Ethical Funds received the support of nearly 20% of shareholders for a proposal filed at Barrick’s annual general meeting on Wednesday in Toronto.
After five years of dialogue with company and a site visit to Barrick’s operations in Nevada, Ethical asked that Barrick hire an independent party to assess performance against the Company’s current community engagement and sustainable development guidelines.
In response to the proposal, Barrick has committed to review its existing policies in 2009 as part of its membership obligations in the International Council of Mining and Metals. However, many shareholders believe the core risks associated with on-the-ground performance will not be captured by an industry review of existing policy alone.
“The risk here is the ability of Barrick to maintain its social license to operate,” said Bob Walker, vice president of sustainability for Ethical Funds. “Without an independent review focused on community engagement practices and getting robust feedback from the affected communities, investors cannot properly evaluate the company’s performance.”
“Barrick has good policies in place but is falling behind industry best practices, given that competitors Newmont Gold and Goldcorp Inc. have recently conducted independent reviews of their community engagement policies and performance to address similar risks, at the request of shareholders,” Walker added.
The controversy over Barrick heated up earlier this year when Norway’s state pension fund divested from the gold miner, citing environmental concerns and human rights violations.
“We are active shareholders and we are looking for action from Barrick to address these social issues,” Walker added. “We must own to engage and address risks – Barrick has strong policies; it’s time to see them realized.”
Doug: This result is actually quite strong. Most large blocks of shares are held by investors who are not as familiar with the issue of social licence to operate as they might be with climate risk or executive compensation issues -- issues and proposals that have had time to mature. The substance of the Barrick proposal is relatively new to investos. Note that the rules governing shareholder proposals recognize that it can take time to educate investors on new risks and concerns. A proposal must get at least 3% of the vote in its first year; 6% in its second year; and 10% in its third year to remain eligible for inclusion in the management proxy circular. In this light the result for our proposal at Barrick is very good. Also note that, historically, companies have tended to take steps to address shareholder concerns when proposals reach about 10% investor support. Thanks for the coverage of this story.
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