Csr in the extractive industry by Pippo Opoku Nelson

CORPORATE SOCIAL RESPONSIBILITY IN THE EXTRACTIVE INDUSTRY: THE ROLE OF GOVERNMENTS, COMPANIES, CIVIL SOCIETY AND THE HOST COMMUNITY.

BY P.O. NELSON MARCH 2014

Abstract: CSR in the extractive industry is now a global agenda being pursued and promoted by the various stakeholders in the extractive industry. The actions and operations of the companies will surely result in challenges to the environment, humanity and society as a whole.CSR practices, policies and initiatives have proven over time as the best tools for handling such challenges .whiles many are of the view that companies should be solely responsible for CSR initiatives and practices in the extractive sectors, others are also of the opinion that it will take the collective effort of all the stakeholders namely states, companies, civil society organizations and host community to ensure comprehensive CSR policies and initiatives in the extractive industry. The paper takes a stand with the position of the later to suggest the various roles and responsibilities of the players to embrace promote and ensure efficient CSR practices in the extractive industry. The paper also concludes with how CSR initiatives and practices can be implanted and the various challenges that confront CSR in the extractive industry.

Contents LIST OF ABBREVIATIONS .................................................................................................................... 4 LIST OF TABLES ...................................................................................................................................... 5 Introduction ................................................................................................................................................. 6 CHAPTER 1 ................................................................................................................................................ 7 1.0

Corporate Social Responsibility and the Extractive Industry ................................................ 7

CHAPTER 2 .............................................................................................................................................. 11 2.0

Does all Stakeholders have Roles to Play? .............................................................................. 11

CHAPTER 3 .............................................................................................................................................. 14 3.0

All Hands on Deck .................................................................................................................... 14

3.1

The Role of Government in Ensuring CSR in the Extractive Sector ...................................... 14

3.2

The Role of Companies in Ensuring CSR in the Extractive Industry.................................... 17

3.3

The Role of Civil Society in Ensuring CSR in the Extractive Sector ................................... 19

3.4

The Role of Host Community in Ensuring CSR in Extractive Sector.................................. 20

CHAPTER 4 .............................................................................................................................................. 21 4.0

Ensuring CSR in the Extractive Industry: Implementation ................................................. 21

4.1

Ensuring CSR in the Extractive Industry: Challenges .......................................................... 23

CHAPTER 5 .............................................................................................................................................. 25 5.0

Conclusion ................................................................................................................................. 25

REFERENCES .......................................................................................................................................... 26

LIST OF ABBREVIATIONS CSR

Corporate Social Responsibility

NGO

Non- Governmental Organization

EITI

Extractive Industry Transparency Initiatives

PWYP

Publish What You Pay

LIST OF TABLES

Table 1

CSR Implementation Framework

Introduction The extractive industry in both developing and developed countries encompasses actions involving the extraction of mineral resources and oil. Many countries now relies on the extraction on mineral resources for their source and stream of revenue and will therefore prefer to have an environment that will attract companies being it local or foreign to the extractive industry. This is mainly so because s most of these governments and countries are not in positions to extract the mineral materials. The companies in the extractive industries in their quest to make profit are expected to be socially responsibilities since their activities and operations as happened many at times in the past may pose serious environmental, social, human and economic challenges that need serious attention. In most cases such challenges as mentioned above are addressed through Corporate Social Responsibility initiatives and practices. Many are of the view that in ensuring Corporate Social Responsibility policies and initiatives in the extractive industry, the onus lies solely on companies to promote Corporate Social Responsibility policies and practices since their action result in the negative impact mentioned above whiles others think that CSR initiatives should be a collective responsibility for all stakeholders in the extractive industry. In view of this, the research paper critically looks at Corporate Social Responsibility in the extractive industries and seeks to address some of the issues raised above relating roles and responsibilities of the various stakeholders of Corporate Social Responsibility in the extractive sector. Chapter one of this research paper talks about the Corporate Social Responsibility and the extractive industry whiles Chapter two of the paper is asks if there are roles to be played by the various stakeholders in the extractive industry. Chapter three of the research papers discusses the role of the various actors in ensuring Corporate Social Responsibility in the extractive industry. Finally Chapter four laments on how CSR can be implanted in the extractive sector and the challenges that will hinder the progress of CSR policies and initiatives in the extractive industry.

