Negative investor sentiment hits mining offenders

RepRisk has named Alpha Natural Resources, Newmont and Glencore as the world’s most controversial mining companies in its latest research on ESG risks to corporate reputations.

RepRisk says that, though the “extraction industry is traditionally one of the most criticised by various stakeholders for its negative impacts on communities and the environment”, public views of companies based on negative media coverage are directly affecting their revenue generation, access to capital and licences to operate.

The traditional sources of public criticism still trouble the industry. In the past year, mining multinationals have come under fire for polluting water, damaging ecosystems and harming local communities. Poor health and safety standards and occupational fatalities also continue to stain the sector’s image.

RepRisk’s research, based on press and online criticism of a company’s operations and benchmarked against international standards such as the UN Global Compact ten principles, says: “There has been a significant impact on companies’ reputations from negative stakeholder sentiment throughout 2011. This is made obvious by the fines paid by the industry, increasing regulation and the risk of loss of licence to operate.”

The worst offender was judged to be Alpha Natural Resources, almost solely because of its purchase of Massey Energy, whose mountain-top removal mining, alleged pollution, safety problems, poor employment and fraud issues make it one of the world’s most reputationally-damaged companies.

Others in the top ten include BHP Billiton, Rio Tinto and Freeport-McMoRan.