Corporate Social Responsibility: 3 Steps to Getting Started
As companies continue to evolve and migrate to remote locations for operations, Corporate Social Responsibility (CSR) plans have become common practice in the mining industry. The future of mining projects relies heavily on this framework and the effective implementation is critical to its success.
While mining companies have a responsibility to run good businesses, they also have a responsibility to deliver sustainable benefits to host communities. By implementing an effective CSR program, mining companies can successfully achieve both.
1. Establish an area of influence
“The very first thing to do when considering a CSR strategy is to establish the company’s area of influence. This helps to define the scope, impact and, importantly, the limits of such a strategy,” said Monica Ospina, founder and director of O Trade, a socioeconomic development consultancy firm.
The first step in creating a CSR plan is to establish certain critical services to successfully operate in the new host community, including security, transportation, infrastructure, electricity supplies and environmental considerations.
According to Ospina, if most of the workforce lives in that settlement, the new nearby mine would create an inflationary economy in the town. “One of the hallmarks of a good CSR strategy is that the community understands clearly that the mine will eventually close and the company will move away, and that it is ultimately the government’s responsibility to facilitate economic development.”
Ospina advises mining company not to just throw money at social problems because they run the risk of being held hostage by communities, as they would eventually be seen as a “cash machine.” Mining companies can either be an agent for development in operating communities, or an agent for disaster.
“It is one thing to be a controller and another to have control. This means starting the dialogue with communities early, acknowledging that you are impacting the community and talking about the mitigation measures.”
2. Create a clear channel for communication
One of the most significant aspects of a successful CSR campaign is communication. It has the power to either make or break a mining project.
“If you don’t have an avenue that allows people to express their frustrations – big and small – with you directly, you will have third parties moving in to do that job for the communities. This creates the risk of damaging the company’s reputation and, in extreme cases, can even place the project in jeopardy,” Ospina said.
It’s important for a CSR plan to have an effective grievance mechanism to channel communication between employees and communities directly. Personal interactions, community gatherings and one-on-one interviews are especially important for CSR engagement.
“When a company realizes the impact that its presence in a community has and recognizes the fact that it would have to form a strong relationship with the community, I have found that communities are then often very eager to collaborate with the company, which is the key to any successful CSR program,” Ospina said.
3. Ensure critical needs are met
“When communities feel abandoned by their governments, they often think that whoever comes first to them will be responsible for their development, which is unfortunately not true,” said Ospina.
The next step in creating an effective CSR strategy is ensuring critical needs are met. Strong legal framework should be put in place to create economic stability and facilitate foreign investments. Companies should look into forming alliances to assist government in fulfilling its obligations, which consists of critical needs identified by the community.
In addition, it’s important for mining companies to explain to their host communities just how much money is being paid to the respective governments in the form of royalties, taxes and permitting fees. Along with taking a lot of the community’s natural resources, companies need to demonstrate they are leaving them with lots of wealth in return.
“Communities are often left feeling that they do not benefit from the wealth being extracted and the improved transparency guidelines have forced governments to be more accountable to its people. They are increasingly being forced to demonstrate what they have done with every single payment made by a specific company,” Ospina said.
DRC selects Fortescue to develop giant hydro project
Democratic Republic of Congo's (DRC's) government said on Tuesday Fortescue Metals Group would develop the Grand Inga hydroelectric power project, including a 4,800-megawatt dam that has already been committed to Chinese and Spanish developers.
Fortescue to develop dams for world's largest hydroelectric project
Australia's Fortescue confirmed it was in talks with Congo to develop a series of dams that could become the world's largest hydroelectric project, but it said no formal binding agreement had been concluded.
Fortescue's involvement is the latest twist in Congo's decades-long quest to expand Inga, whose two existing dams - completed in 1972 and 1982 - have a combined installed capacity of nearly 1,800 MW.
The proposed expansion of six more dams would bring capacity to over 40,000 MW, roughly double the size of China's Three Gorges dam, currently the world's largest. Total development costs have been estimated at up to $80bn.
In 2018, a Chinese consortium that includes China Three Gorges Corporation and a Spanish consortium that includes AEE Power signed a deal with Congo's government to develop the third dam, known as Inga 3.
Ground has yet to be broken on Inga 3 because of questions over its financial viability. Alexy Kayembe De Bampende, President Felix Tshisekedi's top infrastructure advisor, said the project would now be led by Fortescue.
"Fortescue will be the sole operator for the entire Grand Inga (3 to 8). Chinese & co are welcome to join Fortescue," he told Reuters."There has been discussion between Chinese (Three Gorges) & AEE and (Fortescue) since last year to work together."
Three Gorges and AEE Power did not respond immediately to requests for comment.
DRC's Grand Inga green energy project will create hundreds of thousands of jobs
In a memorandum of understanding signed between Fortescue and Congo in September 2020, Fortescue "acknowledges the existing potential rights held on Inga 3 by third parties".
"In the event that, for any reason, such rights to develop Inga 3 become available, the government of the DRC undertakes to secure for Fortescue Future Industries an exclusive first option to develop Inga 3," it said.
A senior official at the government's Agency for the Development and Promotion of Grand Inga (ADPI), speaking on condition of anonymity, said the ADPI had not been involved in the talks with Fortescue.
Fortescue chairman Andrew Forrest met Congo President Felix Tshisekedi on Sunday to discuss the project. Forrest said Fortescue would use the energy from Inga to produce hydrogen to export around the world.
"The capital cost of this will be many many tens of billions of dollars and direct and indirect employment will be in the hundreds of thousands," he told reporters.
Fortescue has said it plans to fund the majority of its green energy projects off its balance sheet, investing about $1bn a year of its own money.
Fortescue's statement was made in response to an article in the Australian Financial Review.
Meanwhile, Fortescue has teamed up with Hatch, Anglo American and BHP, to form a Green Hydrogen Consortium focused on ways of using green hydrogen to accelerate decarbonisation within their operations globally.