By Joseph Kirschke, News Editor-Mining
In 2006, Nick Fleming and Susanne Cooper, chief sustainability officer and sustainability practice leader, respectively, with engineering and consulting firm Sinclair Knight Merz, joined a team of miners developing a major new copper asset in Southeast Asia.
On evaluating the project, however, Fleming and Cooper noticed a potentially serious complication: the planning of a road alongside a slurry pipeline—one that could facilitate haphazard development, rainforest clearing and a mass influx of job-seeking migrants.
“The potential for unrest, disease and impacts on nearby villages was high; in short, a technology that worked well in other situations was inappropriate,” they write in “Insight Trading: Collaborating to Transform the Infrastructure that Shapes Society,” (Sinclair Knight Merz Pty. Ltd. 2013). “So the team went back to basics—using river barges. This solution eliminated social and environmental risks, created community benefits and enhanced the mine’s social license to operate.”
Through these and other examples, Fleming and Cooper have compiled a compelling road map for miners, engineers, and others seeking to understand the core nuances of corporate social responsibility (CSR) in natural resource and infrastructure projects in a world where the only constant is change.
CSR and sustainable development are, to many, elusive by definition—not least in mineral extraction—something the book acknowledges throughout. But as one of the great commodities booms from Chinese and Indian growth has prompted companies to crisscross the globe for new resources at a pace unprecedented in world history—alongside a burgeoning social media spotlight and increasingly demanding stakeholders—CSR change can no longer be ignored.
At times, this 198-page book appears overly simplistic, but that’s the point—it’s more a blueprint than a cautionary tale. Of course, “profitability and legal license to operate are no longer sufficient measures of a company’s success.” But, the authors quickly add, “a social license is easily lost and hard to regain”—one of many well-put points easily lost on miners, geologists and engineers hard-pressed for returns under tight budgets in far-off places.
More importantly, this work effectively highlights four pillars toward “sustainable design”—for “viable and resilient systems.” These encompass the “capacity to recover from dramatic shocks;” “adaptability,” or evolution “with longer-term change;” “health and function,” or the maintenance of systems integrity “to function well;” and “efficiency,” so resources are used “sparingly and waste is avoided.”
To some, this may seem obvious even in the context of Fleming’s and Cooper’s textbook-style illustration. Indeed, even though some 20 million entries are associated with “sustainability definition” or “sustainability results,” in a Google search, they note, this is logical as cross-industry CSR itself remains a relatively new phenomenon.
Sustainability leadership, they note, has only existed since 2000, and even more recently emerged as a viable career path. As of Q3 2011, for instance, merely 29 companies among the 7,000 publicly listed on the New York Stock Exchange and the Nasdaq employed senior-level sustainability managers. Outside the U.S., just about 30% of companies had such officers reporting to their CEOs.
Within these sparing statistics, though, the authors manage to be at once scientific and diagnostic. “By definition,” for example, “experts have deep expertise in a topic or field endeavor; they are not generalists—this carries an important neurological connection.”
And, under certain circumstances, their proliferation onsite can be ineffective—and, at worst, dangerous. “Experts have made great investments establishing their knowledge base and neurological connections,” according to the authors, “which thus present substantial barriers to or wanting to change them.”
So, despite the inevitable presence of specialists at any project as complex as a mine, it is “almost necessary to engage people with relevant but different experience to get a richer, more realistic picture of the problem;” again, this sounds obvious, but for many miners and engineers, it’s easily overlooked.
Moreover, each project has its own unique complexities—usually rendered even more difficult by the specific fusion of personalities, technologies, environments and communities surrounding it. Resource-seeking industries meanwhile, have long boasted a special breed of hard-driving, technology-oriented individuals—deeply dedicated, yet sometimes resistant to change.
Then there are fundamental approaches. Of paramount importance, according to the authors, are questions among teams—not just their content, but their open-ended nature: “What’s the perfect port? How can we upgrade this plant to extend its operating life while substantially reducing energy costs? How can we increase our revenue 25% by cutting our raw material use by the same measure?”
In particular, Fleming and Cooper invoke educator Eric Vogt’s white paper, “The Art and Architecture of Powerful Questions” (Whole Systems Associates, 2003) in it, they note, his research of questions within professions cross-culturally. His conclusion: the best questions share common elements—in all, provoking introspective conversation while challenging deeply held assumptions.
“A powerful question channels attention and energy and connects with deeper meaning and aspirations,” they add, “questions starting with ‘why’ ‘how’ and ‘what’?”
Non-traditional collaborations can further enhance outcomes amid an en- hanced, or uneven, regulatory environment, note Fleming and Cooper. The authors, at one point, recount helping a mining operation struggling with air emissions constraining operational growth. “To remove this constraint cost-effectively, we identified an opportunity to collaborate with smaller, adjacent competitors.”
In the end, “it would involve investing in reducing their emissions; with their collaborator’s agreement,” they added, so “they could effectively buy the resulting improvement in local air quality and increase their regulated emissions limit.”
The stakes are increasingly high on several fronts. Never before, Fleming and Cooper note, has international awareness by shareholders, equity analysts, ratings agencies and news organizations—the precise audiences crucial to a mining project’s long-term existence—been so quickly apparent. Standard & Poor’s, Bloomberg, Thomson Reuters, Moody’s and Goldman Sachs rank among the news outlets, ratings agencies and financial institutions issuing their environmental, social and governance information—including emissions data, energy consumption statistics, board composition and corporate policies.
“That information was kept hidden and shared sparingly until quite recently,” the authors note, “but now it’s online and available to all.” Recognition can also come from the Dow Jones Sustainability Indexes, the Carbon Disclosure Leadership Index and places like the Nasdaq and London’s FTSE.
“Insight Trading” further contextualizes CSR globally, in part, through a 2002 survey by SustainAbility, a sustainability consulting firm, and the Inter- national Finance Corp. (IFC): Emerging market companies, that is, focus on short-term costs and revenue, while “brand value” and reputations prevail for businesses headquartered in industrial nations. “Community investment and development are seen as overhead in developed countries,” meanwhile, “but in emerging markets are shown important in retaining social license to operate.”
Also intriguing is how Fleming and Cooper equate company leadership and sustainability with profits, another trend evolving alongside the CSR field itself. In a 2013 study by the Boston Consulting Group polling 2,600 managers and executives, for example, they cite half linking a 23% average profit increase directly with CSR programs.
“Interestingly, their perspective is one of building a competitive advantage through innovation, than seeing it as a cost issue,” the authors note. “Rather, it is high-performing organizations with strong leadership that embrace sustainability issues—these exhibit common characteristics including a long-term strategy, strong governance, sound risk-management and investment in green innovations.”
Issues neglected in this book, arguably, are more serious scenarios of forewarning: ones concerning environmental disasters, labor unrest or extreme human rights abuses—all bedeviling the mining business in a very public way. Indeed, while much has improved since implementation of initiatives like the Voluntary Principles on Security and Human Rights in 2000, among other significant global frameworks and agreements, plenty of work remains.
But when it comes to CSR and sustainability in mining, change is now—and there’s no turning back. And for any industry insiders seeking literature toward basic, effective sustainability in a mining—or any other infrastructure-based—project, this book offers a roadmap comprehensive as any. Expect more as the most important challenge facing the mining business continues to evolve.