CHAPTER 1 1.0

Corporate Social Responsibility and the Extractive Industry

Corporate Social Responsibility has gained much prominence and surfaces as an important area of research over the past years due to the relevant attention accorded to it by civil society organizations, the business world, the state and other actors across the world. Due to its prominence on the global platform, many writers have come up with different definitions for Corporate Social responsibility making it quite a herculean task to pick on a generally accepted definition for the CSR simply because most of these writers argue from different viewpoints1. Lord Holme, former executive director of Rio Tinto and Philip Watts former Chair of Royal Dutch Shell defined Corporate Social Responsibility as the “ the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large”. According to the confederation of British Industry, “Corporate Social Responsibility encompasses the extent to which companies should promote human rights, democracy, community improvement and sustainable development objectives throughout the world” whiles the World Bank defines Corporate Social Responsibility as a “commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life, in ways that are both good for business and good for development”. Although Corporate Social Responsibility has different definitions, the message being preached by various definitions clearly suggests that companies and corporations have a crucial role and a responsibility to play2. Literature has revealed that there have been four main eras’s relating to the concept of Corporate Social Responsibility. The first era was in the early 1950s where CSR was widely seen as the Philanthropies era where companies resulted to the donations to charity.1953 to 1967 was the era 1

Crane, A., et al (2008). The Oxford Handbook of Corporate Social Responsibility. New York: Oxford University Press Inc. Page 4-7 2

Blowfield, M., and Murray, A. (2008). Corporate Responsibility a Critical Introduction. New York: Oxford University Press. Page 12-13

awareness. During this time companies saw the need to involve themselves in community activities. The period of 1968 to 1973 saw the Corporate Social Responsibility saw the emergence of the issues era where companies turned their attention to specific issues such as pollution and discrimination while 1978 till date marks the responsiveness era where companies started taking management and organizational steps to handle issues related to Corporate Social Responsibility3. Many reason have been given to the rise in the CSR concept globally, one of such reason contributing to the emergence of the CSR concept is the rise in the activities of the extractive industry which is seen as threat to the environment and the society. Most of the destruction and calamitous events that happened to the environment and issues of human rights violation took place in the extractive industry. This can be said to have increased and heightened the call for the CSR concept in the extractive industry4. A brief history of the extractive industry tells that during the 1940s, countries from the developing world such as Africa, Latin America and Asia began to improve economically by relying on their oil and mineral resources. They came to the realization that the only way to reduce poverty and improve their economies was to start the exploitation of their resources. Such developing countries not having the required financial capabilities to start with the production and exploitation of the oil and mineral resources needed to fall on private and foreign investor. This allowed and paved way for many foreign companies to flood the extractive industry. Today in the extractive industry, the developing countries from the Sub-Saharan African dominate with huge amount of mineral resources whiles the Middle East boast of adequate oil reserves5. The extractive industry is of great benefit and significance to the developing countries. Funds and returns accrued from the extraction of the oil and mineral resource will not only cushion the economies o these countries financially but will also improves the standard of living as well as 3

Supra note 1, page 24-25

Yakovleva, H., and Natalia, J., ((2006)). Corporate social responsibility in the mining industry: Exploring trends in social and environmental disclosure. Journal of Cleaner Production 14 , 284-284. 5

