Why corporate social responsibility makes sense for communities, companies and investors

December 28, 2015 03:04 PM

Mining companies and their shareholders have come to the realization that doing the right things in the communities where they operate is important for a lot of reasons, including the bottom line. Mining executives also tell The Gold Report that the most effective corporate social responsibility programs (CSR) are orchestrated cooperatively instead of applied prescriptively.

In 2014 Endeavour Silver planted more than 40,000 trees as part of its commitment to reclaiming and restoring land disturbed during the mining process. Photo courtesy of Endeavour Silver.

The emphasis of mitigating the economic, social and environmental impacts of mining on local communities can be seen in the billion-dollar price tags on education and clean water projects in Ghana underwritten by Rio Tinto Plc, training programs in Burkina Faso co-financed by IAMGOLD Corp. and small business loan programs in Peru funded by Barrick Gold Corp.

As the Mining Association of Canada puts it on its website, corporate social responsibility (CSR) standards "are one way that companies can help manage risks and avoid potential conflicts. . .as an industry we also support community development to help spur local business development, build environmental expertise and reduce poverty in the areas where we operate."

Companies large and small have found that an investment in the people living where they work can have outsized returns in human impact terms, permitting time and even the ability to continue operating. But they have also learned that programs have to be designed in cooperation with local communities rather than imposed on them to have a lasting impact.

A Social License

Great Panther Silver Ltd. has taken a measured approach to its good neighbor policy. "Our main priority," according to Mariana Fregonese, director of Corporate Communications and Sustainability, "is to listen to what our stakeholders have to say. This isn't about telling them what they need and then doing it for them. We need to get to know each other and build trust in each community where we operate because their needs and realities are different. Afterwards, we work in a partnership approach to achieve shared goals."

At the San Ignacio mine, a half-hour from the main Guanajuato mine facility in town, the needs are much different. "We met with our neighbors when we started developing this new mine and quickly learned that the community had an active environmental problem because they were importing bottled water and burning the plastic containers, thereby releasing toxins in the air. We developed an easy training program to separate different types of plastics and set up recyclers to come every two months, with the profits from selling the materials matched by the company and used for community events," Fregonese said. By the end of the year, she anticipates that 1.5 tonnes of plastic will have been recycled in a community of only 500 people.

One woman approached Fregonese after the company opened a community center closer to its Guanajuato mine and processing plant, and explained how having that place to go and connect with other women of the community had changed her life and helped her recover from a difficult situation. "She is now employed full time and helping other women in similar situations in our community center. That is an example of a true partnership having a real impact. It is highly rewarding."

CSR has become part of doing business for Great Panther. When the company acquired Cangold Ltd. and its option on the Guadalupe de los Reyes exploration project in the Sierra Madre range in Sinaloa, Mexico, in May, a social assessment was launched the same time as the environmental study. In this case, it came back that the handling of drinking water was a challenge.

"We held a hands-on clinic to work with local women to address health issues associated with hygiene, water sanitation and food handling," explained Fregonese. "With 90 local women participating in these workshops, we anticipate that approximately 80% of the local population benefited from this program."

"It doesn't cost a lot of money, but it shows we understand and care. Throwing money around is not always the answer; it is normally counterproductive," said Bob Archer, Great Panther Silver CEO and president.

It seems to be working. When a landowner built a fence and tried to block the drills from getting to the project site, the community came out in support and convinced him to let them by. "That is an example of how building a social license can make a huge difference," Archer said.

Fregonese is involved in the Prospectors & Developers Association of Canada and the Association for Mineral Exploration in British Columbia CSR committees and finds it important to share best practices among CSR practitioners and to adopt international environmental and social standards. "We, as an industry, can generate economic development and bring better sustainable lives to the local communities."

"The word sustainability gets kicked around a lot," said Archer. "But it is key to moving forward in this environment. Shareholders need to know which companies are taking a sustainable approach and are properly managing their social risks. You can have all the money you want, but when it comes to community support, a CSR can trump money in the bank."

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