Gaia Amazonas

1. INTRODUCTION
London Mining Network (LMN) is an alliance of 27 human rights, development and
environmental groups concerned about the impacts of the activities of mining
companies listed on the London Stock Exchange (LSE) or financed by Londonbased
institutions.1 In April and September 2011, LMN submitted comments2 to
the UK Treasury’s consultations on the proposed new UK securities regulatory
framework.
The proposed reform includes transference of the functions of the UK Listing
Authority (UKLA) from the Financial Services Authority (FSA) to a new body, the
Financial Conduct Authority (FCA). Based on knowledge of the social,
environmental and human rights impacts of mining around the world, LMN
considers that the proposed new body needs to be equipped with the authority,
expertise, personnel and funding to enable it to exercise vigilance over all UKlisted
companies – not only financial services companies – in a way that has been
lacking in the past. Reform of securities regulation must result in much stricter
oversight, particularly of companies involved in mining and trading in minerals.
Present regulation of both the LSE’s Main Market and its Alternative Investment
Market (AIM) sub-market is not sufficiently rigorous to prevent harm, as shown by
the case studies in this report, and should be upgraded. The current regulatory
system does not adequately operationalise the limited demands on corporate
reporting contained in the Companies Act 2006. For example: findings against
companies of non-compliance with International
Finance Corporation (IFC, a member of the World Bank Group), Organisation for
Economic Co-operation and Development (OECD) and other international
standards, as well as convictions in non-UK courts, should necessarily be
included in corporate reports.
LMN is now publishing this report, including an updated and expanded version of
the comments and case studies submitted to the Treasury in April and September
2011, as an advocacy briefing for the UK Government and other stakeholders to
show the need for very significant reforms of the way the UK regulates listed
companies, with a particular focus on the mining sector.
Recommendations for the proposed new FCA
If the FCA is to function effectively as the UK’s new listing authority, its operational
objectives must include enforcing good conduct on all UK-listed companies. As the
case studies in this report demonstrate, even obedience to UK law has not in the
past been effectively enforced by the UKLA.
1. London-listed companies and their directors must obey the law in the UK and
in the countries where they operate and face appropriate sanctions when they
do not obey the law. This must include compliance with national regulations
concerning biodiversity, ecological and environmental protection.
2. UK-listed companies should be legally required to note in their corporate
reports all findings of non-compliance with IFC and OECD standards, and of UK
and non-UK regulation concerning biodiversity and environmental protection,
as well as convictions in UK and non-UK courts.
3. The FCA should have powers to enforce the corporate reporting
requirements relating to environmental and social impacts contained in section
172 of the Companies Act 2006, with sanctions for failure to comply.
4. The FCA should ensure that UK-listed companies recognise and respect
international human rights and environmental standards to which the UK is a
signatory, including the Universal Declaration of Human Rights, the
International Covenant on Economic, Social and Cultural Rights, the UN
Declaration on the Rights of Indigenous Peoples and the Convention on
Biological Diversity, and implement the highest environmental, social, cultural,
labour, and health and safety standards.3
5. The FCA’s oversight needs to extend beyond the financial services sector to
include vigilance over the behaviour of all companies listed on UK-registered
investment exchanges. This will require sufficient funding for the FCA to be
able to call on the expertise necessary.
6. The UK Government should back strong reporting rules for EU-listed and EUbased
unlisted mining and other extractive companies. These rules should be
based on current European-level proposals requiring extractive companies to
publicly report payments to governments and other financial data on a countryby-
country and project-by- project basis. EU rules should be at least as
comprehensive as listing requirements for mining companies on the Hong Kong
Stock Exchange and those proposed under the US Dodd-Frank Wall Street
Reform and Consumer Act.4
7. Present regulation of AIM is not sufficiently rigorous to prevent harm and
should be improved to ensure that AIM-listed companies fully comply with the
human rights, social, cultural, labour and environmental laws, regulations and
conventions noted above.
8. The FCA’s governing body needs to include people with expertise not only in
financial matters but also in human rights and environmental protection if it is to
exercise its function in a competent manner.
9. People and organisations with well-founded concerns about the conduct of
UK-listed companies should be able to make their concerns known to the FCA
through an accessible and transparent procedure. The FCA should take
account of, and respond to, these concerns, in compliance with legal
obligations, and respect guidelines concerning meaningful public participation
in decision-making.