Ross, M. (2001). An Oxfam American Report:Extractive Sectors and the Poor. at http://www.sscnet.ucla.edu/polisci/faculty/ross/oxfam.pdf (last visited 05/08/2013)

opening up other sectors of the of the economy if the extractive industry is managed well by the state6.But when not managed well the country runs into serious problems and economic difficulties. Failure by the state to appropriately administer the extractive resources coupled with issues such as corruption and conflict in the extractive industry might lead to what we call the resource curse, thus the situation where resource rich countries upon all it resources experiences low standard of living and under development. Therefore the onus lies on the state to transform the lives of people and the economy as a whole by through the extraction of the mineral resources. In ensuring the avoidance of the resource curse in rich resourced countries, CSR is usually seen in most instances as a appropriate tool to prevent this ritual7. For example a consortium in Chad in charge of the construction of pipeline infrastructure for the transportation of oil to Cameroon did not only recruit the local people but also supported the construction of clinics, and schools, provided scholarships for local people and also promoted and facilitated other health and educational programs. All these CSR projects to some extent were geared towards the alleviation of poverty and improvement of standard of living in the resourced rich countries8. CSR practices and policies in the extractive industries can be said to have double standards, in that CSR practices in the extractive industry of the developed world is most at times different from the concept of CSR in the extractive industries of developing countries. This has become possible because in the developed countries, there are already, structures, plans, and regulations and institutions in place to help in the management of the extractive resource and also put the market in check, in this case Companies have no option than to operate according to the laid down regulations. But in the case of developing countries, there is a different story to tell with respect to CSR in their extractive industries. Countries in the Sub- Saharan Africa, Latin America and Asia are characterized by corruption, weak enforcement, lack of institution and regulations in the extractive industry forcing most companies in the extractive industry to be on

Hilson, G. ( (2012) ). Corporate Social Responsibility in the extractive industries:Experiences from developing countries. Resources Policy 37 , 131â&#x20AC;&#x201C;137. 7

Cash, A. (2012). Corporate social responsibility and petroleumd evelopment in sub-SaharanAfrica:The case of Chad. Resources Policy37 , 144â&#x20AC;&#x201C;151. 8

Chevron. (2013). Chad Fact Sheet. at http://www.chevron.com/documents/pdf/chadfactsheet.pdf (last visited 05/08/2013)

their own and most at times ignore what is expected of them although these companies have to give back to the society in which they operate9. One may ask if companies should solely promote and ensure CSR in the extractive industry or all other major stakeholders have a role to play. If other players in the sector need to play a part, then what are the roles and responsibilities needed to be performed by the various stakeholders involving states, companies, civil society organizations and host community to ensure comprehensive CSR practices especially in the extractive industries of developing countries.

Supra note 6

CHAPTER 2 2.0

Does all Stakeholders have Roles to Play?

There is absolutely no doubt that states, companies, civil society organizations, host communities have a role to play in ensuring effective CSR practices in the extractive industries of most developing countries. Truly, they all have a part to play and their collective effort could tell a different story of CSR in the extractive industry. This is mainly because attempts by any of the actors to single handedly promote CSR practices in the extractive industry on its shoulders might stagnate the progress of CSR in the extractive industry. It is therefore very important that equal interest and support from states, companies, civil society organizations, and host community is accorded for the pursuit of effective CSR in the extractive industry10. States like any of the actors in the extractive in industry is a major driver of CSR and contributes greatly for the establishment of an effective CSR practices and policies in the extractive industry. The active involvement of the state in the pursuit of CSR in the extractive industries of developing countries will not only promote CSR but will also ensures and encourages other players such as companies in the extractive sector to take up greater responsibilities of their actions and operations11. In as much as all the actors need to play a massive role, majority and greater part of the responsibilities lies on the companies involved in the extractive industry. The activities and operations of these companies usually come at a cost to the communities either socially or environmentally which most at times amounts to global protest and outcry. The global protest against their actions have not only corporately affected companies like BHP Billiton, Rio Tinto, Shell, Freeport and others but have also affected their operations in the communities they operate. In making sure that this is prevented from happening and ensuring the smooth operation

World Bank. (2003, July 7th - 25th). WBI Series on Corporate Responsibility, Accountability, and Sustainable Ccompetiveness. Public Policy for Corporate Social Responsibility , pp. 1-12. http://info.worldbank.org/etools/docs/library/57434/publicpolicy_econference.pdf ( last visited 06/08/2013) 11

