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Mining & Metals Face Growing Ethical Claims – Covalence Basic Resources Sector Report 2009

Press Release | Geneva (Switzerland), 31 August 2009

090831_basic.jpgIt has been another bad year for the Basic Resources sector’s ethical reputation: criticisms have increased and demonstrating the social and environmental value of products remains a though challenge, states Geneva-based Covalence in a report published today.

The Basic Resources sector ranks 17th out of 18 sectors in Covalence EthicalQuote calculated from July 2008 to June 2009. In the last 24 months, the sector has lost nearly half of its past gains, while the overall benchmark doubled.

Criticisms have strongly increased in 2008 and 2009. The recent economic down-turn is certainly an important explanation. Last year downsizing and jobs cuts have weighted heavily on the sector’s ethical performance, more than on the 18 sectors benchmark. Other negative issues last year have been: Legal issues; Water issues | usage, rivers, etc.; Community issues| health, family etc; corporate governance.

The current inflation of negative news naming Basic Resources can also be interpreted in terms of Corporate Social Responsibility (CSR) dialectics. This socially and environmentally exposed sector has always had to face various ethical challenges. Non Governmental Organizations (NGOs) and alliances, local groups and communities are watching it closely. It has therefore been strongly stimulated to develop CSR strategies. Companies’ announcements ands initiatives have generated a mostly positive coverage in years 2005 to 2007.

Now, Basic Resources remains an ethically exposed sector. Critical observers have acknowledged the progresses that were made and have adapted and, for some, renewed their political scope. As companies respond to critics through various commitments, NGOs adapt to this change: recognize progress, consider partnerships, question own conceptions, set up new campaigns. Negative news push companies to generate positive news, which in turn push critics to reformulate their ethical demands, etc.

Basic Resources companies present sensibly less positive news in criteria group Impact of Product compared to the all-sectors benchmark. It is difficult for metal companies to demonstrate the social and environmental end value of their products. The challenge seems even greater for mining companies: what is the utility of gold and diamonds for society? What are their benefits for the environment?

Alcoa and Rio Tinto are clearly the leaders of the sector and are the only companies to reach the top 100 of Covalence cross sectors ranking with Alcoa being member of the top 10. On the 12 months period the best progresses have been accomplished by International Paper and Peabody Energy, while Arcelor Mittal, Impala Platinum, Freeport-McMoRan and Barrick Gold suffered the most.

Major positive issues & keywords registered for the Basic Resources sector in the Jul 2008 – Jun 2009 period were: Climate Change | emissions, energy, etc.; CSR Commitments |Policies, programs and initiatives; Community issues; Health issues.

More information on Covalence Basic Resources Sector Report 2009:

> Extract: Covalence Basic Resources Sector Report 2009

> Press Release (.pdf)

 

About Covalence

Geneva-based Covalence tracks the ethical reputation of multinationals by sourcing online information. We publish ethical rankings and offer reputation management products to clients among companies, investors and institutions, while informing researchers and the media > Covalence in the news.

Covalence’ s ethical quotation system is a reputation index based on quantifying qualitative data, which is classified according to 45 criteria such as Labour standards, Waste management, Product social utility or Human rights policy. It is a barometer of how multinationals are perceived in the ethical field. The system integrates thousands of documents found among media, companies, blogs, NGOs and other sources.

This tool received the Cantonal Sustainable Development Prize (Geneva) in 2004 and prompted Covalence among the finalists of the Social Entrepreneur of the Year 2005 award organised by the Schwab Foundation. Covalence research is also distributed by Reuters, Thomson Financial and Bloomberg.

Covalence is closely monitoring 18 sectors including 550 companies that are classified as the largest market capitalizations in the Dow Jones World Index. Covalence is a limited company that was founded in Geneva in 2001 by six persons with political science and finance backgrounds.

Press contact

Covalence SA Antoine Mach, Direction & Research

Tel: +41 (0)22 800 08 55; antoine.mach@covalence.ch

Sales contact

Covalence SA Marc Rochat, Marketing & Sales

Tel: +41 (0)22 800 08 55; marc.rochat@covalence.ch

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