Social Performance in the Extractive Sector

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Natural resources are a huge source of wealth, job creation and development for many countries in Asia. For companies in the extractive sector, environmental and social performance has a well documented economic impact. Natural resources are finite and not sustainable business models in themselves, but it is likely for a few decades to come, especially in developing countries that natural resources will be extracted. During this finite period more emphasis is likely to be placed on managing the social performance of extractive companies, the impact that extractive companies have and the broader societal benefits that should accompany natural resource extraction.

In the extractive sector, poor community relations and public discontent can lead to devastating consequences for companies, including sabotage, protests, delays, blocking of roads, shutting down production facilities and work stoppages. Many mining sites are in remote areas, with poor infrastructure, services, health care and education. Companies therefore have a lot they can contribute, but when the needs and expectations of the local communities are not understood, it can result in conflict. Addressing environmental and social impacts is critical to ensure a licence to operate and create “political capital” with host governments.

Governments themselves are under increasing pressure to ensure development impacts are realised with resource extraction. This pressure is passed downwards to operating companies to deliver demonstrable development impacts as well as economic returns. Governments in South East Asia recognise this challenge – the government of Laos suspended approvals of new mine exploration licences in June 2012 until 2015 whilst they review existing concessions, for example.

Whilst the risks associated with extractives are acknowledged and many companies in Asia now invest in improved health, safety and environmental performance few it seems are investing in improved broader social performance. Social performance often comes as an after thought, with performance evaluated by incidents and spend rather than by broader measurements of positive impact based on the influence and impact of an extractive activity on the broader community.

Investing early in social performance can help safeguard assets and save considerable time and resources spent managing later conflicts that could have been avoided or mitigated. Many times companies explore extraction opportunities and establish assets long before they engage with and try to understand the needs and potential impact of the business for local communities. This is a mistake.

To address these challenges we are hosting an industry forum in Singapore– Social Performance in the Extractive Sector on December 10 and 11. The event is hosted by Bloomberg who will be sharing the experience of how investors view emerging markets and ESG issues. The Forum will have specialist panels, sharing best practice, challenges and developing industry initiatives. Speakers are from industry, civil society and indigenous community leaders. The Forum explores:

  1. International Best Practice: The opening session will examine industry guidance and best practice – there is a huge amount of resources and guidance available, the panel will explore which are being utilised and why, which legislation is impacting disclosure and what social performance is expected by investors. Karen Westley from will share how Shell manages Social Performance in practice.
  2. Multi-stakeholder initiatives: The second session acknowledges that the challenges faced by extractive companies are those which are best addressed in partnership with other companies, government, civil society and other stakeholders. Speakers in this session will share their experience in the development of a regional governance framework for extractive industries in ASEAN, experience from the mining coalition in Vietnam and the EITI in Myanmar.
  3. Community engagement practices: The third session looks at best practices in community engagement and consent. How is the practice of Free, Prior and Informed Consent (FPIC) practiced by extractive companies in Asia. Chanthy Dam will share the experiences of indigenous communities in Cambodia and how liaising and engaging with local companies is perceived from a community perspective.
  4. Engaging internal and other key business stakeholders: Our final session will explore how other business stakeholders view social performance. How do lawyers, investors and engineers view ‘non-technical’ performance issues. How and when does social performance become simply company performance?

Join us to network with peers, explore how extractive companies are tackling sustainable development in Asia.

View the Forum details on the event website here and register here

Source: CSR Asia