Supra note 1.Page 312

of companies in extractive industries mostly of developing countries, Companies should take a strong stand for CSR in the extractive industry12. The role of the civil society which comprises of Non Profit Organizations, Charity Organizations, faith based organizations, trade and labor unions, advocacy groups, social movement, professional associations, community groups etc in the extractive industry concerning CSR practices cannot be overlooked and under estimated. As an important player in the extractive industry many of these civil society organizations are there to pursue, serve and the agenda and interest of the resource rich community and the society as a whole in ensuring comprehensive CSR policies and practices in the extractive industry most at times in developing countries13. Finally, the role of the host communities in the extractive industries concerning CSR policies and practices should not be taken for granted. Literature has revealed that most of these resource rich communities are considered to be very poor and are at times neglected by companies and the state although they sit on huge and valuable mineral resources. The activities of these companies affect these local people and the community as a whole14. In moving forward and ensuring that these companies become responsible for the impacts of their actions, indigenous communities will clearly need to play a pivotal role in the extractive industry .The involvement of the Indigenous community in the CSR practice will not only push them to fight for what is due them but will also put the company in a position to know what is expected of them15. Cleary as seen from the above that states, companies, civil society organizations and host communities have a major and equal role to play to guarantee effective CSR practices and policies in the extractive industries of developing countries, the next chapter of the paper shall 12

Luning, S. (2012). Corporate Socia lResponsibility (CSR )for exploration:Consultants,companies and communities in processes of engagements. Resources Policy37 , 205–211. 13

Kourula, A. (2010) . Corporate engagement with non-governmental organizations in different institutional contexts—A case study of a forest products company. Journal of World Business 45 , 395–404. 14

Newell, P. (2005). Citizenship, Accountability and Community:the limits of the CSR agenda. Journal of International Affairs 81, , 541-557. 15

Imbun, B. Y. (2007). Cannot Manage without The ‘Significant Other’: Mining, Corporate Social Responsibility and Local Communities in Papua New Guinea. Journal of Business Ethics 73 , 177–192.

have a thorough look at the various roles and responsibilities expected of these actors in the extractive industries.

CHAPTER 3 3.0

All Hands on Deck

As already said, ensuring comprehensive corporate social responsibility practice and policies in the extractive industry means there should be the need for equal and collective participation of the state, companies, civil society organization and the indigenous community. Allowing companies to single handedly promote and pursue corporate social responsibilities in the extractive as been done in the past may not favour the course CSR in the extractive industry. To push the CSR agenda across extractive industry especially in the developing countries is the all hands must be on deck to play a role.

3.1 The Role of Government in Ensuring CSR in the Extractive Sector Generally the issue of states and government taking up the primary role as the promoter of corporate social responsibility has been in existence from the early 1990s. Although few states and governments bought into the idea at that time, now it can be said many states have taken up the responsibility to promote and a play a pivotal role in ensuring corporate social responsibility after series of pressure from other stakeholders such as Non Government Organizations and international bodies. This was evident in 2002 when the European Commission through its European Commission Communication dubbed Corporate Social Responsibility: A business contribution to sustainable development urged governments and states to pursue policies and practices that will promote CSR16.

Although CSR is most at times seen as a voluntary initiative, countries raise the bar and the status-quo by regulating the industry. This may usually come in the various ways such as regulation, laws, penalties and measures all aimed controlling the operation and activities of companies especially in the extractive. That is, government can regulate the action and operations of companies in the extractive industry by setting the accepted norms and standards grounded in the countries constitution. Issues relating to labor force, pollution and emission level and reporting procedures can be spelt out clearly in the laws of the country serving as guiding 16

Zsolnai, L. et al (2009). Ethical prospects. : economy, society, and environment (Vol. Volume 1). Springer. at SpringerLink http://libproxy.dundee.ac.uk/login?url=http://dx.doi.org/10.1007/978-1-4020-9821-5 ; (8/08/2013)

principles for the companies17.China took the lead in such CSR regulations and standards in the extractive industry in 2006 at the Soft Competence Summit, where China’s Minister for Commerce Yi Xiaozhun revealed China’s intention of drawing up regulation and standards for CSR in

