ESB and the Sourcing of Coal

ESB purchases coal from a number of mines on the international market through registered procurement companies, utility trading business units and specialist traders.

To ensure we source coal in an ethical and responsible way on the international market, as well as addressing public concern about operations at such coal sites, we joined Bettercoal in 2014. It is ESB's policy that supplying mines have either been assessed or is in the process of becoming a Bettercoal supplier while we also verify the sourcing mine.

Bettercoal was established in 2012 by a group of major coal buyers, including utilities, rather than the coal mining industry. Its mission is to promote continuous improvement in mining and sourcing coal for the benefit of all the people affected by the industry – including workers and their communities. In effect, it is working towards a globally responsible coal supply chain. More information on Bettercoal can be found here.

In 2018, Bettercoal set up Country Working Groups (CWG) to facilitate a more coordinated approach to the monitoring of Continuous Improvement Plans (CIP), as well as building knowledge and measuring impact on the ground. Colombia and Russia were the first Country Working Groups established with global energy companies also members including ESB, Enel, RWE, Uniper and Vattenfall.

In 2018, Bettercoal assessed Cerrejón in detail across 31 criteria which include human rights, workers’ rights, ethics, community engagement, environment, pollution, biodiversity and compliance with laws and regulations. The assessment was carried out through interviews with key stakeholders including management, staff, community and trade unions.

This assessment found that Cerrejón meets requirements in relation to 15 of the criteria; substantially meets the requirements in relation to a further 12 criteria, and partially meets the requirements on further four. The assessment does not record any misses or fails for any of the criteria.

Based on the assessment the assessor and the mining company agree a Continuous Improvement Plan (CIP) to address the areas identified where the mining operation has not fully met the Bettercoal code. The CIP is independently monitored by the assessor.

Bettercoal's assessors are independent experts who are contracted through a competitive process to conduct the assessments of the mining companies. The entire selection process, as well as the name of the assessors, are available on its website.

A site assessment of Cerrejón was completed in July 2018. ESB is encouraged by Bettercoal’s comments in relation to a positive engagement with the management of Cerrejón.

In the period 2015 to 2018, ESB purchased just over two per cent of the Cerrejón mine’s output. Given that ESB is a very small purchaser of coal, ESB believes that its active membership of Bettercoal provides the best platform to achieve continuous improvement in the mining industry.

ESB is well aware of Colombia’s difficult history which has had severe impacts on its people over many years. We are also aware of issues reported in the media in relation to the Cerrejón mine, many of which are related to Colombia’s history. We are committed to remaining vigilant on all of these issues and will continue to engage with Bettercoal to exert influence and drive improvements. We bring such issues to Bettercoal for their assessment as a matter of course.

Bettercoal, through the Colombia Working Groups, has had frequent communications with Cerrejón and other Colombian producers where the Continuous Improvement Plan (CIP) is discussed along with other issues that are brought to the attention of Bettercoal and its individual members regarding plant operations and its effect on local communities. Representatives from ESB also visit the mine and gain assurance from the people they meet and the practices and procedures which they witness.

Bettercoal, through the Colombia Working Group, has regular communications with mining companies, NGOs and civil society groups to develop a broader view of human rights issues that are brought to the attention of individual members and Bettercoal itself. These issues include water quality for communities, threats against social leaders and fostering dialogue in the peace building process.

Bettercoal's assessment also provided some recommendations on Free, Prior and Informed Consent (FPIC) processes being applied, especially with regards to afro-descendants. Again, progress against the CIP is then assessed by the assessors.

As part of the Site-Assessment, input from third parties is always actively sought by the independent assessors. They usually meet with local government, local communities and local leaders. They will also conduct desktop research as part of the first phase, this includes assessing reports from NGOs and other organisations either on the company and/or region of the assessment. For example, for the Cerrejón assessment in 2018, the following organisations were interviewed as part of the evidence gathering process:

• Civil Society Organisation focused on human rights
• Community representatives
• Governmental institutions and agencies

NGOs and civil society groups are also invited to become members of Bettercoal's Technical Advisory Committee. The Colombian Working Group has identified a number of key stakeholders and third parties and have entered into direct dialogue on a wide range of issues. For example, as part of its work plan, Bettercoal supports the CREER multi-stakeholder dialogue project, named Building Trust in Cesar. This support is part of Bettercoal's commitment and activities to promote continuous improvement in mining and sourcing of coal for the benefit of all people in the area of influence of the industry, including workers and coal mining communities.