The Social Dimension of Sustainable Development and the Mining Industry
Risks and Opportunities
Mining companies can choose from a diverse range of possible activities to reduce negative social impacts or enhance positive social opportunities. These activities carry with them social and other risks and opportunities. This discussion will begin by examining mining industry practices and will then explore how these can lead to risks and opportunities for individuals and communities, and for the industry.
4.1 Types of Practices
The diverse activities of the mining industry can be classified in a range of types (Dunn, 1999):
- beads and trinkets: individuals gifts and donations, usually presented to local leaders;
- grants and donations: direct support for health care, education or other social needs;
- leveraging relationships: encouraging national governments and other interests to increase local health and education services, often with cost-sharing by the mining company;
- training and education: developing the skills and abilities of local people to participate in mining and related activities;
- capacity development: increasing local business, economic and managerial capacity to diversify the economy and reduce dependence on the mineral development;
- employment: assisting in the creation of local jobs, both directly and with suppliers and contractors;
- procurement: procuring local goods and services; and
- partnering: securing equity participation in local projects.
These types of activities serve to highlight the attitude that a mining company can take towards a community and its people. Such an attitude can range from a paternalistic attitude, exemplified by the giving of beads and trinkets, to a partnering attitude, exemplified by working with the community and its people to identify their needs, enhance their lives, respect their culture and traditions, and accept them as participants in decision-making.
Although, through time, it is possible to see a progression from beads and trinkets towards partnering for the industry as a whole, it is not the task of this report to analyze the progression for individual companies. Do companies use different strategies with different cultures? Do companies use different strategies in Canada and overseas? The use of different phases in different areas by a single company would make an interesting study.
4.2 Catalogue of Social Practices in the Canadian Minerals and Metals Industry
During the summer of 2000, in order to begin identifying present social practices and tracking progress towards sustainable development, the Minerals and Metals Sector (MMS) of Natural Resources Canada began the compilation of a Catalogue of Social Practices in the Canadian Minerals and Metals Industry. The information collected for this catalogue has been posted on the Internet to create a repository of information (www.nrcan.gc.ca/mms/sociprac/intro_e.htm).
Eleven mining companies responded to our invitation to contribute information to the catalogue. During the spring/summer of 2001, a second round of requests for information was sent out. The responses of the companies were very diverse and the information was collated into six categories based on the types of practices that were reported. The following is only a sampling of the types of activities that mining companies reported.
Corporate Policies/Codes of Conduct
- Many companies reported on the existence of corporate policies dealing with social practices.
Aboriginal Partnerships
- Involving native and local populations;
- Priority to hiring local and native people;
- Policy for the advancement of Aboriginal peoples;
- Financial contributions to the local heritage centre and local elders;
- Uses traditional knowledge;
- Impact and benefits agreements;
- Facilities for storing and preparing food;
- Fostering joint ventures with local Aboriginal enterprises.
Training, Education and Awards
- Training women;
- Building schools;
- Sponsoring local schools;
- Investing in public and post-secondary education programs;
- Scholarships;
- Apprenticeship programs;
- Contributions to university research projects;
- Making presentations to local schools.
Labour Relations
- Career and financial counselling for employees and families;
- Employee education programs;
- Hiring Aboriginal employment and training officers;
- Fly-in programs;
- Retraining programs;
- Hiring local students in a work experience program;
- Holding mine rescue and first aid training at the mine sites and in the communities;
- Banning alcohol and drugs from the mine site.
Community and Business Development
- Supporting local business;
- Preferential consideration to local and Aboriginal business proposals;
- Community advisory panel;
- Meeting regularly with local leaders;
- Providing environmental monitoring reports to local people;
- Studies and surveys to determine community needs;
- Economic diversification strategies;
- Technology and research and development partnerships.
Community Participation
- Building community centres and health facilities;
- Consultations, tours, community visits and public information sessions;
- Publishing of monthly community updates;
- Reporting to local councils and regulatory agencies;
- Funding for boys and girls clubs;
- Annual donations to the local library and to local community groups and activities.
A critical analysis of the practices of the mining companies and their effectiveness has not been completed for two reasons. First, the intent of the catalogue was to be a repository of information = a snapshot in time of the activities of the mining companies. Second, the catalogue represents only a sample of the activities of mining companies since not all companies responded to the call for information.
Although the range of activities is large, the question becomes one of why the mining industry should get involved in social issues since some of these issues can be viewed as the responsibility of governments. There are risks for the industry in becoming too involved and taking the place of government, or in not being involved enough with the community and facing opposition to a proposed or existing project. There are also opportunities for the industry in establishing a good relationship with a community and its people, which can facilitate operations over the long term.