China’s extractive industry18. Government of especially developing countries in ensuring comprehensive CSR in the extractive industry may use its organizational and fiscal resources to partner companies to promote CSR in the in the industry. As seen in developing countries, the partnership or the collaboration may take different forms such as the government seen at times as the catalyst or as a partaker. For example the United Kingdom government is seen as an ardent advocate of partnership with companies to promote and ensure CSR19. Again, governments can also use it formal and explicit approval and endorsement to urge and encourage Companies to take up responsibilities in the extractive industry. Many are of the view that governments and states lack the capacity and funds for most of the developmental works in their country and therefore they will rely and seek help from the companies in the industry. In 2003, the Danish social affair Minister rolled out with the ‘It concerns us all initiative

which

suggests that CSR has role to play in addressing some of the problems in the public sector20.Not long ago the UK government came out in support of this. According to the former UK Minister for education, David Millband who said; “We cannot do this on our own. Education is a joint enterprise – between teachers and students but also between schools and the wider community. Business can sponsor Specialist Schools and Academies. Business can contribute to curriculum

United Nations Economic and Social Commission for Asia and the Pacific.(UNESCAP). (2010). Creating Business and Social Value Chain:The Asian Way to Integrate CSR into Business Strategy. New York: United Nations publication. at Page 100 http://www.unescap.org/tid/publication/indpub2565.pdf ( last visited 08/08/2013) 18

FESS and USAID. (2008). Corporate Social Responsibility and China’s Overseas Extractive Industry Operations: Achieving Sustainable Natural Resource Extraction. http://www.fess-global.org/publications/issuebriefs/csr_china.pdf ( last visited 08/08/2013) 19

Supra note 1.page 314

enhancement. Business can offer work placements and work experience. Business can offer mentoring and governor support.”21 An appeal like this from the government will help encourage CSR in extractive industry of developing countries where governments lack the financial strength to carry out developmental projects. In encouraging a formidable CSR practices and initiatives in the extractive industry, the government should be transparent in revenue management and distribution. It will be the responsibility of the government to develop the resource community physically and humanly with the revenues accrued from the operations in the extractive industry. Although it might not be possible at all times to take this initiative, governments can give back to the resource community using the revenues received to develop areas such as education, health, roads and other developmental projects especially in developing countries where they lack such amenities22. Lastly the government also has a primary role to play in protecting and respecting the right of people in place where resources are extracted. That is, government will have to ensure that the rights of the citizen in the resource community are not abused or violated in any way by the operations and activities of the company in the extractive industry. Governmnets do not only protect and respect the rights of people but also ensure that rule of law is adhered to and applied in the extractive sector. Where there exist any such form of such abuse and violations, the onus lies on the government to look into such issues, set out the appropriate punishment and provide remedy23.

Moon, J. (2004). United Kingdom – An Explicit Model of Business-Society Relations. Page 52 at http://link.springer.com/content/pdf/10.1007/3-540-26960-6_5.pdf ( last visited 08/08/2013)

Macdonald, C. and Schloeffel, A. (2011). Australian Government:Social Responsibility in the Mining and Metals Sector in Developing Countries. http://www.ret.gov.au/resources/Documents/LPSDP/DEPRES.pdf ( last visited 12/08/2013) 23

Ruggi, J. (2011). Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework. at https://my.dundee.ac.uk/courses/1/CP52037_CAS_D65_201213/content/_3459513_1/ruggie-guiding-principles-21mar-2011.pdf (( last visited 13/08/2013)

