SEC Alert: Vale S.A. Charged With False ESG Disclosures

On April 28, 2022, the Securities and Exchange Commission (SEC) charged Vale S.A (BVMF: VALE3) with making false and misleading claims about safety in its ESG disclosures. Vale’s actions came to light when its Brumadinho tailing dam collapsed, killing 270 people and causing significant harm to the local community and environment.  

The SEC’s complaint charges Vale with violating antifraud and reporting provisions of the federal securities laws and seeks injunctive relief, disgorgement plus prejudgment interest and civil penalties.

According to the SEC’s complaint, beginning in 2016:

  • Vale’s public Sustainability Reports fraudulently assured investors that it adhered to the “strictest international practices” in evaluating dam safety and that 100 percent of its dams were certified to be in stable condition
  • Vale manipulated multiple dam safety audits 
  • Vale obtained numerous fraudulent stability certificates 

Through its false ESG disclosures, Vale misled local governments, communities and investors about the safety of the Brumadinho tailing dam. The SEC claims Vale knew that the tailing dam did not meet internationally recognized standards for dam safety and concealed the environmental and economic risks posed by its dam.

Melissa Hodgman, Associate Director of the Commission’s Division of Enforcement, stated, “While allegedly concealing the environmental and economic risks posed by its dam, Vale misled investors and raised more than $1 billion in our debt markets while its securities actively traded on the NYSE.” Hodgman went on to state, “Today’s filing shows that we will aggressively protect our markets from wrongdoers, no matter where they are in the world.”


A tailing dam is typically an earth-fill embankment dam built to store waste and toxic byproducts from mining operations for an indefinite period. According to news reports, the Brumadinho tailing dam had not received tailings (the waste products from mining) since 2014. Even still, the collapse released around 12 million cubic meters of iron ore tailings and hit the mine’s administrative area, where hundreds of the mine’s employees were having lunch, unaware of the deadly incident about to occur. In February 2021, the state government reached an agreement with Vale to repair all environmental damage and to pay the communities affected socio-economic and socio-environmental reparations, initially estimated at $7 billion.

Final Thoughts

ESG integration is meant to help investors identify risks and opportunities using ESG factors. An independent third-party verification of Vale’s ESG information may have helped identify the alleged fraud and prevented the deadly event. Investors require financial information to be audited, so when will investors start requiring ESG information to undergo the same level of scrutiny? 

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