When is CSR not worth the effort?
Later in this issue you’ll see and hopefully read a new column by Michael Torrance, a lawyer with Norton Rose Fulbright of Toronto, who specializes in Corporate Social Responsibility, or CSR as we all call it.
In his inaugural column, Michael talks about the Government of Canada’s new strategy for the “Extractive Sector,” (that’s us, the mining industry…. “Extractors”) and the consequences mining companies will face if they don’t follow the rules as set out in the government’s new CSR Best Practice Strategy.
Without taking away from Michael’s column, I won’t go into detail about the new Strategy or how the government plans to slap the wrists of those who don’t follow the rules, but I would like to comment on CSR in general and perhaps why some companies have found it frustrating to spend money on CSR and why they’re reluctant to participate.
As we all know, mining takes a lot of promotion and salesmanship when it comes to convincing communities and their inhabitants to accept that the landscape in their backyards is going to change drastically once a mining company moves in.
In fact, it’s safe to say that in most cases, it will be scarred for life because no matter how you look at it, the definition of extract (in part) is to: “Take out by force” and as “Extractors,” that’s what miners do.
They take minerals out of the ground by forcing their way into the earth and as a result, the makeup of the landscape gets altered thanks to the huge machines and crews of miners that invade the site where the ore is buried.
It’s the nature of the business and try as hard as many mining companies do, there’s no getting around the fact that mining is a powerful industry that impacts communities where, and whenever it is permitted to set up shop.
And, as far as CSR is concerned and why I think some mining companies are reluctant to follow the government’s best practice strategies, is based on the Fed’s previous failure to provide guidance after it created an office called: “The Government of Canada’s Extractive Sector CSR Counsel,” complete with a CSR Counsellor as a Special Advisor to the Minister of International Trade.
At first this all sounded well and good because it looked like the mining industry finally had someone in Ottawa to talk with when it came to getting guidance with matters involving Canadian miners working abroad and what they should know about foreign policies and procedures when going after work in foreign countries.
But, like I just mentioned about this CSR office, it’s no wonder it failed because the CSR Counsellor’s job description also contained the words: “The Counsellor has no policy-making role and does not represent Government of Canada policy positions.”
With those restrictions, it’s no wonder the mining industry didn’t bother using the government’s CSR office and why it’s now closed after being in operation for about four years.
Liberal Foreign Affairs Critic John McKay said recently the CSR office was created to mediate conflicts but after opening six cases in four years and not resolving any, it was: “Completely and utterly ineffective and a waste of taxpayers’ money.”
That being said, it gets me back to my earlier point about many mining companies finding it frustrating to spend money on CSR.
As we all know, many communities where mining companies start drilling are in remote areas, particularly in foreign countries where the there’s little or no infrastructure and the local inhabitants have limited personal resources.
In fact, many of these people need almost everything and they often look upon mining companies as ‘saviours’ who bring wealth and a better way of living because they’re often obligated to provide jobs, build houses, schools, and even hospitals as part of a right to mine their land.
It’s a huge expense but as I mentioned earlier, it’s a frustrating one too because of the cost of seeing money being spent on training and facilities for locals only to see them abused or not understood.
A case in point I heard recently involved a mining company coming in and supplying the local community with seeds for planting and a herd of goats but when the seeds were eaten, not planted, and the goats sold, not raised, the company was approached for more.
I know this is an extreme, but you gotta wonder … is CSR worth the effort?
Comments
Brent McNiven
I can appreciate the frustration when well intentioned efforts get eaten, but if you give someone an inappropriate gift, don’t blame the recipient — blame the giver.
The responsibility lies squarely in the hands of management who obviously failed to obtain even the most fundamental understanding of their stakeholders, or their culture, society, needs and requirements. If they had, they would have anticipated the goats fate.
I have been involved with dozens of land access and community agreements in 12 countries from Afghanistan to Venezuela, and the communities and land owners have never been “the problem”. Most agreements were achieved fast and with minimal conflict (and the goats lived).
It is no exaggeration to say that effective CSR initiatives by experienced Junior companies have resulted in 100’s of successful community and landowner access agreements all over Latin America. Many exploration and mining companies have very competent staff who know how to do it right, and repeatedly prove it. For them, IFC compliance will be just business as usual. But of course good news never makes the front page.
To identify appropriate community incentive requires fully understanding the cultural and social environment in their historic context, and then understanding what community capacity development will be necessary to ensure success. SEIA are simple, fast, can be done cheap, and will put you on the right track, but few do them. Instead of using a local expert, an expat geo is expected to find a band aid solution.
Any mining / exploration company that wants to work with a community, must become part of that community, build social capital, and that includes a focused community capacity development program. Throwing them a (inappropriate) bone is just shooting yourself in the foot, one toe at at time. They will take all they can get, then toss you under the bus.
A simple metric that is a proven predictor of success, is if the community does not have the capacity to professionally and adequately manage their part of the project, and the company has not taken steps to develop that capacity, then it will crash sooner or later (and for sure won’t meet IFC requirements).
IFC requirements, but also most countries laws require consultation with an impacted community. This is patently unfair in many cases, when communities we normally work with are often semi-literate, may not have telephone, electricity or internet, have few (none) trained managers or any cash to pay lawyers or consultants, yet are required under local laws to meet as equals with the mining company.
Most mining / exploration companies recognize that unless they can bring the community up to a level where it can participate as equals, then the entire process will fail. While this opens a new can of worms including how to avoid conflict of interest when the company pays / trains a village to negotiate with that same company, it does present a simple benchmark against which to measure success potential (and IFC compliance).
The world has changed. Globalization — the elimination of borders — encouraged the “hit and run” style of short term, fast and agile exploration project. Globalization went into reverse by 2008 and was replaced by Internationalization that encourages FDI — but demands longer term investment, strict local hiring rules, and sharply restricts the ability to import staff (hard to get work visas and stiff taxes).
Many junior companies have adapted and thrived, and became profitable producers.
Few underfunded (or cheap) juniors that depend on generating fast results, can function effectively in the Internationalized world.
The proof is on the BBQ.