3.2

The Role of Companies in Ensuring CSR in the Extractive Industry

Over the past years, companies in the extractive industry have been tasked by academicians and policy makers and other international bodies to have clear and set out objectives, roles and obligations in countries and communities they operate. These set out roles and objectives of companies in the extractive industry should take into account the interest of the state and the inhabitants of the resource community, thus in a way giving back to the community. This is mainly so because many have argued that companies and corporations have a role to play in national development and also helps in providing solution to issues of public concern.24. Some years ago, most companies in the extractive industry held the view that their responsibility was only issues relating to the o security and socially welfare of its workers but this scenario has change within the past 15 years. Now companies are required to be more responsible to the state and host communities. The shift has not only moving companies in the extractive sector from the philanthropic initiatives but also companies are now asked to accountable for their actions and also play a pivotal role in the pursuit of CSR initiatives and practices in the extractive sector 25. Firstly, companies should make provision for training and capacity building initiatives that will improves the lives of people in the host community. Any proposed initiative in capacity building should aim at providing income and employment opportunities those benefits the resource communities. Companies that develop training and capacity building initiatives must factor in women and the less privilege in the society since they such people in the host communities of extractive industry are most at times neglected26. Secondly there are many voluntary initiatives proposed to promote CSR initiatives such as the Global compact Principles initiated by the United Nations could be a starting point for companies in the extractive industry in their quest to ensure CSR practices in the industry. Companies have a role to play in the global fight for comprehensive CSR policies in the extractive industry by embracing and promoting their operations and activities through a set of 24

Eweje, G. (2006). The Role of MNEs in Community Development Initiatives in Developing Countries:Corporate Social Responsibility at Work in Nigeria and South Africa. Business & Society , Volume 45 Number 2, 93-129. 25 26

Supra note 12 Supra note 22

values relating to human rights, labour standards, the environment and the anticorruption. This clearly suggest that companies relying on voluntary initiatives such as the Global Compact will work with policies and practices that will ensure and promote and respect the rights of the host community as well as adhering to the required labour standards in the extractive industry. It is also the responsibility of the company to ensure that its operations and policies promote environmental sustainability.27. The concepts of transparency and accountability are key drivers of CSR in the extractive industry and to ensure and promote CSR in the industry, companies and corporations seen as major actors in the sector need to play a major and vital role .There are most times bad blood between companies, governments, civil society and the local community about revenue generated from the industry, the use of the revenue, the payments of royalties, tax etc many at times leading to disturbance from the local people have the tendency to halt the activities and operations of companies in resource rich communities. In preventing such occurrences in the extractive industries companies will need to commit to the EITI and PWYP initiatives. Embracing the EITI and PWYP concepts will not only ensure transparency and accountability in the industry but will also help to reduce corruption in the extractive sector as well as promoting the corporate image of companies. In many instances governments in especially developing countries see the establishment and implementation of EITI as very complicated and that is where companies can also offer their help and support. Assistance such as capacity building of government officials, provision of funds for the implementation and other technical support may be offered by companies as their contribution to transparency and accountability in the extractive industry.28.

IBLF and EITI . (2008). EITI Business Guide : How companies can support implementation. at http://eiti.org/files/document/EITI%20Business%20Guide.pdf ( last visited 13/08/2013)

3.3

The Role of Civil Society in Ensuring CSR in the Extractive Sector

The contribution of the civil society to CSR in the extractive industry which dates back to years are very important and cannot be under estimated. Civil society groups such as Green Peace, Friends of the Earth, Amnesty International, Oil Watch and other groups have been in the extractive industry for year with one common objective â&#x20AC;&#x201C; to make sure that the right practices are adhered to by companies and institutions in the extractive industry. Some years ago, civil society groups saw companies and other actors in the extractive industry as enemies but today the situation has changed. Civil society groups and other actors have now realized that they will all need one another in the ensuring a comprehensive CSR in the extractive sector29. Transparency and accountability in the extractive industry should not only be spear headed by companies and states although they have leading roles to play. Civil society groups have an important role to play in ensuring transparency and accountability which are seen as important aspects in CSR in the extractive industry. For instance, in helping to advocate for transparency and accountability in the sector through initiatives such as the EITI and PWYP, civil societies also have a role to play during the implementation and monitoring stages of the EITI and PWYP initiatives30. Secondly, one of the major roles to be played by the civil society in the extractive sector is to bring to light activities and bad practices of companies and governments in the extractive industry. Over the years the world has come to know events in the extractive industry through massive campaign and support from the civil society groups. Companies in the extractive sector such as Shell, ENI, ExxonMobil, Chevron etc have seen their operations and activities being brought to a halt due to the position taken by civil society groups to expose and campaign against bad practices of companies which usually centers mainly on environmental, health, human rights, corruption, and other ethical related issues31.

