The Ethical Investor: Buy this kind of mining stock if you love profit … and the environment

You can love the planet – and your mining profits too. That’s the startling message BlackRock and other ESG-focused firms are sending to investors.

You can be a proud tree-hugger and invest in mining too, you know. Picture: Getty Images
You can be a proud tree-hugger and invest in mining too, you know. Picture: Getty Images

Investors who care about the climate should buy mining stocks.

Say what?

That’s the opinion of investment giant BlackRock’s global head of thematic and sector investing Evy Hambro.

It’s a statement that would startle many ethical investors – and it has even more implications in a strong mining nation such as Australia.

Hambro told Bloomberg TV investors could be missing out on the opportunity to profit from the energy transition because of their outdated view on the mining industry.

“If you’re focused on sustainability, if you’re focused on the energy transition, don’t overlook this area. There’s a huge value opportunity.”

Hambro said recent changes in the industry meant that the mindset of most miners had shifted to a focus on reducing carbon emissions in metals production.

Miners these days also had a more disciplined approach to spending than in previous booms, so ethical investors could miss out on a big opportunity by shunning the industry.

“It’s wonderful that we are going towards this future that’s going to be moving towards more of a mechanically-captured energy environment, rather than the hundreds of years we’ve been addicted to fossil fuels,” Hambro said.

He said the metals boom wasn’t about now, but what would happen over the next 10 to 15 years, calling on metals companies to invest in decarbonisation.

“If we’re just simply stopping burning fossil fuels for the production of energy, and continuing to burn them for the production of materials, and we need a lot more materials, then we’re not actually going to solve the challenge that we face,” Hambro said.

Alphinity also endorses ethical mining

The debate over green metals mining has given rise to a more basic question: can investing in any mining companies – gold, iron ore or any metals at all – ever be ethical?

The simple answer is YES, says a report from Alphinity Management.

“Some mining companies produce materials that we believe are not necessary to achieve the United Nations’ sustainable development goals (SDGs), and some mine in a way that is unnecessarily destructive to the environment …,” said a report from Alphinity.

However, the report added that many the commodities that mining produces were essential to raising living standards, as well as creating a more sustainable world.

“We use the SDGs to determine whether particular commodities are really needed to achieve one or more of the goals.

“In our view, mining can be ethical if it produces raw materials that are really needed, as long as the mines are operated in a socially responsible way.

“We will invest in companies only if they meet both criteria,” said Alphinity.