Today I got a new job from my BFS leader (Bankable Feasibility Study) in ferronickel project. He asked me to write some important points regarding Corporate Social Responsibility (CSR) aspect. It is pretty new for me, therefore I need to learn the principles first. I am very lucky because the leader gave me a really good example how to develop CSR. He gave me a handbook titled Social Responsibility in the Mining and Metals sectors in Developing Countries.
What is Corporate Social Rensponsibility?
The term “Corporate Social Responsibility” has been used since 1950, however its definition is not clearly defined. The publication in October 2010 of the International Organization for Standardization (ISO) Guidance on Social Responsibility (ISO 26000), furnished an internationally acknowledged definition.
Social responsibility is the responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behavior that:
- contributes to sustainable development, including health and welfare of society
- takes into account the expectations of stakeholders
- is in compliance with applicable law and consistent with international norms of behavior
- is integrated throughout the organization and practiced in its relationships
What is the importance of CSR in mining industry?
Investment in exploration and mining activities in developing countries has increased exponentially in recent years. At the same time, many developing country governments are becoming more exacting in their understanding of the social and environmental impacts of mining and minerals processing and their expectation that companies mitigate this impacts and invest in host communities. Local communities are becoming more vocal too in their demands to participate in the benefits of mineral projects in their neighborhoods, increasing the importance of companies establishing and maintaining their social license to operate.
What is social license?
Unlike other license, social license is an informal license, unwritten social contract, a form of operating acceptance from the local communities given to the company. Communities may seek to block project developments; employees may choose to work for a company that is better corporate citizen. It is possible to obtain legal licenses to operate from national governments but be rejected by neighboring communities, leading to unrest that can render a project unviable. Mineral companies which operate in developing countries should consider this factor in order to ensure sustainable operation.
A socially responsible minerals company will:
- seek to contribute to sustainable development by enhancing social and economic opportunities while taking care to protect the environment
- strive to convert exhaustible mineral resources into sustainable social and economic endowments for the communities and countries whose minerals they develop
- seek to establish environmental benefits that go beyond rehabilitation and enhance the environmental values of the places in which they operate
It sounds theoretical, is not it? Maybe. Actually, there is no exact formula for contributing to sustainable development but there are many opportunities for doing so. Several real implementations are:
- working with local partners to improve soil and water quality in surrounding area
- helping to build healthy communities
CSR and Global Standards
Several commercial banks, such as International Finance Corporation (IFC) and the European Bank for Performance Standards on Social and Environmental Sustainability have created standard that aim to minimize impacts on the environment and affected communities. The effect is that it is increasingly difficult for companies to obtain funding for the project unless they adhere to international standards of good practice.
Does CSR really work?
Yes, it does! IFC has developed a tool called Financial Valuation to quantify the potential benefits that can accrue from investing in social responsible programs. Some examples are:
- The Newmont Ahafo Project in Ghana was able to start construction six months earlier than anticipated because it invested community trust early in the land access negotiation process by embedding specialists in the project team to work alongside the technical experts
- Rio Tinto Alcan Project, a USD 50 million investment in sustainability project returned USD 500 million
I can conclude that CSR is very important. There should be allocation for social responsibility since we can quantify the benefits we earn from investing in the social responsibility.
Social Responsibility in the Mining and Metals sectors in Developing Countries