Tuodolo, F. (2009). Corporate Social Responsibility:Between Civil Society and the Oil Industryin the Developing World. An International E-Journal for Critical Geographies , 8 (3) , 530-541. 30

Supra note 28

Supra note 29

Lastly, as seen in recent times, civil society groups may also partner and collaborate with companies and other actors in the extractive industry. With such partnership and collaboration, all actors involved have share and equal responsibilities to play to promote CSR in the extractive industry. Civil society groups can collaborate especially with companies in the extractive to tackle issues and roll out projects in the sector. Chevron in collaboration with World Wildlife Fund outdoored the conservation of natural resources in Papua New Guinea whiles Shell and Amnesty International came out with Human right training for employees in Norway32.

3.4

The Role of Host Community in Ensuring CSR in Extractive Sector

Although the role of the host or resource community in ensuring CSR in the extractive industry is seen as minimal, this cannot be down played. Host communities acting as rightful custodians of the resource being extracted in the country have a crucial role to play in the use and management of the land and resources. The host communities in their quest to admonish companies in the extractive industry to operate with the best practices in the interest of the local people should strive to get involved in the activities and operation of companies in the sector. The involvement of the host communities in the affairs of companies will bring to the attention of the world and the global community about issues relating to human right abuses and bad environmental practices committed by the companies. What happened in the Ogoniland is a clear example; the activities of shell which were considered as violating the right of the people of Ogoniland were exposed to the outside world due to the host communityâ&#x20AC;&#x2122;s involvement and attention to the activities of Shell in Ogoni33.

Supra note 29, page 534

Okonta, I., Douglas, O., Where Vultures Feast: Shell Human Rights and Oil (United Kingdom London, New York: Verso, 2003). Page 119

CHAPTER 4 4.0

Ensuring CSR in the Extractive Industry: Implementation

The implementation of CSR policies and practices are usually engineered by the government and the companies. On the part of most companies, especially those in the extractive industry, there exist no form of an approved and accepted by all method of implementing CSR approaches, initiatives and practices since companies may have different and varying agenda’s to pursue. For the purpose of this paper, a framework for the implementation of CSR policies and practices in the extractive industry which is seen as quite flexible and suitable for companies in the sector shall be adopted. The table shows a detailed account of the implementation framework spelling out what companies need to do in implementing CSR practices and policies34. Table 1: Implementation framework When? (Stage )

What? (Task delineation) 1. Conduct a CSR assessment

How? (Checkpoints on the journey) ●Assemble a CSR leadership team ●Develop a working definition of CSR; ●Identify legal requirements; ● Review corporate documents, processes and activities, and internal capacity; and

2. Develop a CSR strategy

●Identify and engage key stakeholders ● Build support with CEO, senior management and employees

Plan ●Research what others are doing, and assess the value of recognized CSR instruments; ●Prepare a matrix of proposed CSR actions; ● Develop ideas for proceeding and the Business case for them; and ●Decide on direction, approach, boundaries and focus areas. 34

Table 1: CSR Implementation framework When? (Stage )

What? (Task delineation)

How? (Checkpoints on the journey) ●Do a scan of CSR commitments; ●Hold discussions with major stakeholders;

3. Develop CSR commitments

● Create a working group to develop the commitments; ●Prepare a preliminary draft; and ●Consult with affected stakeholders. ●Develop an integrated CSR decision-making structure;

4. Implement CSR commitments Do

●Prepare and implement a CSR business plan; ●Set measurable targets and identify performance measures; ●Engage employees and others to whom CSR commitments apply ●Design and conduct CSR training; ●Establish mechanisms for addressing problematic behavior; ●Create internal and external communications plans; and ●Make commitments public. ●Measure and assure performance;

Check

5. Assure and report on progress

●Engage stakeholders; and ●Report on performance, internally and externally. ●Evaluate performance;

Improve

6. Evaluate and improve

●Identify opportunities for improvement; and ●Engage stakeholders.

