May 2010

Voices from Industry

Coming full circle: Integrating global economic, environmental and social challenges into our core business practices

By L. Nehring

Our industry has come to the realization that being sustainable is dependent upon our ability to integrate economic, environmental and social challenges into our core business practices. We might argue the materiality of these competing challenges, depending on time and context, but we cannot dispute our obligation to strategically manage the dynamic tension between the three challenges that is ever present within our business. Corporate social responsibility (CSR) or, more explicitly, corporate responsibility, is not a “value-added” activity. It is a central accountability that is expected by our investors, public policy-makers, employees, communities and civil society.

There are many sustainability management frameworks available covering multiple sectors, each of which present a suite of core business elements along with a specific technical emphasis. I’d like to focus on three — engagement, performance and governance — which are required to effectively manage any internal or external risk or opportunity associated with our industry.

Rigorous, strategic engagement is the surest method of clearly defining the issues that are of highest concern to our “communities of interest” and our business objectives. It means that we will endeavor to involve those who are most likely to be affected by our business decisions, including our own workforce, communities and others with a special interest. Once the issue is defined and well understood, it becomes easier to find common ground and, as a result, develop practical, workable solutions to ensure that the opportunity is realized and the risk well managed.

Meaningful engagement is not a band-aid for complex issues. But, it is a good indicator that a company has focused on building relationships that will challenge them to accelerate their own leadership and find solutions through innovation. Twenty years ago, we struggled as an industry to merge traditional ecological knowledge into our environmental business decisions along with our traditional empirical science knowledge. Today, we have countless examples of how their successful integration has influenced significant changes to our management of water, biodiversity and reclamation.

Ultimately, it’s the “so what” factor of engagement that counts, which is why performance is the second core element of CSR. More importantly, performance informed by engagement is more likely to be driven by a strategy of continuous improvement as a result of the broader perspectives, ideas and challenges that are entering into the decision-making process. As a result, the emphasis is on setting objectives that will deliver required business outcomes and that have meaning for both internal and external stakeholders. Without this relevance, it is very difficult to harness the right leadership, commitment and resources to meet our targets, a lesson we learned from our industry’s improved health and safety performance. How and where we are improving our economic, environmental and social performance is no longer a matter of trust. Accountability must be demonstrated through a process of assurance and reporting that speaks to transparent good governance.

Today’s mining leadership is distinguishing itself by its participation in a multitude of reporting mechanisms that cover the spectrum of local community, regional, national and international interests — many of which are voluntary. In addition, the range of outcomes we report continues to increase and is expanding the need for verifiable data collection and senior management oversight. The reporting challenge also includes our reluctance to share where we have not been so successful. It is difficult to convince ourselves that a public discussion of what is not working will be beneficial. Happily, the rise of credible multi-sector initiatives is creating an environment that supports this next level of reporting and analysis. While not easy, forums such as the National Roundtables on Corporate Social Responsibility and the Canadian Extractive Industry and the ongoing development of the Canadian Centre for Excellence in CSR support the need for constructive, challenging discussions among parties with a shared interest in corporate social responsibility and mining.

Thus, we come full circle to the integration of global economic, environmental and social challenges into our core business practices and the need for our industry to excel at engagement, CSR performance and governance.

Lee Nehring is vice-president of sustainability and human resources at Xstrata Nickel.

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