When is handing over a cheque not enough?

The financial, operational and reputational risks associated with poor community relations, environmental infringements, and weak or non-existent CSR programs are well understood by Canadian mining companies operating abroad. Yet,  some Canadian mining companies are seeing their projects put on hold, watching their share prices fall, and making the news for the wrong reasons.

Headlines like those above do not just have a negative impact on the mining companies they refer to; they tarnish the industry as a whole, making it harder for even responsible mining companies to secure and maintain their social and environmental licences to operate.

Canadian mining companies are under scrutiny, not only by sophisticated shareholders and regulators in Canada, but increasingly by local communities, governments and watchdogs in other parts of the world.  Transparency about how we interact with communities and our environments is no longer a nice notion to include in values statements; it has become a reality for mining companies today no matter how remotely located their projects may be.

So why then, with mining legislation embracing clear social and environmental requirements and increasing scrutiny on the industry, are so many companies still falling foul of local communities and regulators?  As an advisor to clients seeking to improve the business value of their social investments we  have  identified three drivers which will help companies not only mitigate risks and change perceptions, but also deliver tangible benefits for all stakeholders.

• Shift the focus from social responsibility to social purpose. Many mining company executives still see social responsibility, and the costs associated with it, as a necessary business expense, and a means to an end, rather than as intrinsic to their purpose.  Once they make a paradigm shift in their thinking and view the very nature of their business as contributing to society then the business of mining becomes something they do for communities and shareholders alike rather than at the expense of communities and for shareholders.  Once this mind shift happens, companies and communities become true partners, rather than adversaries trying to secure the best deal for their constituents.  It is in this space that exciting opportunities emerge, innovation occurs and problems are solved collaboratively.
• Make a good first impression. Even though a mining company may not have been the first explorers on the ground staking, sampling and drilling for a resource, their predecessors have already paved the way for what will either be a positive and healthy relationship with the local communities or one which will be characterised by acrimony and mistrust.  Getting the relationship off on the right foot from the beginning goes a long way to de-risking the project and adding value further down the line, regardless of whether the ultimate intention is to sell or develop the asset. Training and equipping geologists in community relations and budgeting for early stage CSR programs sets the stage for long-term success.
• Remember that results are worth more than investments.  Successful contribution to society is about much more than handing over a cheque.  Real transformation requires real commitment. Finding local partners is a critical component to effecting lasting change. Local partners often have a better understanding of what is needed and they have grassroots connections in the communities.  Mining companies which succeed in achieving and maintaining their social licence know how to build long-term relationships with local people, institutions and governments.  It takes more than money to build these relationships.

Canadian mining companies which establish and maintain credibility with local communities, and those whose names do not appear in negative headlines, understand that what they do actually does have real shared value for all stakeholders. They start early in demonstrating that value.  They are conscious that while making money for shareholders is an important result of doing business, the reason for doing business goes way beyond that.  Good business is about being good for all stakeholders, including local communities and local governments. That’s a good news story.