Developing Ideas Digest May/June 1998
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LitScan TrendWatch

3.

Social Savvy

Many resource extractors have been learning - the hard way - that a good public image, well-tended community relations and local resource sharing are as important a part of doing business as access to resources, labour and equipment. In the mining sector, for instance, recent ecological disasters in the Philippines, Guyana, Spain and the former Soviet Union have badly tarnished the industry's reputation, creating difficulties for all companies whose operations depend upon local goodwill. Indeed, in the 1990s, the concerns of local communities are difficult to ignore. Sustainable development - with its emphasis on equity and social justice for local stakeholders - has become accepted to the point where lenders such as the World Bank routinely include community concerns in loan agreements.

Meanwhile, the transition to democracy in many countries has given local players a greater role on the national stage; while the advent of e-mail, fax and the Internet has lent local advocates the opportunity to publicize their grievances at a global level. This new community clout has forced some multinational resource firms to face up to a new reality: the company that does not accommodate the interests of the local community risks losing its welcome, losing licenses, and facing social strife that could shut down its operations.

Firms that take a consultative approach have found ways to minimize damage and maximize community benefit so that both parties win. The Canadian mining giant Placer Dome, for instance, brokered a complex deal with local interests when it took over a mining concession in southern Venezuela. Small-scale 'artisanal' miners had been removed from the Las Cristinas concession in Bolivar state (where the government subsequently offered mining rights to multinationals), and re-settled in two new towns where there was no alternative employment and scant health, education or social services. Not surprisingly, many of the artisanal miners returned to the land to prospect illegally. Anger and social tensions in the area led to protest marches, roadblocks, the occasional violence and invasion of lands -- amounting to a general threat to the foreign miners' ability to operate. The company's response, however, was to accept the main proposal of an independent study which suggested a 'co-habitation' approach allowing artisanal miners to work the Los Rojas section of the concession. After a partnership was formed between the company and a new association of artisanal miners in Los Rojas - which took on community development projects like the founding of a new store, and oversaw a formalized membership subject to safety checks in the field -- the 'win-win' scenario emerged. In exchange for providing the Los Rojas miners with funding, technical support, and the training of miners in extraction techniques that did not rely upon the use of mercury, the company benefited from a new social peace and from the presence of potential workers for its mine. For the community, there was an ongoing income source and a new, development-oriented organization.

The tangible business benefits of this kind of more socially sensitive way of doing business are now widely recognized. Over 50% of respondents to an A.D. Little study (see In Depth, DI#1), for instance, believed that a sustainable approach could enhance a business' ability to secure an operating license and to grow, by improving its environmental performance, its public image, and its ethical/social performance. [resource sharing benefits companies and communities]

social justice n. treating the socially disadvantaged fairly

Warhurst, Alyson (et al). The Environmental Management Strategies of Mining Companies: an Overview of the Issues and Case Studies of Corporate Responses to Environmental and Social Challenges. (Draft) Working Paper. No.125. Bath, UK: University of Bath Mining & Environment Research Network, 1998. unpaged

Virtual Ideas

Business for Social Responsibility http://www.bsr.org/