For many decades, social performance and community relations in the mining sector were managed off the side of someone’s desk. Companies typically did not have dedicated resources for dealing with “social issues.” At the same time, there were limited requirements of companies and any community relations work that took place was often inspired by management or employees having an interest in philanthropy and community development. Community relations was seen as a soft skill and there were few best practices, trainings or guidance available.
In the early 2000’s leading companies began to professionalize and systematize their efforts. Fast forward almost 20 years and social performance is now seen as business critical. It is a professional discipline similar to health and safety and environmental management. The professionalization of social performance has been influenced by increased regulatory and ﬁnancing requirements as well as greater societal expectations about corporate behaviour.
The industry has recognized the inherent business risk that social issues can present. ‘Licence to Operate’ is the top business risk facing mining and metals for the second year in a row, as reported by EY. EY notes that the landscape is shifting “beyond the narrow focus on social and environmental issues” and that “applying just the social and environmental lenses, seeing it as a soft issue or allocating it to one section of the business will directly threaten your ability to operate,” (Top 10 Business Risks and Opportunities – 2020, EY).
Management systems are a key part of the professionalization of social performance and the push to increase the rigour of company approaches. By the early 2010’s every major mining company had developed a social performance management system. Social performance learned from other disciplines and built management systems around the same core processes and fundamentals used by other functions such as following a plan-do-check-act/adapt cycle.
Elements of a good social performance management system:
- Fit for Purpose. An effective management system meets corporate and community requirements without being too prescriptive. Importantly, it is adaptable and scalable to the local context, which when dealing with social issues, will always be different.
- Integrated. Social performance management systems must align and integrate with other company management systems and the core business – social performance is everyone’s business in the same way that safety performance is everyone’s business.
- Comprehensive. Social performance management systems should cover impact mitigation, stakeholder engagement, and beneﬁt sharing and be aligned with enterprise risk management systems.
- Include assurance. Social performance gets a bad rap for not being ‘measurable’ yet when there is a system in place, there is now something to measure against and deﬁning KPIs should be part of the process. Third-party assurance is increasingly common, often driven by investors, ﬁnanciers, governments, or other external organizations.
- Inclusive of internal and external stakeholders. Information and major strategic decisions should be inclusive of external stakeholders, especially local communities.
- Adaptive to external requirements. Top companies are feeling pressure from standards and expectations frameworks, and companies should ensure their management system helps them respond to those expectations.
Does having a social performance management system guarantee better outcomes?
The emphasis on management systems is based on the idea that if a company has the right process in place, the right outcomes will follow. In part this is in response to the challenge the industry has faced in terms of measuring and demonstrating good social performance outcomes. It also is in response to the pressure from external requirements and from shareholders, lenders, and ﬁnancing bodies who want to feel conﬁdent in a company’s approach to managing licence-to-operate risks.
While the good practices noted above can certainly help a company improve its management system and approach, ultimately there is no guarantee that social challenges will be avoided – particularly when social risks can be so cross-cutting (e.g. the risk of a tailings dam collapse will have massive social implications). However, management systems will help the company become more consistent, avoid making predictable mistakes, and make social performance everyone’s responsibility. This supports an internal paradigm shift that tends to deliver better social outcomes.
We see two big trends when it comes to social performance management systems. First, they will continue to be the core foundation of a company’s social performance approach as expectations and external assurance requirements grow. Companies have responded by increasing the rigour of their approach, which in some ways has created more space for external organizations to expect even more.
As a result, we see a proliferation of standards and frameworks to measure and demonstrate companies’ social performance: from indices like the Dow Jones Sustainability Index to multi-stakeholder efforts like the Initiative for Responsible Mining Assurance. This is on top of industry-led initiatives like the Mining Association of Canada’s Towards Sustainable Mining, ICMM’s Performance Expectations, and the Responsible Gold Mining Principles from the World Gold Council. It’s unclear if the proliferation of standards and frameworks improve outcomes, but it doesn’t seem to be changing anytime soon.
Secondly, just as the mining industry has professionalized its approach to social performance, community, local government, and civil society stakeholders are also improving their approach to tackling the social issues that come along with mining development. The beneﬁts of a management system are not unique to the mining industry and stakeholders dealing with social issues around mining are recognizing they need an equally systematic approach.
Communities are developing internal community protocols for responding to mining projects and NGOs are developing standards and guidance for their operations in mining-affected areas to tackle mining-related risks and opportunities relating to their activities. Communities and NGOs can learn from industry’s experience to improve the processes they employ.
In this ever-changing landscape of growing social risks and expectations, well-integrated and effective management systems can help drive a paradigm shift among all involved stakeholders across the industry, from companies to local partners, that responds to these social changes and prioritizes positive social outcomes.
CAROLYN BURNS is director of operations at NetPositive, a non-profit that works with diverse stakeholders to help local communities see sustained positive outcomes from mining.
JANE CHURCH is a co-founder and director of collaboration with NetPositive.