Sustainable development, Part 2

Corporate actions in support of sustainable development are often muted. In part, this reflects a perception that engaging with the community is an expensive proposition and, moreover, fundamentally the responsibility of government. In other words, industry sees it as an area in which it should not get too involved.

Often, companies are unsure how best to contribute to local well-being. This uncertainty is partly the result of confusion between “social infrastructure” (schools and hospitals, for example) and “social capital” (the relationships and norms among people that facilitate collective action, access to resources, and self-reliance). Companies tend to invest more in the former, because, unlike social capital, infrastructure is tangible, familiar and easily managed.

However, both are important. A holistic, long-term approach would be to implement a plan based on the general economy of the region in which mining is carried out. The revenue generated by mining would be used to create an economic base that would last long after mining ceases, thereby helping to sustain the community.

But companies cannot and should not be expected to do this alone; government has a role to play. Unfortunately, many governments in many countries lack both the capacity (that is, the financial resources) and the political will to make a meaningful contribution.

Furthermore, local and regional demands for access to the benefits derived from mining put additional pressure on companies. Often this takes the form of a general call for the fair distribution of wealth from the project. This expectation — often a demand — may be met through the flow of tax revenue back to the communities, but that is in fact rare. In areas where government is cannot afford to provide for the population, the company may be forced to act as surrogate — for example, supplying infrastructure, basic services and social assistance. (All the while, of course, the company is also being taxed, by the same government.)

To date, governments have responded to this situation in two ways: providing incentives for companies (for example, Honduras, Bolivia and Papua New Guinea all have tax provisions designed to encourage investment that benefits the community), and, more frequently, enacting regulations (such as those in Indonesa, which stipulate that companies must contribute to community development programs).

The trend appears to be toward regulation, both directly by statute and through policy pronouncements. Papua New Guinea has embarked on a program of regulatory reform that is intended to see the principles of sustainable development applied to the mining sector. Nunavut has similar intentions, as do Peru and the Dominican Republic. It is to be hoped that the policy and regulations produced from such national projects reflect the cultural imperatives and heterogeneity of the population and thus help the private sector meet both local and global expectations.

Current legislative regimes are, by and large, unsatisfactory, but the situation appears to be improving: early initiatives designed to ensure that benefits reach the local community are already being superseded by attempts to provide a regulatory framework based on sustainable development. In this regard, the industry is well-positioned to engage with government to discuss the nature of new legislation.

What is ultimately required is a concerted effort on the part of companies and governments to create models of legislation which the world can adopt.

— The preceding is an edited version of a paper published in Communiqu, a news bulletin of the Prospectors & Developers Association of Canada. Susan Joyce is the senior social specialist at Golder Associates in Calgary, Alta., and Ian Thomson is the principal owner of On Common Ground, a Vancouver-based consulting firm.