A case for sustainable development

To those within the business sector who see sustainable development as a fad or as a distraction, let me say this: There is a strong business case for sustainable minerals operations. So strong, in fact, that those companies that ignore it will put themselves and their shareholders at a disadvantage.

Even worse, they will put the activities of responsible companies at risk.

We all face incredibly long investment horizons for any major new minerals operation, and the investments are capital-intensive. An example is a US$750-million alumina refinery being built in Gladstone, Australia, by Comalco, a subsidiary of London-based Rio Tinto. The planning for that refinery extends back more than 20 years. During that time, the world has changed.

For example, we have all seen change in markets, technology, our relationship with our employees, and our fanatical obsession with creating a safe and healthy working environment.

A key factor that has affected all major capital investments is the shift in Australia’s attitude to private business investment. A generation or so ago, Australians expected a paternalistic government that would assume responsibility for aspects of our lives, whereas today, in a deregulated culture, such a situation would be regarded as invasive. The government’s role has contracted, and the roles of the individual, and also business, have expanded — especially in the wake of globalization.

People now credit large international companies with considerable power, and we should acknowledge this because with power comes responsibility. Large resource projects can have huge economic, environmental and social impacts, and it is important that we are held accountable for our developments.

It is important, too, that corporations accept that the benefits we gain as a result of greater freedom bring strong expectations of reciprocal public benefits. Companies that meet these expectations will be welcomed and find opportunities for fresh investment. Companies that refuse to engage with their communities, and listen to their concerns, will be at a disadvantage.

The business case for sustainable development is not about companies acting philanthropically, or as extensions of government services. The community does not expect this, and our duty to our shareholders, who bear the risk of investment, should preclude expansive gestures.

When Comalco carried out its community research in Gladstone, before starting construction of the refinery, it was acknowledging the shift in public sentiment that had occurred over the previous 20 plus years. Government approvals remain essential, but nobody today invests in a project of this nature without community backing. So we talked to the community in the language of sustainable development. The response was heartening, and very pragmatic.

This is a community that, more than any other in Queensland, has experienced a roller-coaster ride of explosion-and-bust industrial development since the 1960s. What Comalco’s community surveys confirmed was that the people of Gladstone expected the company to provide benefits based on its obvious strengths. But the community did not expect the company to act alone. Increasingly, there is a recognition that partnerships with community bodies and government are the best way for a company to leverage its strengths and to achieve sustainable outcomes. Gladstone is a beautiful town and a great place to live, and its residents want to preserve their quality of life.

Therefore the community expects businesses such as ours to observe high environmental standards. And they are prepared to help us do this.

For example, Australians live on the driest inhabited continent, where water is a precious resource. Any way of reducing water consumption is worth exploring. Queensland Alumina Ltd. (QAL), a local aluminum company, draws water from Gladstone’s Awoonga Dam. Two months ago, with the community facing the impact of a drought, QAL, together with the Gladstone city council, agreed to commit the capital required to replace 5.5 million litres of fresh water with grey water, or treated effluent from the Council’s sewage treatment. As Gladstone’s mayor, Peter Corones, said, the project was a great example of what industry and local government can achieve when they work together.

The new refinery will use technology to provide high-energy efficiency and low levels of emissions. Stringent safety and environmental standards have been built into the design from the start.

Less obvious are programs that ensure that the refinery meets the expectations of the community in terms of training programs and employment policies. These are designed to increase the economic and social spinoffs for the city and the surrounding region, and to minimize the boom-bust syndrome associated with previous projects.

One way Comalco has sought to strengthen its ties to Gladstone has been through setting up a community fund to target issues of concern, such as protecting the environment and building a skilled and diversified workforce.

Keep it safe, keep it clean, and employ and train local people. Use local businesses where possible and join the community. Not unreasonable requests by any standard, and they are the basis of a sustainable relationship with the people of Gladstone.

Today, companies cannot afford to leave such relationships to chance.

— The preceding is from a keynote speech delivered at the International Alumina Quality Workshop in Brisbane, Australia. The author is the chief executive officer of Comalco, based in Brisbane.