On March 29th and 30th I had the honor of attending the ISID’s Resource extraction conference in Montreal. Being a former McGill International Development Studies (IDS) student and a current professional working closely with the extractives sector at CBSR, the conversation was very close to my heart. The conference managed to bring together top-level speakers from all sectors (government, private sector, NGOs, communities, civil society, the international community and the finance sector) to talk about mineral extraction, and both the challenges and opportunities of public-private partnerships for sustainable development.
The array of speakers and their different positions and perspectives made it an enriching conversation that was able to steer away from the one-sided discourses, to get into more of the “grey zones” of this discussion and the potential solutions to addressing these.
The conference aimed to address the following 3 questions:
What are the key challenges in trying to establish partnerships between extractive firms and other organizations to promote Sustainable Development in the communities they operate in?
Are there any effective partnership practices / models that can be identified?
How can government policies and activities help facilitate these public-private sector partnerships?
THE NATURE OF THE INDUSTRY: CHALLENGES AND OPPORTUNITIES
The growth of the extractives industry poses both challenges and opportunities for development. The mining industry is quite unique given its capital intensive nature and the fact that increasingly new explorations are taking place in developing countries, often in the most marginalized and poorest regions of the world, leading to conflicts around distribution of wealth and economic opportunities.
CHALLENGES FOR DEVELOPING PARTNERSHIPS
A couple of the challenges mentioned during the conference for establishing good relationships with communities on the ground included:
Misconceptions of what mining is which can challenge communication
Managing expectations to avoid conflict and build trust
Competing interests of stakeholders – difficulties agreeing on goals and visions for the future
Different timelines between business and communities
In country governance: collaborating without taking on the role of government
Getting all relevant parties to the table. Ex.: women; and understanding what Sustainable Development is for the communities in the area of operation
GAINING AND MAINTAINING THE SOCIAL LICENSE TO OPERATE
Many panelists agreed that it is possible for large scale mining and communities to live in harmonious manner. However, throughout the conference we heard once and again that it takes time to develop those relationships, gain the trust of the communities involved, and it takes continuous efforts to maintain a company’s social license to operate. The key to gaining this social license is early and proactive stakeholder engagement. As one of the conference panelists mentioned: “The legal license is not the same as a the social license to operate – this later one needs to be continuously earned and maintained – you know when you have it, and you also know when you have lost it”. The advantages of doing so early on and continuously include avoiding delays and disruptions and it can act as a differentiator among competitors with different approaches to business.
Another important highlight brought forth in the conversations was that regulation cannot be made by policing alone. It is better to address underlying problems proactively than have to face them recurrently in the future. When relationships are not well developed from onset, opportunists come in and fill the communication gap. As one panelist mentioned, “Ask CFOs to calculate costs when things go wrong. What is the cost of not engaging communities from the start? It will get more and more expensive for companies to do their work if they can’t obtain their social license to operate.”
THE KEY TO EARLY AND PROACTIVE STAKEHOLDER ENGAGEMENT
When local communities are part of the process early on, there is a multiplier effect that is more effective in developing trust-based relationships. So how does a company gain the social license to operate? According to the panelists a company needs to:
Do community engagement as early as possible – many CSR programs start at the operation level, when they should be starting off on the exploration level. Engage stakeholders throughout all phases of the mine, and pay close attention to the stakeholder’s view of the future during closure.
Develop community ownership from the onset that can outlive the life of the mine (skill, capacity and wealth generation)
Promote local opportunities through the supply chain – people need to see the direct benefit.
Establish communication avenues, strong grievance mechanisms and be as transparent as possible.
Adapt plans and strategies to fit the needs of stakeholders in the operating context and engage stakeholders in decision making. As one panelist pointed out: “It’s not that indigenous peoples don’t want the project, we want to have decision making power too. We want to be able to manage these projects with you.”
Invest in the communities you operate in, but do not fund community programs on your own. What will happen to project when mine closes? Avoid creating a paternalistic relationship or dependency; all actors have important roles to play.
OPPOSITION CAN MEAN OPPORTUNITY
The complexity of the issues at hand call for a joint effort to address the issues by bringing together complimentary skillsets to work towards joint objectives. It is equally legitimate for NGOs to be critical and try to influence policy, as well as for NGOs to work beside companies to address challenges together. Both competition and collaboration are needed to keep the checks and balances in place. Conflicts in the past have changed the mining sector’s reasoning and approach of the way they conduct their business, and the sector has also become aware that it cannot address all the challenges on its own. As one panelist mentioned: “It is now time to push each other up to create win-win opportunities for inclusion or ‘winclusion’ opportunities.”
ISID will soon be sharing the debrief of the session - a follow-up message will be posted accordingly.