Metals & mining sector engagement: Boliden

With the global population growing, increased demand for minerals and metals is expected. The industry is also crucial for successful the decarbonization of the world economy, as metals such as copper, cobalt and lithium are core to energy transitions strategies. But the mining sector has substantial adverse impacts as well.

The mining industry can be considered the backbone of society and contributes significantly to the economy, as many of the products we use every day are made up of metals and other minerals. With the global population growing, increased demand for minerals and metals is expected. The industry is also crucial for successful the decarbonization of the world economy, as metals such as copper, cobalt and lithium are core to energy transitions strategies. But the mining sector has substantial adverse impacts as well.

The mining industry is responsible for 4-7% of human-caused greenhouse gas emissions and contributes significantly to the carbon footprint of our own portfolio. The sector is characterized as high risk in terms of the potential for adverse environmental impact and human rights violations, for instance as a result of recent tailing dam failures in Brazil in both 2015 and 2019. The mining sector also has large biodiversity impacts, as 40 per cent of mining activity occurs in regions where biodiversity loss is high. To minimize the adverse environmental and social risks of the mining sector, investors need to be actively involved with companies and the development of strategies.

PGGM engages with a multitude of companies in the mining sector, in the areas of climate, environmental protection and human rights. One of the companies we engage with is Boliden, a Swedish mining company. Boliden’s track record in terms of environmental and social impact is quite good, but its climate-related targets and strategies have been less ambitious than its competitors. As part of our climate active ownership programme, PGGM started engaging with Boliden in August 2022 and shared high-level expectation that include Paris-aligned emission reduction targets covering all three scopes and third-party independent verification of these targets.

Last year, during a Capital Market Day, Boliden presented an increased scope 1 and 2 emissions reduction target, a 40% reduction of absolute CO2e emissions by 2030, a newly developed scope 3 emission reduction target of 30% by 2030 and two product-level targets: for copper and zinc. In line with our asks, Boliden submitted its targets to be validated by the Science Based Targets Initiative. Late 2023, Boliden announced SBTI had validated its emission reduction targets as in line with a 1.5 °C warming scenario.

During the Capital Markets Day, PGGM visited one of Boliden’s five smelters in Harjavalta, Finland. The site visit included a tour of the feed concentrate storage facilities, a sulphuric acid plant, a copper anode casting facility, their own laboratory and a Q&A session with the management board of Boliden. Boliden is currently on track to reach their 2030 targets, and we will continue engaging with the company to strengthen its alignment with the objectives of the Paris Agreement and to accelerate their decarbonization strategy.

PGGM is convinced that site visits, including meeting a company's management in person and being able to ask them questions directly, is highly valuable and helps us better understand a company and it performance, while companies get important feedback on investor's priorities.