Last week I attended the annual convention of the Prospectors and Developers Association of Canada(PDAC), the world’s largest annual gathering of the mineral industry. The convention, which included trade and mining investment shows, attracted more than 22.000 people involved in exploration, discovery and development of mines around the world, and featured more than 1,000 displays from mining companies and suppliers to the industry.
Corporate Social Responsibility (CSR) was front and centre at PDAC. There was a special CSR Event Seriesand many mining companies put a high priority on showcasing their CSR initiatives on displays and in CSR/Sustainability reports that were made available to attendees.
At PDAC, I discovered 9 areas in which mining companies can improve their CSR performance:
1. Licence to Operate:Increasing pressure from citizens and advocacy groups is causing local government stakeholders to demand more and better documentation of the social and environmental impact of mining operations. This means mining companies need credible data and new ways of modeling impact.
2. Advocacy:International advocacy organizations (including JATAM, The Mining Advocacy Network) and local organizations around the world are keeping close tabs on the impact of the mining industry. Mining companies need to pro-actively identify and engage these groups during all phases of exploration, development and operations.
3. Risk:Poor CSR performance increases the perception of reputational and operational risk – especially among investors. In order to secure financing and maintain share value, mining companies need new ways of documenting and communicating what they are doing to mitigate negative social and environmental impact.
4. Governance:Directorship of mining companies needs to be expanded from the old boy network. Women, Aboriginal people, and local stakeholders should have a place at the table. In addition, checks and balances at a governance level need to encompass Environmental, Social, and Governance (ESG) performance.
5. Stakeholder Engagement:Key external audiences are demanding more than lip service. Mining companies need to identify the stakeholders that matter most in each project, commit to an ongoing dialogue ,and implement ideas that reflect the needs of their stakeholders.
6. Social Perfomance:There’s a science to predicting, benchmarking, and tracking environmental impact. Assessing social performance is just as important but much more difficult. Mining companies need new and better ways of documenting the qualitative impact of their operations on their employees and on local stakeholders.
7. Innovation:CSR is new territory and mining companies need to think creatively and execute differently. At PDAC, I heard some remarkable stories about what Eldorado Goldis doing to reduce environmental impact and support economic sustainability in communities where it has operations (including helping a local communities in Turkey to grow grapes and produce wine).
8. Values Chain:Mining companies can increase competitive advantage with customers who are increasingly demanding better social and environmental performance from their suppliers. Much can belearned from best practices such as GE’s Ecomaginationwhere the company is provided more value to customers by re-engineering its products to be more environmentally responsible and less costly to operate.
9. Social Purpose:Producing an investment prospectus, an annual report, and (increasingly) a CSR report isn’t enough anymore. Today, the opportunity for mining companies is to stand for something compelling above and beyond ROI for shareholders. Companies should be asking themselves: What is our social purpose and how can we best communicate this?