ESG Enforcement Tracker

In March 2023, the SEC confirmed that publicly traded Brazilian mining company Vale had agreed to make payments totalling US$55.9 million to settle charges relating to allegedly false and misleading disclosures regarding the safety of its dams, prior to the infamous collapse of a dam in 2019 which killed 270 people, caused “immeasurable environmental and social harm”, and led to the loss of more than US$4 billion in market capitalisation.

The SEC’s complaint alleged that, from 2016, Vale manipulated dam safety audits, obtained fraudulent stability certificates, and misled local governments, communities and investors about the safety of the Brumadinho dam through its ESG disclosures.

In addition, the SEC alleged that although Vale knew the Brumadinho dam did not meet internationally recognised standards for dam safety, its public sustainability reports and other filings fraudulently confirmed adherence to the “strictest international practices” in evaluating dam safety, and that 100% of its dams were certified as in stable condition.

The SEC brought charges against Vale in April 2022.

The agreement does not require Vale to admit or deny the settled claims, but subject to approval by the US District Court for the Eastern District of New York, imposes a civil penalty payment of US$25 million, and disgorgement and pre-judgment interest payments totalling US$30.9 million. It will also terminate the SEC’s lawsuit, and permanently restrain and enjoin Vale from violations of the Securities Act of 1933 and the Securities Exchange Act of 1934.

The Associate Director of the SEC’s Division of Enforcement confirmed that the settlement, if approved, would show that “public companies can and should be held accountable for material misrepresentations in their ESG-related disclosures, just as they would for other material misrepresentations”.