• What is Corporate Social Responsibility (CSR)?

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    Corporate Social Responsibility (CSR) refers to voluntary actions undertaken by mining companies to either improve the living conditions (economic, social, environmental) of local communities or to reduce the negative impacts of mining projects. By definition, voluntary actions are those that go beyond legal obligations, contracts, and licence agreements.

    CSR programs usually invest in infrastructure (potable water, electricity, schools, roads, hospitals, hospital equipment, drainage repairs, etc.), building social capital (providing high-school and university education, providing information on HIV prevention, workshops on gender issues, information on family planning, improving hygiene, etc.), and building human capital (training local people to be employed by the mining enterprise or to provide outsourced services, promote and provide skills on microbusiness, aquaculture, crop cultivation, animal rearing, textile production, etc.).

    Common Components of Corporate Social Responsibility

    It is challenging to outline a set of clear components that are common to all Corporate Social Responsibility programs. Each CSR program needs to be designed and continuously evaluated according to the needs of the community affected by a mining project. Creating a successful CSR project is therefore usually a process of trial and error. However, most CSR projects focus and incorporate three mains areas: the environment, social, and economic factors.

    The Government of Canada has promoted the following international CSR performance guidelines for Canadian companies [1]:

    International Promotion of CSR

    There are a number of other international initiatives and associations that promote best practices and corporate social responsibility in the mining sector, the following ones being the most recognized worldwide:

    Mining companies are also pursuing certifications such as ISO 14000 (environmental certification), SA 8000 (working conditions certification), and AA 1000 (accountability certification). They are also making efforts to be listed in the Dow Jones Sustainability Indexes.

    Promotion of CSR by the government of Canada

    There are also a number of initiatives that promote CSR practices at the national levels. In 2003 the Canadian government supported the development of an online Sustainability Reporting Toolkit and provided national training workshops on CSR for Canadian companies.[2] In 2007, the government joined the Extractive Industries Transparency Initiative (EITI), a mechanism to publish and verify company payments made to governments and government revenues received from oil, gas, and mining.

    In March 2009, the Canadian government issued the report Building the Canadian Advantage: A Corporate Social Responsibility (CSR) Strategy for the Canadian International Extractive Sector, which encourages Canadian companies to observe the OECD Guidelines in their operations abroad.[1] Most recently, Canadian International Development Agency and various mining companies from Canada are co-financing CSR projects in developing countries. These projects include:[3]

    • A project in Ghana to help local government’s ability to provide quality education and clean water. This project also includes training 400 young people to help diversify the local economy in Ghana. The project is co-implemented by World University Service of Canada (WUSC) and co-financed by Rio Tinto (CIDA: $500,000; WUSC/Rio Tinto: $428,000);
    • Training 13 communities to meet labor market demands in the mining sector and sub-sectors in Burkina Faso. This project is co-implemented by PLAN Canada and co-financed by IAMGOLD (CIDA: $0.9 million; IAMGOLD: $1 million);
    • Providing loans for people to start small businesses and building social capacity in Peru. This project is co-implemented by World Vision Canada and co-financed by Barrick Gold (CIDA: $500,000; Barrick Gold: $500,000).

    Measuring a CSR program’s success

    It is difficult to precisely measure the success of a CSR program. This difficulty arises because the success of a CSR program is usually measured in terms of what doesn’t happen rather than what does. For example, the absence of local tension, time not spent in dispute litigation, or of not having to absorb unplanned costs. [4]

    Why are mining companies engaging in CSR programs?

    There are several ways to understand why mining companies are engaging in CSR programs.

    From the community’s perspective, the CSR programs of mining companies provide a mechanism of compensation for the social and environmental costs associated with mining. These costs are usually associated with environmental impact, higher food and housing costs, and social impacts from an increase in the number workers living in the area. [7] In addition, a CSR program provides the community with a means through which it can be involved in and provide input into the mining project. Since local communities may not see many of the direct benefits from the mining industry, CSR programs are a means through which a mining company can be seen to actively give back to the community.

    Mining companies also benefit from CSR programs in several ways. Firstly, they help build better relations with the local communities in which they operate.  The economic risks of not having good community relations include project delays and even mine closure. Significant delays may cost up to two-thirds of the mine project’s initial value.[5] According to the World Bank, the mining industry has become a very technologically complex sector which employs considerably fewer people than in the past and, therefore, needs to provide other benefits to local communities “in order to obtain a ‘social license’ to operate”.[6, p.8]

    Secondly, it provides a way of responding to increasing consumer concern about how the products they buy are produced, combined with the fact that the internet allows consumers to scrutinize mining companies’ operations.[5]

    Finally, companies that are regarded as socially responsible may be more likely to be asked to do business with governments that are accountable to their citizens. [5] These companies can also be more efficient in their recruitment processes because “access to the brightest and best in the labour market will depend upon the reputational status of the industry and the companies within it”. [5, p.129]

    Limitations, drawbacks, and areas for further research

    Despite the benefits of CSR programs there are a number of criticisms of these programs. Firstly, there are claims that CSR programs are just part of a company’s public relations strategy. Thus, CSR programs do not really intend to benefit the local community, but are there more to bolster the company’s image. [6: p.86] In some cases funding for projects under a CSR program never materializes. Other critics argue that CSR programs divest profits from companies’ shareholders and diminish efficiency of the market economy. [7] Further research needs to be done to explore to what extent CSR programs take away from company profits.

