Guest Post: Four Ways to Make Mining More Responsible
“Wanting to be socially responsible is different than having to be socially responsible,” says Juan Pablo Duque, CEO of Four Points Mining, a Colombian-British company devoted to the exploitation and exploration of gold and silver in Colombia.
I’ve spent the last two days participating in the Prospectors and Developers Association of Canada’s (PDAC) Annual International Convention, Trade Show and Investors Exchange – the world’s largest annual gathering of the mineral exploration industry. I attended PDAC’s CSR Series and spoke to representatives from mining companies of all sizes.
It is clear that corporations in the resource extraction sector know that their license to operate is contingent on operating responsibly. They are acting accordingly. However, to Mr. Duque’s point, I’m not convinced that being responsible is something they really want to do.
What does responsible mining look like? Centerra Gold, a Toronto-based gold mining company, is a great example of a company with a solid approach to CSR. In 2010 the company produced its first annual corporate responsibility report. The report includes Centerra’s corporate responsibility principles, a scorecard of its achievements, challenges, and targets in four CSR areas (Heath and Safety, Environment, Community, and Governance and Standards), and performance data tracked against the Global Reporting Initiative’s (GRI) indicators and guidelines for a level C report. “We look forward to continuing to expand the scope of our operations while enhancing our reputation for responsible management of social and environmental aspects of our business,” says Stephen Lang, Centerra’s President and Chief Executive Officer in the company’s corporate responsibility report.
The benefits of mining in a socially responsible manner include reduced labor shortages though investing in local education and skills training, more consistent production as a result of a healthier workforce, less likelihood of conflict by building better relationships with local indigenous people and artisanal miners, better access to lower cost services and supplies through regional business development, and faster access to financing because of lower perceived risk by equity markets.
Although mining companies have adopted the principles of corporate social responsibility and are taking positive steps to be more responsible at a local level, many significant challenges remain.
Deloitte’s Tracking the Trends 2012 contains the top 10 trends mining companies may face in the coming year. According to Deloitte, “As mining company activity catches the international spotlight, industry stakeholders find themselves subject to higher levels of activism than ever before.” In addition, mining companies have not developed the right recipe for sustainable social programs. For example, funding the construction of local schools is seen as a valuable social investment, but providing ongoing support for school operations or repairs is not. (In fact, delegates acknowledged that there isn’t a clear idea of what social and environmental sustainability actually looks like.) Improving stakeholder engagement won’t solve the problem of government policies that are inconsistent with the UN’s Guiding Principles on Business and Human Rights. And bribery and corruption remain culturally acceptable practices in many developing countries.
On the one hand, mining companies now have to be responsible. On the other hand, CSR isn’t having enough impact and operating risks are seen to be increasing.
Mr. Duque’s presentation made me think that there’s a new question that should be asked: What would CSR look like for companies that want to be more responsible? Here are four ideas that came out of the conversations I had at PDAC. They build on what’s been accomplished so far and could go a long way to address the challenges the mining industry faces.
1. Mining companies should do things that don’t always make business sense. For example, at one of the CSR sessions at PDAC, we heard from a company that found out from local community leaders that better access to clean water was the community’s highest priority. According to the presenter, the company “didn’t have the financial resources to pay for building a well.” Spending more may not have been in the company’s short-term interests (and may even have resulted in push-back from shareholders). However, it sure would have been the better thing to do in terms of building long term support in the community. Taking action that doesn’t appear to be in the best interests of the business creates a very high level of authenticity and good will, even among the most challenging stakeholders such as advocacy groups.
2. Make mining much more transparent. Most mining operations take place in very remote places. Before the Internet age, this meant that mining companies could operate with relative impunity. Not anymore. We’re in the “age of transparency” and corporations have to be accountable to a degree that was never anticipated. “Stories about mining operations can now be spread worldwide at a moment’s notice,” said Donald Lindsay, CEO of Teck at the last CSR session, CEO Panel: Linking Strategy and Sustainability. Mining companies that are operating responsibly (or are on a track to improving their operations) should share what they’re doing through blogs that are open to employers, advocacy groups, indigenous people, investors, and other stakeholders; give outsiders a window into mining operations through web cams and videos of operations; and ensure that mineral development agreements and CSR performance are accessable to all stakeholders. Volkswagen’s Transparent Factory in Dresden is an inspiring model. The company’s remarkable facility makes the “process of car production transparent to the world, establishing a link between technology, environment and people such as has never been seen before,” according to Volkswagen. We need to see the mining industry’s equivalent of VW’s Transparent Factory.
3. Apply engineering discipline to solving social problems. According to the American Society of Civil Engineers (ASCE), “engineers have a leading role in planning, designing, building and ensuring a sustainable future. Engineers provide the bridge between science and society.” Engineers in mining companies are trained to solve complex problems, many of which are related to social issues such as better access to clean water, a resource that is vital for mining companies and for communities. Engineering is a profession with a social purpose and mining companies have yet to leverage the social value of their own engineers.
4. Acknowledge that mining has a social purpose. Mining companies have a distinct social purpose and, in many cases, are directly responsible for the well-being of indigenous people, often in the absence of local government policies and programs. Participants at PDAC agreed that existing voluntary guidelines related to corporate social responsibility such as GRI and ISO 26000 are important but don’t capture the qualitative outcomes of corporate social investments in education, health, environment, and local culture. Responsible mining companies should develop meaningful social objectives, understand the ways in which social outcomes intersect with and support their business goals, implement a social continuous improvement process, and communicate outcomes in a clear and transparent way.
Mr. Duque also told me that responsible mining means “using operations to transform lives.” That’s more responsibility than mining companies have to take to secure their license to operate. The good news from PDAC is that there are a growing number of companies that want to take responsibility for social change because it’s good for business and it’s the right thing to do.
Mining and social change should be the CSR theme at PDAC next year.
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This post also appeared on the Forbes Corporate Social Responsibility blog and can be viewed here. Distributed with permission of the author.
Paul Klein founded Impakt in 2001 to help corporations become social purpose leaders and is considered a pioneer in the areas of corporate social responsibility.
Paul has helped Fortune 500 companies and other large corporations including BC Hydro, Canada Post, The Co-operators, De Beers, Hain-Celestial, Home Depot Canada, McKesson, Nestlé-Purina, National Bank, Petro-Canada, Pfizer, RONA, Shoppers Drug Mart, Starbucks, sanofi-aventis, and 3M to improve the value of their social purpose programs. Paul has also helped many leading non-profit organizations to build shared value partnerships with corporations.
Paul is a regular contributor to Forbes, has served on the Advisory Council of the Queen’s School of Business, and has been a featured speaker for organizations including the Aboriginal Human Resource Council of Canada, Association of Canadian Advertisers, Conference Board of Canada, Canadian Business and Community Partnership Forum, Canadian Stewardship Conference, and the Sponsorship Marketing Council of Canada.
Paul is regularly featured in the media as a corporate social responsibility source, was included in the Globe and Mail’s 2011 Leading Thinkers Series, and was recognized as one of America’s Top 100 Thought Leaders in Trustworthy Business Behavior.
