Mining Companies Discover the Truth About CSR: It Pays

The history of the mining industry is filled with sagas of the old company town where workers not only received their pay, but also their food and their shelter -- where wages were low, work hours were long and options for advancement in standard of living were limited.

But there is another side to the story that in a strange way connects with the state of the mining towns of today.

As they invested in North America's industrial development, mining magnates learned that if they wanted to woo workers and maintain a stable workforce, they needed to be responsive to needs. They needed to provide housing, resources and, in some cases, health care. In short, they needed to ensure that the forbidding environment in which laborers were expected to work, live, sleep and raise their families supported the basic needs of its new inhabitants.

The mining industry of today faces similar challenges. I say similar because, in the end, its appeal to the towns and communities that have grown up around its mining claims, plants and developments have a bearing in its success, just like the marketing of its product. And perhaps more than in the 1800s and 1900s, a company's image is tied to its commercial success.

"When opposition to the mining industry materializes as social conflicts, then mining projects risk blockades, vandalism, and other acts of violence," points out Luis Garcia Westphalen, an intern at the Center for Mining Studies at the Fraser Institute in Vancouver, BC Canada.

Corporations have discovered in recent years that showing a vested interest in the community adjacent to their mining operations, or on whose land they may be operating, is one way of alleviating tensions with local residents and avoiding expensive conflicts. It not only demonstrates stewardship, but also recognizes the community's expectation that it will be, in some fashion, compensated for difficulties the mining operation may cause.

But this understanding hasn't always been the case. The watershed example is Chevron's recent settlement with an Ecuadorian community that sued the company for widespread pollution of its ancestral lands from 1964 to1992. The lawsuit took close to a decade and in 2011 yielded one of the largest financial settlements ($18 billion) in mining history. To date, Chevron remains embroiled in contentious litigation and expensive appeals. It has also impacted the corporation's global image and, indirectly, its dealings with communities in other regions of the world.

But ameliorating protests and negative press isn't the only reason that mining companies have become proactive in establishing corporate responsibility at worksite communities, these days.

Corporate social responsibility (CSR) "provides a way of responding to increasing consumer concern about how the products they buy are produced," writes the staff at MiningFacts.org. Extractive industries have discovered the added plus of transparency on their websites, in their press releases and in worksite communities. And "companies that are regarded as socially responsible may be more likely to be asked to do business with governments that are accountable to their citizens," a real plus for companies that have long-term operations in the country. In some cases, these initiatives receive government backing that helps defray cost.

When Rio Tinto provided a town in Ghana with clean water and education, it also led to a training initiative for 400 young individuals. The CSR program was underwritten by both Rio Tinto and the Canadian International Development Agency.

But the mining industry's increasing use of CSR as a means of avoiding social tensions isn't without its critics, said researchers Ralph Hamannn and Paul Kapelus. "In contrast to the business case argument for CSR, critical perspectives argue that CSR is primarily about greenwash," said the authors, in which the companies are accused of putting forth a concerned image "without significant change to socially or environmentally harmful business practices." In South Africa, these views have been reinforced by inconsistent efforts and lack of mandatory requirements that would ensure the community feels compensated for use and development of the property.

And that is, in part, because there are no legal requirements for a company to invest in such programs. "CSR is truly voluntary," Westphalen said. The corporation's decision to invest in a small-loan initiative to help community members start businesses or go to school helps the mining company as well as the community, but it isn't required by law.

International programs like the United Nations Global Impact and the Renewed EU Strategy 2011-14 for Corporate Social Responsibility have helped encourage and add framework for companies that see CSR as part of their social and business strategy.

Still, say Hamann and Kapelus, while"CSR-related claims, and particularly the reference to a business case for voluntary CSR, need to be treated with caution," CSR isn't greenwashing. It has a constructive purpose that benefits communities and when invested in wisely, can help reduce the impacts of an industry that increasingly is being seen for its detrimental environmental effects.

The question that other industries have had to address and seems equally current to the fossil fuel sector is how to migrate toward other investments while using CSR to minimize the impacts of extractive technology. Industries like waste management, which was at one time centered on carbon-expensive landfill operations, have found ways to use their technology to benefit communities, job growth, environmental preservation and, at the same time, migrate away from high carbon-based operations. Can the mining industry do the same?

Perhaps this will be the next question that the extractive industry needs to face. CSR initiatives like building schools, creating infrastructure and expanding diversified job growth are voluntary measures, but in today's commerce they are the essential tools to doing business. So is looking ahead toward the industrial and commercial changes that mandate a carbon-free future, and an enduring healthy environment.

Image of Red Ash Virginia, 1929: Jack Corn/National Archives

Mining protest: Keith Bacongco

Miner and daughter, 1974: Jack Corn/National Archives