Corporate Social Responsibility: A question of ethics

30 October 2013 | ResolutionPossible

Welcome to the second of three blogs looking at Corporate Social Responsibility (CSR) in the mining industry, part of our Minerals series. This blog primarily addresses the ethics behind a mining company’s motivation to implement a CSR programme and the common shortfalls experienced. 

A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment.

– European Commission definition of Corporate Social Responsibility

Corporate Social ResponsibilityCompanies are not required to implement Corporate Social Responsibility programmes – it’s up to their own discretion and policies. So what actually motivates a mining company – part of an industry that doesn’t typically interact with the end consumers of their products – to engage in such proactive and often extensive programmes?

The report ‘Corporate Social Responsibility in Mining in Southern Africa: Fair accountability or just greenwash? looks at the gaps between ‘mining companies’ CSR activities… and accountability and fairness’. While not ultimately dismissing CSR as ‘greenwash’, the report does propose ‘a need to engage business critically towards more sincere versions of CSR’. It suggests two potential motivations for a company to implement CSR policies.

Business case:

Sees the benefit of increased profits following efforts to work within the community to minimise negative impacts of their operations and implement positive developments.

Eco-modernisation case:

Approaches environmental (and social) problems with technological solutions. For example, effective environmental management is seen to increase the efficiency of production by lowering both energy and material needs. Consequently, bottom line profits are likely to increase.

Both cases lead to what is typically referred to as a ‘social license’, whereby a CSR programme  can foster positive relations between the corporation and the extended community. This works to ensure the mines can operate with minimal disturbance. The benefits of this are significant for corporations, gaining a reputation for being socially responsible which helps ensure the mines can operate with minimal disturbance, and also creating a favourable relationship with the governments that allow them to operate in their country. In fact, CSR is increasingly seen as a prerequisite for governments to issue mining licenses. A company that is known to act responsibly towards its work force can also attract high calibre employees.

Shortcomings

So, the original idea behind CSR is certainly noble, and we can see mutual benefits for the corporations and the host countries. Underneath the surface, however, the ethics of the practice can be clouded by self-serving motivations and the voluntary and unregulated nature of CSR.

It doesn’t take much research to reveal several pitfalls with CSR, including a lack of interest by corporations and communities alike, ongoing mining dependency, and language and cultural barriers. A further complication is the variation in CSR project sites, geographically, demographically, economically, and culturally, which calls for an element of context specificity to be built in to such programmes that is not always recognised. While many CSR initiatives represent welcome development or infrastructure improvements, the study by Hamann and Kepulas suggests that often CSR programmes have little impact on the root causes of social problems surrounding the mines. Many of these problems, such as employee recruitment and housing, are directly attributable to the core business practices of the mine, undermining the overall sustainability of CSR itself.

The Global Reporting Initiative (GRI) is a recent attempt to establish a framework for best practices for companies to structure and publicise reports on their economic, social and environmental impacts.  This aims to provide a benchmark for comparative analysis which could equally serve to identify the best and worst cases of CSR programmes.

Gold Supply Chain infographic by Simon Copeland of Resolution:PossibleExtending responsibility

We previously highlighted the wider question of where responsibility falls in the mining industry, but responsibility is an equally clouded issue in the context of CSR programmes. A significant prerequisite of CSR practices is consumer demand – but the extractive industry is at the beginning of a very extensive supply chain. There is some call for every stage of the supply chain to be regarded as a consumer, not just those who buy the finished product. This would alleviate the burden of responsibility on mining companies and would target companies at all stages to practice ethical and moral behaviour.

This idea is not new, but it isn’t embedded either. Electronic giants, including Intel and HP, are leaders in taking proactive measures to trace and audit their supply chains. HTC and Nintendo, on the other hand, are considered to have done ‘next to nothing’ in shifting their supply chains towards conflict free minerals .

Another aspect of responsibility for the implementation of CSR projects lies with host governments, particularly in the structuring of legal and regulatory frameworks that promote and support the creation and longevity of CSR projects.

ResPoss asks:

If both the ‘business’ and ‘eco-modernisation’ cases can generate benefits for the extended community, should we be concerned with inward looking motivations of the mining companies?

Should mining companies – whose primary purpose is commercial – be relied on or expected to develop CSR programmes that would have the most genuine impact for communities and the environment? Should they be expected to engage in developmental activity, or should their responsibility be limited to mitigating against the negative impact of their industry?

How could responsibility be extended effectively and fairly across all phases of the supply chain, host governments, international institutions, and ourselves as consumers?

If you have views you would like to share we would love to hear them.

 

Contributing writer/research: Megan Setchell

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