Risk has a connotation of loss, while opportunity leads to gains. Both risk and loss are evaluated differently by stakeholders, based not on technical studies, but on perceptions, values and preferences. The emphasis is often placed on emotions and on the perceptions of the stakeholders and the industry. It is important to remember that risks and opportunities are not evaluated on the basis on information, but on the basis of the values and views of the world.
4.3 Corporate Social Responsibility
Corporate social responsibility has been defined as the voluntary social and environmental practices of companies that go beyond existing legal obligations. It comprises of all those activities that companies undertake to maximize the benefits of projects while minimizing their impacts, which extend beyond what is required by the laws of the countries where they operate. In this context, the term "social" refers not to social issues, but to societal objectives, such as economic development, social contributions, and environmental protection. Corporate social responsibility has been described as the corporate tool to implement sustainable development.
Voluntary activities, within the realm of corporate social responsibility, are believed to be vital to ensure the competitiveness of industry. A large part of competing and working in a globalized world rests on the reputation of companies, which is based partly on the quality of their products and partly on the activities of those companies outside of production. Being involved with communities and working with the people of nearby settlements can serve to enhance a company's reputation and to facilitate future acquisitions.
This is especially important for the mining industry, which has a reputation as being the cause of serious environmental damage. Furthermore, mines are often located in remote areas where they are the only significant economic activity. The reputation of companies, based on their actions in other areas, is reflected in the idea of the social licence to operate. Countries and settlements are beginning to look at specific companies and deciding whether to give a company a social licence to operate, and mining companies are receiving increased scrutiny around the world.
Mining industries have responded by increasing their voluntary activities to minimize impacts on the environment and have begun to explore ways of maximizing social benefits. This is reflected in the fact that more and more mining companies are adopting codes of conduct and publishing sustainable development reports that look at the company's economic, environmental and social activities. There is no benchmark or standard for corporate social responsibility, but leading companies are attempting to set directions through both practices and reports.
Corporate social responsibility involves activities that are integrated throughout a company and its business strategies. It cannot be an activity that occurs only on one site or only in one country. Corporate social responsibility is not just a series of practices; it is also a culture, an ethic that sees the integration of social, economic and environmental factors in all the activities of a company.
In many cases, there has been a perception that corporate social responsibility is about shifting governmental responsibilities to the private sector. Although this may seem particularly the case in many developing countries, in Canada, corporate social responsibility is about complementing governmental responsibilities and working with governments to enhance the standard of living of people living within the vicinity of mines. For example, in Canada, educational activities would include training for adults in mining, business or finance-related subjects and not in building schools and taking over the educational role of provinces and territories.
In many ways, mining companies will have difficulty implementing any corporate social responsibility practices on their own. Such activities require partnerships between industry, local groups and governments to identify the needs, determine the best methods of maximizing benefits, and deliver results. For mining companies, working with stakeholders can help to improve risk management, enhance access to capital, and protect the social licence to operate (Smalheiser, 2002). W orking with stakeholders can also help companies to anticipate changes in regulations and technology and to enhance opportunities for innovation.
For industry, corporate social responsibility is not altruistic but, rather, a response to shareholder interests that can raise a company's profile and facilitate access to land and financial resources. Consider, for example, that investment in ethical funds in Canada grew from over $100 million in the 1990s to approximately $6 billion in 2000. A genuine commitment to corporate social responsibility also leads to better motivation and social satisfaction on the part of employees and serves to attract young people to the industry. Industry can contribute to better health services for communities, higher educational and training levels, and a clean environment that in turn means healthier and more productive employees.
In many ways, social responsibility is about managing risk. M ining companies are engaged in corporate social responsibility to enhance their chances of economic success. There are risks in being involved with local settlements, but there are greater risks in ignoring the environmental and social impacts of mining. A company's profile, based in part on its social and environmental practices, has a direct bearing on its ability to raise equity and debt capital (Smalheiser, 2002). In this era of globalization, failure to demonstrate corporate social responsibility practices may be a greater financial risk than spending the money on maximizing benefits and minimizing negative impacts.
For industry, there is also the risk of free riders = companies who depend on others to do the "good work" and then ride on the coattails of the industry's reputation. While standards and guidelines can provide a framework for identifying free riders, we must remember that every mine is different and every community has different needs.
This paper examines only one part of corporate social responsibility, namely that which deals with social practices. Yet corporate social responsibility represents the voluntary decision by corporations to increase their positive benefits to society, countries, communities and people. It is a sustainable development tool that has the potential to be a constructive, proactive force in local and world affairs.
4.4 The Role of Social Concerns in the Evolution of Industry Practices
Canadian mining companies are world leaders in mineral exploration and leading suppliers of capital to the international mining industry (The North-South Institute, 1998). Mining companies have been dealing with environmental concerns and developing technical expertise and solutions to environmental difficulties. However, on both the international and the national scenes, Canadian mining companies are facing challenges and demands from people and communities asking to be involved in mineral development decision-making and to have their concerns dealt with. Traditionally, these concerns centred on the environmental impacts of mining activities, but additional concerns related to impacts on individuals, families, culture, traditional lifestyles and communities are surfacing.
