TABLE OF CONTENTS Feb 2012 - 0 comments

A new problem-solving tool for Canadian companies overseas

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By: Marketa D. Evans
2012-02-01

Where has Canadian mining money been going for the past 10 years? From statistics compiled by Natural Resources Canada, we know that the overall portfolio has increased by about $100 billion, to around $130 billion in 2010. Destinations have changed too – dramatically. All of that growth has come from Latin America and Africa. The law firm Norton Rose put out an interesting publication recently, which features a few "risk maps" from the global risk consultancy Maplecroft. A quick glance at those risk maps – on Security and Human Rights or Indigenous Rights for instance – shows a sea of red "high or extreme risk" countries. Many of those are regions where Canadian mining investment has gone.

Managing a project in a developing country is a complex and challenging undertaking. A host country may try hard to attract such investment in order to stimulate economic growth, jobs, and government revenue. And we can expect more of such efforts, as indicated by the endorsement of the African Mining Vision by the African Union in 2009. But large investments also raise the risk of community conflict; communities can feel left out of the big decisions, and consultations may not be adequate. People fear losses to their livelihoods or have concerns about their health. The Office I head up was put in place to put new problem-solving tools in the hands of both communities and companies, in order to address these kinds of issues.

Why would we want to do this? As a recent Harvard University study points out, the costs of corporate/community conflict in the mining industry are extremely high. Aside from reputational, legal and investor relations issues, in a third of the cases studied, the conflict resulted in loss of life. How do people typically try to resolve such issues? Companies might try to petition the host government, or go to the courts. After all, the argument often goes, the government granted the license and should enforce it. Communities might try to launch a media campaign or some kind of social activism at the site. But such processes can be long and costly, and not always satisfactory. Sometimes the issue at hand is not really amenable to resolution through these typical means.

Another potential avenue for tackling some of these types of disputes is through third party honest brokers, such as this Office. We provide a neutral facilitation space for problem-solving between Canadian mining, oil and gas companies and their local communities. It was constructed because the government recognized that unresolved disputes, or community discontent, pose an increasing risk to Canadian companies overseas.

Impressive results have been achieved by similar processes globally and we were fortunate recently to hear firsthand about an institution that has been around for more than 10 years doing this kind of work. Meg Taylor, from the Compliance Advisor Ombudsman office at the World Bank, spent some time in Toronto demonstrating the value such a problem-solving approach might provide. Meg’s office works with private sector companies, across all industries, and host communities, resolving complex conflicts in emerging markets. They now have 100 cases under their belts. From their case history, we learned a couple of key things: most of the disputes they deal with involve socio-economic issues. In fact, for mining, about 90% of the cases deal with water issues in some fashion. The cases are getting increasingly complex, with more stakeholders involved, and the number of cases is increasing. A webcast of one of Meg’s discussions, laying out her approach and results, hosted with the Ryerson CSR Institute, is available at http://ryecast.ryerson.ca/12/watch/1680.aspx

Concerns sometimes arise due to lack of useful information, so one benefit of this type of approach is the ability to provide information and to understand what else the community needs in terms of information. What are their concerns? How can the issues be better understood by everyone? Who needs to be heard? Is there any opportunity to resolve this conflict in a way that might generate some new win/win options? For communities, it is an opportunity to have their voices and concerns heard. And it is critical for companies to listen.

Our office is new – it was opened just two years ago in Toronto – and already we have received a tremendous amount of interest and support.

Given the high costs of corporate/community conflict, we need to make every effort at constructive resolution and conflict prevention. Conflicts do not just go away. They pop up later, in another form. And they can do tremendous damage while they fester away. We invite you to contact us and learn more.

Visit www.csr.gc.ca or email csr-counsellor@international.gc.ca.

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Marketa Evans is the Government of Canada's Extractive Sector CSR Counsellor.  The CSR Counsellor is a special advisor to the Minister of International Trade.  The Counsellor has no policy-making role and does not represent Government of Canada policy positions.
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Caption: Marketa Evans is the Government of Canada's Extractive ...
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