Chile’s Supreme Court ruled in October that mining giant Goldcorp wasn’t allowed to move forward with its $3.9 billion El Morro gold and copper mine (pictured) until local indigenous groups who oppose the project are better consulted.
Embracing Corporate Social Responsibility (CSR) has become much more than a matter of public relations. Today there are several practical and legal reasons for companies to have a CSR strategy in place.
Less than two months ago, Canadian Minister of International Trade Ed Fast unveiled an “enhanced” strategy to advance the use of CSR by local mining and energy companies. “Enhanced” refers to some modifications that result from a five-year review of an earlier strategy released in 2009.
These changes are serious and James McNally, technical director at Wardell Armstrong International, explains why they matter.
There is no single international body as such, but today the general acceptance of CSR in the mining industry is a big step forward from the situation only a few years ago.
Intergovernmental frameworks have emerged from United Nations (UN) conferences, from organizations such as the International Labour Organization (ILO), the Organization for Economic Co-operation and Development (OECD) and the World Bank.
Frameworks have also been established by financing bodies such as the International Finance Corporation (IFC). The Equator Principles are now subscribed to by over 80 of the world’s major banks. Various aspects of global CSR are also being increasingly managed through campaigning from civil society organisations, and industry associations such as Bettercoal, London Bullion Market Association, World Gold Council, Responsible Jewellery Council, Kimberley Process etc., the list goes on.
My impression is that there is a now a multitude of frameworks, codes and standards delivered through many organizations across the supply chain. Some are legislated, but most are guidelines or voluntary codes. There is often overlap between many of these frameworks and reporting formats often differ with the end result that such sources and frameworks may appear “uncoordinated and generate confusion”. The challenge going forward will be to develop common indicators and reporting formats, so CSR activities can be meaningfully evaluated and compared.
Whilst this may sound like a good idea it would be difficult to set up, organize, manage and police. There remains the issue of compliance and who will monitor the findings. Will this be managed unilaterally or will there be an international approach driven by a common set of standards. Industry self-regulation is important. A model that has been successful is the International Council on Mining and Metals (ICMM), which was founded in 2001 to improve sustainable development performance in the mining and metals industry. Today, ICMM brings together 21 mining and metals companies as well as 35 national and regional mining associations and global commodity associations to address core sustainable development challenges. The objective of ICMM is for the collaboration of industry leaders to catalyze sustainable industry performance. The organization is governed by a Council of the chief executives from their member companies as well as two representatives from member associations.
Extractive industries play an increasing role in their country’s economy but all companies in the extractives sector have a legal, commercial (reputational) and moral obligation to manage their human rights impacts. The environmental and social performance of poorly performing companies also reflects on the reputation of home governments and could indirectly undermine other companies and industry sectors back home.
The concept of a government-backed initiative to manage CSR abroad is being looked at by various nations. In the UK, the Business, Innovation and Skills (BIS) Select Committee has recently published a report to encourage companies to act responsibly and the Committee calls on the UK Government to enable investors to look into and rank mining companies according to factors such as governance ethics, community relations, and the management of climate change. This outlines the concept that to improve the performance and accountability of mining firms, a Social Responsibility Index is proposed, which features extractive companies listing in the UK. This would build on existing schemes or the Government could establish a new index. Such a scheme is working, first-hand, with the SRI index at the Johannesburg Stock Exchange. In short, Governments needs to ensure their countries are as strong on Environmental and Social Governance as they are on Financial.
A rigorous index would help achieve this goal, assist responsible investors and provide an incentive for all extractive companies to conduct themselves in a socially and environmentally responsible way.