There are a variety of players and stakeholders who are asking the mining industry to deal with perceived risks. Labour unions have been active in asking for health and safety measures to be put in place at mine sites. Non-governmental organizations have been active on a variety of fronts, including the environmental agenda, human rights issues, community involvement and participation, and concerns related to the impact of mining on individuals and families. Communities are also active participants in the discussion, asking for participation in decision-making.
In all of these cases, the industry is dealing with the risks that stakeholders perceive in a mining operation. These perceived risks are varied and the list is long. They include possible environmental degradation, loss of access to resources, health issues for workers and the people living in the vicinity of the operation, safety issues at the mine site and in the surrounding area, increased access to the area by outsiders, an increase in the number of strangers in the area, increased crime and prostitution, increased substance abuse, loss of land or land tenure, uneven distribution of benefits, destruction of religious or cultural sites, disintegration of local culture, loss of traditional knowledge, changes in values and value systems, unequal participation in decision-making, and decision-making that does not take the values and culture of people into consideration.
Many stakeholders and communities also recognize that a mining operation can bring opportunities to an area and the people who live there. Increased employment, better and higher education for the children, economic diversification, and community capacity-building are important opportunities. The difficulty for stakeholders and communities then becomes to maximize the opportunities, minimize the risks and, where possible, turn the risks into further opportunities. This requires information, knowledge and participation through access to decision-making.
Failure to meet the expectations of stakeholders, communities and non-governmental organizations carries a risk for the mining industry. It can trigger opposition to a project leading to costly delays and it can lead to difficulty in accessing project financing, decreased share prices, and even erode management credibility (Dunn, 1999). As communities, individuals and organizations become more proactive, they define their needs and concerns, expect to be recognized and included in decision-making, and can play a role in determining which companies have access to territory and resources.
A progressive image of being environmentally and socially responsible can create opportunities and can give a mining company a competitive advantage and access to potential resources. Dealing with increased social concerns and a multitude of stakeholders is not easy and involves the risk of balancing the requests and concerns of varied stakeholders, but it can lead to a more efficient operation, integrated within the region, and an image for a company that creates opportunities.
Modern communications systems make it possible for individuals and communities to access information and to open dialogues with environmental groups, international organizations and other communities. This means that any confrontation between individuals or communities and mining companies can quickly become known on a wide scale. Confrontations can lead to opposition to a project, which can be the source of delays or even abandonment of a project. The result of such opposition is often a negative image for the company involved and for the industry as a whole.
Although modern communications present a risk to the industry, they can also present an opportunity. It is possible for the industry to communicate its successes and for individuals, communities and nongovernmental groups to communicate positive interactions with industry and how they were achieved.
As companies respond to specific local social challenges, new practices are being developed that will result in the identification of leading practices and companies. The recognition of leading companies and practices can create an upward pressure on all companies. Such upward pressure can lead to the development of standards of social behaviour. At present, the mining industry is using the concept of leading practices only in the environmental field, but the pressure being exerted by communities will make it necessary in the social dimension of sustainable development. There is an opportunity for companies to share experiences and learn from others.
The mining industry is finding it necessary to demonstrate social responsibility in order to have access to resources. Social activities need to be seen not as costs, but as investments in the social structure and in the mining activity, and as opportunities to assist individuals and communities and develop a positive relationship with the stakeholders of an area. Investments in the social aspects can yield long-term competitiveness, a better image, and easier access to resources and a healthy social system, thus ensuring the sustainability of the mining activity.
4.5 Social Tools and Opportunities
There are a variety of tools that can be used to estimate the risks and opportunities, minimize the risks, and maximize the opportunities of the social dimension of sustainable development. The following discussion is a brief synthesis of some of the most well-known tools available.
Evaluating the social implications of a specific project and determining the best course of action are usually accomplished independently for each situation. Social impact assessment is being used in many industries to determine the possible social impacts of development, minimize risk and identify the best methods to mitigate negative impacts and maximize social opportunities. Social impact assessments evaluate the social, cultural and socio-economic impacts of a project. Adequate social and cultural data are often not easily accessible, which can result in a social impact assessment biased towards economic indicators. It is important to take the time to collect cultural and social data when conducting a proper social impact assessment (Joyce and MacFarlane, 2001).
Following a social impact assessment, a mining company can prepare a vision, a policy and a framework for implementation. A social issues management plan is an instrument used to oversee the implementation of a social policy. It can include specific activities to enhance the social life of the community, the partnerships needed to take the greatest advantage of opportunities, the mitigation measures needed to reduce negative impacts, mechanisms for the resolution of conflicts, and methods of measuring and monitoring the impacts and the activities related to them. The monitoring and reporting of possible impacts and opportunities is an important tool in communicating with stakeholders and in determining progress.
