Event Summary:
Canada’s Mining Sector and Corporate Social Responsibility
Toronto Branch Event, September 6, 2007
Summary by Laura Sunderland
The event was introduced by Jeffrey Snow, head of the Mining Group at McMillan Binch Mendelsohn. Jo-Ann Davis of the Toronto Branch Executive chaired the session.
Dr. Stephen Lucas, Assistant Deputy Minister of the Minerals and Metals Sector, Natural Resources Canada, opened up the discussion by outlining the new global context in which mines operate. He suggested that corporate performance standards have improved greatly due to technological advances and pressures from civil society. Dr. Lucas noted that mining companies require a “social license” to operate and must adhere to local laws and regulations, ensure that communities and governments are benefiting from mining activities, and mitigating adverse effects to those people who are exposed to potential health risks.
Dr. Lucas discussed the 2005 Standing Committee on Foreign Affairs and International Trade’s report on mining in developing countries and corporate social responsibility (available here). He also touched on the role of public roundtables across Canada that provided stakeholder input to the advisory group, which presented its finding to the Canadian government. (The advisory group’s findings are available here).
Dr. Lucas noted that mining companies should be ambassadors for Canada and concluding by posing a series of questions: do contentious mining projects or accidents represent a general issue or a company-specific issue? What are the roles and responsibilities of the industry and government in addressing this? Should company performance affect Canada’s reputation as a whole? Should voluntary corporate social responsibility (CSR) activities supplement regulatory compliance?
Dr. Tony Andrews, Executive Director, PDAC, described the key factors that define the current working environment of the Canadian mining industry. He noted that an effort to find resources to supply the commodities market has driven the mining industry into high risk efforts. As a result, Canadian companies have a high profile and are subject to high expectations. Legitimate concerns about globalization and a lack of institutions to regulate the mining industry have led non-governmental organizations (NGOs) to attempt to fill the void—but these are often anti-mining advocacy groups. Dr. Andrews suggested that this increasingly complex set of challenges calls for increased transparency and accountability.
Dr. Andrews outlined the key challenges for mines: 1. there is high demand for companies to meet CSR standards but there are no clear agreements on how to measure CSR; 2. efforts to implement CSR are complicated and ineffective; 3. CSR is a continuing process needing constant management; 4. CSR will reduce risk but cannot guarantee that there will not be conflict and resistance.
Dr. Andrews noted that the definition and scope of CSR, which used to focus primarily on sustainable development, has changed over the past few years to include human rights issues. He suggested that the definition should also include environmental stewardship. He noted that there is a wide variation in terms of company performance, regardless of company size. One central problem is that mining companies are bad at communicating the good things that they are doing.
Dr. Andrews concluded that CSR standards must be applied to all players in the system—including host countries and NGOs. He asked the audience whether the mining industry should acknowledge and respect a community’s right to say no to a potential project. He suggested that a possible way to mitigate frustration around anti-mining campaigns would be to form an independent body to receive formal complaints from all sides and analyze the situation.
Mr. Peter Sinclair, Director, Corporate Social Responsibility, Barrick Gold described the formation and growth of Barrick Gold into a leading Canadian foreign investor operating 27 mines primarily in emerging economies. Mr. Sinclair discussed the tension between NGOs and those responsible for CSR, suggesting that NGOs are uncomfortable with mining companies being involved in community development. He noted that mines operate in high altitude, far-flung places where people are the highly marginalized, government capacity and reach are lacking, and where it is challenging to find NGOs or local civil society groups to work with. Community engagement is an essential part of operating a successful mine. A mining company must mitigate the negative social impacts by understanding the concerns of the community and capitalizing on the positive spin-offs for the community.
Mr. Sinclair was clear to note that sustainable economic development is a win-win opportunity—training local people is cost effective and can offer sustainable livelihoods to local residents. The same logic applies to consuming local food, using local security people, bus drivers and so on. He noted that mines can make contributions that go beyond their traditional roles, and that many people who work to implement CSR were formally employed at NGOs. He concluded by stating that Barrick Gold mines do not want to be a substitute for government and do not want people to become dependent solely on the presence of the mine—they want real development.
Dr. Marketa Evans, Executive Director, Munk Centre for International Studies, UofT, opened by stating that CSR and mining is an issue that goes to the heart of Canadian values and interests. The Canadian public wants a foreign presence that reflects their longstanding commitments to environmental and social goals. Dr. Evans framed the problem as a social risk management issue where the status quo is not an option. Canadian mining companies need to meet global challenges by asking how they can enhance development and contribute to Canada’s role in the world. Social stakeholders matter more than ever, and deeper cross-over collaboration in required between industry and civil society. Mines operate in difficult terrain, physically, socially and politically, and they must learn to meet these challenges. Dr. Evans indicated that mining can destroy the environment, feed elite corruption and violate human rights—but these features are not particular to the mining industry alone. Economic development can have negative repercussions, and therefore development must be done in the best possible way.
Dr. Evans stated that 60% of the world’s exploration and mining companies list in Canada, and that the mining industry will make $17 billion in new investments over the next 5 years in emerging markets. The landscape is changing, expectations are increasing and there is a widening gap between expectations and reality. This context drives risk and opportunity. Dr. Evans noted that people tend to believe companies are more responsible for development than host country governments. People trust NGOs more than companies, and companies rank only slightly more favourably than oil and petroleum companies in public opinion polls.
Dr. Evans concluded by suggesting that leadership requires collaboration between companies, civil society, government and academics. Asking corporations to fill gaps in development may make sense in the short run, but development is a complex process and ad-hoc development can have many negative implications in the long run. Dr. Evans advocated a rethinking of development, drawing on an engagement between industry and civil society. She noted that it is possible to find common ground and common causes between these two actors, and cited the success of the Kimberly Process as evidence of deep collaboration to tackle a strategic problem to demonstrate that this type of cooperation and engagement is possible.
The question and answer period generated many insightful comments and queries, including a discussion of the recommendations of the standing committee, what to do when a country is so dangerous that a mining company will almost certainly be implicated in human rights abuses by operating in that environment, water issues and the role of corporate legislation.
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