In South America, the mining companies’ dominant interpretation of Corporate Social Responsibility (CSR) in the community has been in terms of charitable donations and support for good causes. In addition, there may be a considerable lag before new extraction projects generate taxes or royalties that governments can spend on social and economic development, especially with green-field projects. Further, today’s oil, gas and mining operations are highly technical and mechanized, creating fewer prospects for employment beyond the construction phase. Together, these factors have an enormous influence on stakeholder expectations and extraction companies’ abilities to acquire and retain their “social license to operate,” yet stakeholders expect the private sector to find innovative solutions to their critical sustainability challenges.
Deloitte, in collaboration with Rio Tinto Alcan, International Finance Corporation (IFC) and CommDev, have tried to develop a specific tool for the extraction industries whose main objective is to provide a methodology for planning investments in sustainable development /community relations and to estimate the financial value of sustainability – for example, community relations programs, programs for community health or ecosystem management in the development of extraction projects. The model estimates the Net Present Value (NPV) provided for a portfolio of investments in sustainable development for a given project. This approach allows the retrieval of data for value creation and value protection to the firm, and thus provides a framework for strategic decision-making. The calculation of the expected NPV is the sum of two calculations: the direct value (creation), which corresponds to the results of the analysis of costs and benefits of direct investment (cost of input decreases or increases in productivity) and indirect value (protection) which corresponds to the potential mitigation of risks related to indirect investment (less downtime periods, etc.).
Although this is still a pilot project, this model will certainly add understanding to the planning and evaluation of the impact of these investments on sustainable development. This model attempts to alleviate the growing social problems attributed to mining projects, primarily because these actions will have an impact on core business practices.