The field of social impact mitigation and enhancement of opportunities is open to many innovative practices. Partnerships with communities, governments and non-governmental organizations offer the possibility of dealing with difficult issues in a manner that respects the culture and values of a community while ensuring capacity building and sustainability. The range of possible partnerships is restricted only by the imagination and leads to many opportunities to minimize risks and impacts.
As mining companies begin to develop internal policies to deal with social issues, the leaders in the field may want to go farther. A social code of practice could be developed for the mining industry or a certification scheme could be established. An environmental code of practice has been developed by The Mining A ssociation of Canada. Social codes of practice could be added to environmental codes to ensure that mining developments are in fact sustainable for present and future generations.
The development of a code of social practice would rest first on the examples of the present and past practices of the mining industry. A compilation of present practices, such as NRCan's Catalogue of Social Practices in the Minerals and Metals Industry, can assist in the identification of leading practices, an essential step in crafting an effective code of conduct. Leading practices can serve as examples. Much work on social issues is presently being done by the mining industry in developing countries, and some of this work could be imported into Canada and adapted to the Canadian context. In the sam e vein, the work that some mining companies are doing with Aboriginal communities in Canada provides examples of leading practices that could be exported to mining companies working in other parts of the world.
Impacts and benefits agreements (IBAs) are becoming an important social tool for mining companies working on or near Aboriginal lands. IBAs are negotiated between the company and Aboriginal groups and cover such issues as job opportunities, education and training, preferential hiring programs, financial transfer payments, royalties, tax payments, new business development, local purchases or goods and services, anti-discrimination programs, and compensation. Through IBAs, Aboriginal peoples and communities try to minimize risks and maximize opportunities.
Indicators of the social dimension of sustainable development integrated into a system of indicators to report on all the dimensions of sustainable development can be effective tools for measuring and reporting. Social issues are intimately related to environmental and economic issues. The development of the economic base of a region so that it can be sustainable during and after mineral development is a part of both the economic and social dimensions of sustainable development. Protection of the environment to ensure both the health of the human population and of wildlife is a necessity for the sustainability of the social fabric of any remote community. An integrated system of sustainable development indicators could be a useful tool for both the industry and stakeholders in determining and measuring risks, opportunities, progress, and leading practices.
4.6 Time as an Element of Risks and Opportunities
Sustainable development contains a temporal dimension within its definition, concept and application. Inter-generational equity, or ensuring that development is to the advantage of both present and future generations, is an important component of sustainable development, and yet a difficult one to integrate and apply.
Mineral resources are finite in space and time. Once a resource is extracted, it is gone and will not renew itself for future generations. The sustainability of a mining development is thus not found in the resource itself, but in the long-term sustainability of the region. The development of m ineral resources can help to expand the economic opportunities of the people of the region and make them economically and socially sustainable over time. The benefits from mining create wealth and this creation of wealth for the local and regional economy can be passed along to future generations. Furthermore, the materials that are extracted, refined and transformed into useful products provide an immediate benefit to society by providing materials for use today and, if durable, through recycling, for future generations.
Sustainable development thus requires that the development of a resource include consideration of how it can affect the social fabric and the social and economic capacities of communities and a region. This is neither a simple nor an easy task. There are questions of the needs that have to be addressed, of which players should address these needs, of the points in time when change needs to be effected, and of the responsibility of the industry in addressing the needs and effecting change.
Acting within the time dimension of sustainable development to ensure strong communities and regions carries a risk for communities and for the industry. There is a possibility that the region will come to depend exclusively on a mining development and find itself deficient in social and economic resources once the mining development has run its course. There is also the possibility that, in isolated regions, the industry can find itself pressed into a role that it believes governments should perform.
There are also temporal opportunities for individuals, communities and industry. For individuals, ensuring both the social and economic livelihood of future generations is a positive impact that a development can bring. For communities, developing social and economic capacity and diversifying economically can bring long-term stability. For industry, assisting in economic diversification can be a financial asset, while ensuring social stability can mean better relations with employees, communities and governments.
Throughout this paper, examples of activities that take into account the long-term goals of sustainable development have been mentioned. Examples include economic diversification, educational opportunities, ensuring health care, and negotiating IBAs.
Another important tool in considering the time dimension of sustainable development is to consider the region, the groupings of communities and individuals influenced by a development, and to examine the future of the region. The questions then become how a mining development can assist a region in achieving sustainable development over the long term.
4.7 Some Examples
The following two tables, dealing with the social risks to and opportunities for individuals, families and communities, and the risks and opportunities for industry, have been derived from the previous discussion. They serve as starting points for discussion and are not intended to be all inclusive.
| Social Risks | Social Opportunities |
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| Industry | |
| Social Risks | Social Opportunities |
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