Source: International Institute for Sustainable Development, (2007) The underlying fact that needs to be understood from this framework is that a company’s in the extractive industry’s CSR policies and practices should be embraced and incorporated into its decision making processes, strategy and management processes35. Governments also have a hand in the successful implementation of CSR policies in the extractive industry. Firstly at the implementation stage of CSR policies, government will need to create the necessary awareness in the country. 35

Supra note 34

Such awareness do not only promote and ensure successful implementation of CSR policies but will also minimize possible challenges and hindrances. Several governments may also allocate funds and budgetary support for the implementation of CSR policies and programs. The implementation of CSR projects may require substantial amount of fund and therefore government in their bid to ensure comprehensive CSR practices may have to finally support the implementation of such projects and policies.Providng funds for the implementation CSR programs will also help to create the necessary awareness in the sector36.

4.1

Ensuring CSR in the Extractive Industry: Challenges

Corporate Social Responsibility in the extractive industry is likely to face many challenges as it has been most at times in the past. Firstly, lack of communication between various stakeholders and actors is a crucial challenge that hinders the progress of Corporate Social Responsibility especially in the extractive sector. Most often, there is a communication gap at t the grass root level between government and host communities and companies about CSR policies and practices. This situation may also give rise to other challenges such as lack of awareness of CSR policies and practices which will lead to lack of community involvement in the CSR policies and practices. This challenge has attributed to the collapse of many CSR policies in the extractive industries37. Secondly, lack of transparency and accountability in the extractive sector is also a major challenge in ensuring CSR policies and practices in the extractive sector. The issue of lack transparency and accountability on the part of government department and agencies and companies with respect to information disclosure, finances, audit etc may promote mistrust

Ascoli, K.,, Benzaken, T. (August 2009). BSR | Public Policy and the Promotion of Corporate Social Responsibility. http://drcafta.bsr.org/images/partners/Public_Policy_Promotion_of_CSR_final.pdf ( last visited 14/08/2013) 37

Arora, R.,, Garg, R. ( March 2013). Corporate Social Responsibility â&#x20AC;&#x201C; Issues and Challenges in India. International Journal of Research in Finance & Marketing:Volume 3, Issue 2 , 1-9.

between the various actors involved in CSR which will have impact on the implementation of CSR policies since trust is seen as an important catalyst of CSR.38 Another hindrance to CSR in extractive industries is the lack of civil society groups and non governmental organizations in resource communities to know what exactly is happening on the ground and also work hand in hand with most companies in the sector to ensure that CSR policies and practices are successfully implemented. Lastly, also related to inadequate civil society groups and non-governmental organizations in host communities, most of these non government organizations in these resource communities do not have the required capacities and expertise to effectively promote CSR activities and initiatives in the sector39.

Ibid at 37

Supra note 37

CHAPTER 5 5.0

Conclusion

It is apparent from this study that the Corporate Social Responsibility has now gained prominence and global awareness in the extractive industry due to the rise in the activities and operation of the extractive industry. Although extractive sector continues to provide the source of revenue for many countries, the activities and operations of companies is likely to have negative impacts and consequences on resource communities. Corporate Social Responsibility policies and approaches in the extractive sector will ensure that such negative impacts and consequences are taken care of. As seen from the discussions, it can be said that all the various stakeholders in the extractive industry consisting of Governments, Companies, Civil Society Groups and the Host communities have equal and important roles to play in ensuring CSR policies and practices in the extractive sector. This suggest that, it is time CSR in the extractive industry in is seen as collective approach and not to be left only in the hands of companies as seen in time past in the extractive industry. Implementation of CSR policies and practices in the extractive industry should be taken seriously by all the stakeholders especially companies and governments. Successful implementation of CSR policies and practices on the part of companies and government is needed to promote and ensure CSR initiatives in the sector. Although challenges are inevitable in the quest to ensure CSR initiatives and practices in the extractive sector, the collective role and responsibilities of the main actors in the extractive industry will to some extent guarantee efficient and comprehensive CSR policies in the extractive sector.

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