Brumadinho disaster: consumers can hold investors accountable
Saturday January 25th is the anniversary of the catastrophic Brumadinho dam collapse that killed 270 people and caused widespread pollution when tailings and waste engulfed local houses, farms and roads. Since then the owner Vale, the same company involved in the 2015 Mariana dam disaster that killed 19 people, has faced only a brief devaluation in the market, and has already recovered its value on the Stock Exchange.
How can you help to avoid tragedies like this and demand that companies act responsibly?
Fair Finance Brazil and Japan have investigated which Brazilian and Japanese banks invest in Vale, so clients like you can pressure them to use their financial clout to influence Vale to operate responsibly.
Most of Vale's shares are held by Litel and Litela Participações, Brazilian companies controlled by Banco do Brasil (Previ), Caixa (Funcef) and Petrobras (Petros) pension funds. BB and Caixa appoint half of the directors of their respective pension funds. Alone, Litela and Litel have almost 13 billion dollars in Vale shares - 19.1% of the company's value.
In Japan the Fair Finance Guide revealed that the country's three largest banks - Mitsubishi UFJ, Mizuho and Sumitomo Mitsui, contributed US $15 billion in financing and almost $650 million in securities underwriting to Vale. They also invested over 38 billion reais in Mitsui & Co, a Japanese multinational that owns 5.6% of Vale's shares. Shigeru Tanaka of Fair Finance Japan and PARC says that “although the responsibility associated with the deadly failure of the dam obviously falls on Vale, the business partners who could have influenced Vale's management and governance must also assume some responsibility.” He notes also that so far the families affected by the disaster in Brumadinho have not been adequately compensated.
Financial institutions and individual investors are in a strong position to demand that Vale and other mining companies adopt and enforce environmental, social and governance (ESG) policies to better prevent new tragedies occurring.
And we as consumers can tell banks that we expect them to.
What can consumers do?
The first step is to demand transparency from banks.
In 2015, the Swedish Fair Finance Guide - in cooperation with Amnesty International - released the “Responsible Investments” report, revealing that the country's top 7 banks invested their clients' money in companies involved in human rights violations - including Shell and Renault.
After the data was published, consumers sent thousands of emails through the Fair Finance Guide website, demanding that banks stop investing in these companies. All 7 banks have taken steps to ensure responsible investments, for example, by employing more experts on environmental, social and governance (ESG) issues and excluding companies that violate human rights from their funded lists. As a result, companies affected by the loss of investments have also started to adopt responsible practices, as was the case with Shell, which incorporated human rights into its policies, systems and business processes and claimed that it improved its spill response and remediation system of oil.
Even if your bank isn't investing in Vale find your local Fair Finance Guide and tell your bank you expect better. We are currently active in 10 countries: Belgium, Brazil, Germany, Indonesia, Japan, Netherlands, Norway ,Sweden, Thailand, and India.
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See more of the Fair Finance Guide Japan report and investigation (Use your handy browser translate option).
