
 ‘Oxfam interview, May 2012. Unpublished.
 UNEP, CILSS, OCHA, IOM, UNU (2011): Livelihood Security. Climate Change, Migration and Conflict in the Sahel.
 UNFCCC webpage: The international response to climate change
 CONCORD’s AidWatch Report (2012): Aid We Can: invest more in global development.
 This contribution is based on the International Federation of the Red Cross and Red Crescent Societies (2012): World Disasters Report 2012 – Focus on forced migration and displacement, edited by Roger Zetter, p. 231.
 Robert E. Moran (2012): The Conga Mine, Peru: Comments on the Environmental Impact Assessment (EIA) and Related Issues. Environmental Defender Law Center.
 United Nations, Department of Economic and Social Affairs (2005): International Workshop on Methodologies Regarding Free Prior and Informed Consent and Indigenous Peoples, 17-19 January 2005, PFII/2005/WS.2/10.
 World Bank, Development Prospects Group (20013): Commodity Price Forecast Update Released: January 15, 2013.
 Africa Progress Panel (2013): Africa Progress report 2013: Equity in Extractives. Stewarding Africa’s natural resources for all.
 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings.
 John Ruggie (2011): Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy”
 Proposal for a Directive amending Council Directives 78/660/EEC and 83/349/EEC as regards disclosure of non-financial and diversity information by certain large companies and groups, COM/2013/0207 final.
 European Commission Communication on Trade, growth and development, Tailoring trade and investment policy for those countries most in need, COM(2012) 22 final, 27.1.2012.
 International Crisis Group (2004): Liberia and Sierra Leone: Rebuilding Failed States. Crisis Group Africa Report n°87, 08.12.2004.
 European Commission Communication on the Raw Materials Initiative “Meeting our critical needs for growth and jobs in Europe”, COM(2008) 699 final, 04.11.2008; and European Commission Communication on commodity markets and raw materials, COM(2011) 25 final, 02.02.2011
 (1) Strengthening of company’s management system (engagement with suppliers, early-warning risk-awareness system), (2) identification and assessment of risks, (3) designing and implementing a strategy to respond to identified risk, (4) undertaking third-party audits, (5) public disclosure of supply-chain due diligence and findings (annual reporting). This standard is internationally accepted and has already been transposed into domestic law (DRC, Rwanda) and a regional mechanism (ICGLR).
 Considering that companies will need time to apply this methodology to other minerals, we are in favour of a process-based approach allowing them to act in good faith and show measurable progress for a limited transitional period.