    Furthermore, the drawback of adopting CSR programs is that a company runs the risk of making a community dependent on the mining activity for community development. Such community dependency can become a real issue when a mine closes and the company is trying to leave the area. [8] Mining companies are aware of this issue and to respond are beginning to invest in the community in a sustainable manner that generates real and tangible social benefits. [9] However, despite these attempts to avoid dependency, questions still loom over how best to invest sustainably.

    Finally, there are questions about how much of a role government should have in creating CSR standards. For example, although the Canadian government has taken steps to establish and support CSR guidelines, if CSR programs are meant to be implemented by industry to benefit industry, should the government become a driving force behind these programs? This is an area that may require further research.


    Case Study: Barrick Gold Corporation CSR Policy

    Barrick Gold Corporation (Barrick) is a Canadian mining company with interests in 26 mines operating on five continents. In 2010 it contributed $31 million towards social development programs.[10] It has been recognized five times for its social responsibility in the Dow Jones Sustainability Index (DJSI). [11]

    Barrick undertakes a number of CSR projects worldwide. Examples of projects this company has undertaken include:

    • Support global outreach by renowned neuro-surgeon: A $5.5 million donation to the Toronto General & Western Hospital Foundation allows Dr. Mark Bernstein, a world-renowned neurosurgeon, to expand his teaching activities in developing countries and in Toronto.
    • Education Program in Tanzania: In 2001, Barrick invested US$2 million to fund a long-term education program in the remote Kahama District, then one of the worst performing areas academically in Tanzania. Since that time, primary school enrolment has increased by 75% to more than 7,000 children in 2007. Also, significantly more children are now making the transition to high school, where enrolment has more than doubled, from about 800 students in 2001 to 1,885 in 2011. More than 89% of students who completed secondary school passed their final exams in 2011, up from just 16 per cent prior to the implementation of the program.
    • Investing in energy projects: Globally, Barrick sources about 15% of its purchased electricity from renewables, such as wind, solar, and bio-fuels. In Chile, Barrick has completed Phase 1 of the Punta Colorada Wind Farm, a $70 million project featuring up to 18 wind generators with the capacity to produce 36 megawatts of electricity, enough power for 20,000 homes. The initial phase of the wind farm includes 10 turbines that are now generating 20 megawatts of energy.
     


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    References

    1Canada, Canadian Foreign Affairs and International Trade Canada [DFAIT]. Building the Canadian Advantage: A Corporate Social Responsibility (CSR) Strategy for the Canadian International Extractive Sector. 2009 [cited 2013 January 17]: Available from: http://www.international.gc.ca/trade-agreements-accords-commerciaux/ds/csr-strategy-rse-stategie.aspx?view=d

    2Randall, S.J., Canada, the Caribbean and Latin America: Trade, Investment and Political Challenges, 2010, Canadian International Council.

    3Canada, Canadian International Development Agency [CIDA]. Canada Government News Release: Minister Oda Announces Initiatives to Increase the Benefits of Natural Resource Management for People in Africa and South America. 2011 [cited 2011 October 31]; Available from: http://www.republicofmining.com/2011/09/30/canada-government-news-release-minister-oda-announces-initiatives-to-increase-the-benefits-of-natural-resource-management-for-people-in-africa-and-south-america/.

    4World Bank and IFC, World Bank and International Finance Corporation. Large Mines and local Communitites: Forging Local Partnerships, Building Sustainability. 2002 [citied 2013 January 17]; Available from: http://www.sdsg.org/wp-content/uploads/2011/06/Large-mines-local-communities.pdf.

    5Humphreys, D., A business perspective on community relations in mining. Resources Policy, 2000. 26(2000): p. 127 – 131.

    6McMahon, G., The World Bank’s Evolutionary Approach to Mining Sector Reform, in Extractive Industries for Development Series #192010, World Bank - Oil, Gas, and Mining Unit Working Paper.

    7Garriaga, E. & Mele, D., Corporate Social Responsbility Theoriest: Mapping the Territory. Journal of Business Ethics, 2004, 53: pp.51-57.

    8Jenkins, H. & Obara, L, CRRC. Corporate Social Responsibility in the mining industry risk of community dependency. 2008 [cited 2013 January 17]; Available from: http://www.dlist-benguela.org/sites/default/files/doclib/CSR_mining%20industry_risk%20of%20community%20dependency.pdf

    9Hamann, R. & Kapelus, P., Corporate Social Responsbility in Mining in Southern Africa: Fair accountability or just greenwash?. Development, 2004, 47(3): pp.85-92.

    10Barrick Gold, Beyond Borders: A Barrick Gold Report on Responsible Mining March 2011, 2011.

    11Canadian Mining Journal Corporate Social Responsibility: Barrick named again to Dow Jones Sustainability Index. 2011.

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