9.6 The Responses

Evidence of evolving practices is evident in the Oil and Gas Industry Guidance on Voluntary Sustainability Reporting, published by the International Petroleum Industry Environmental Conservation Association (IPIECA), the American Petroleum Institute, and the International Association of Oil and Gas Producers (IPIECA, API, and IOGP 2015). It incorporates feedback from public consultations and improvements in reporting practices. A key change is an alignment of the social and economic issues with the UN Guiding Principles on Business and Human Rights. It also includes a new issue area on water, with comprehensive updates to two water indicators and a new indicator covering planning and execution of decommissioning activities. Similarly, IPIECA (2015a, 15) has created a library of questions and resources to assist procurement officers in identifying and managing human rights and environmental risks in the supply chain. It addresses company concerns about labor practices and environmental issues, such as child labor and young workers, forced labor and human trafficking, health and safety, and environmental responsibility.

Mining. Alongside the economic opportunities it brings, the opening of a mine in or near a community may lead to economic and social disruption. The mining company may be required in its contract to provide some social services to the affected communities, or even financial compensation. This is an area of great sensitivity for a mining project and guidance on actions is available in various forms: the ICMM has toolkits, the IFC has principles and standards, the International Bar Association has a community toolkit, and there is guidance from Sourcebook partner institution, the University of Queensland’s Centre for Social Responsibility in Mining.

A further step in providing this kind of social engagement with a legal basis is the requirement that the company conclude a dedicated agreement on cooperation. For example, the 2009 Mongolian agreement for the Oyu Tolgoi mine states:46

The Investor shall establish cooperation agreements with local administrative organizations in accordance with article 42 of the Minerals Law and these agreements may include the establishment of local development and participation funds, local participation committees and local environmental monitoring committees.

A CDA is used to formalize agreements relating to the improvement of economic development at the local community level. This can be done through a variety of measures, processes, and structures as vehicles for delivering development benefits to communities.47 CDAs can include the preparation and implementation of community economic development plans, incorporating or supported by building local planning capacity, job skills training programs, microfinance schemes, provision for communitycontrolled trusts and development funds, undertakings with respect to local employment and local procurement, and sourcing of goods and services. The CDA is normally concluded between the local community and the project sponsors and is a vehicle for building mutual trust and understanding.

The CDA practice reflects the growing importance assigned by investors to close and regular consultation and communication with affected communities on EI sector projects and their social and environmental impacts. This is not always done well, but even so it can act as a catalyst to further effort. To do this properly requires building local capacity (of both government and community) to plan well and implement the mining project effectively and with good accountability. It also requires checks and balances and capacity regarding local expenditure control systems—a substantial task—and the avoidance of elite capture of the processes and economic benefits.

Representation. Two critical aspects require further concerted efforts. First is overall representation for miners in the sector and its dialogue with national policy makers. Latin and South America are considerably more advanced in this regard than Africa, with viable cooperatives, unions, and federations in place that truly represent the interests of their members. Second is the representation of women. Though women make up at a minimum 30 percent of the ASM sector (Hinton, Viega, and Beinhoff 2003), and much more in certain materials such as coal and salt (Lahiri-Dutt 2008), they continue to face a range of discrimination— some is gender neutral but some is gender specific and has to do with health and sexuality. Efforts to promote organizational representation through cooperatives, unions, federations, and trade associations should be a key policy focus moving forward.

9.6 THE RESPONSES

To help countries respond to the kinds of issues described in sections 9.4 and 9.5, there is a wide range of industry guidelines, voluntary initiatives, tools, international standards, and frameworks for evaluating, measuring,

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managing, or preventing specific types of impacts. A feature of these diverse guides to good practice is that many of them are voluntary and are not based on legislation or the provisions of binding agreements. Improvements in managing environmental and social impacts have often been attributable to extractives companies themselves in subscribing to and following international corporate responsibility schemes. These not-legally-binding initiatives are the subject of this section.

Ideally, extractives policy and project design should provide support to, or encourage, beneficial externalities while mitigating or offsetting any negative consequences. Pursuit of these objectives is in the interest of investors and governments alike. In the case of the former, appropriate attention to social and environmental issues provides a social license to operate from the EI project host country or community; this goes beyond the strictly legal license. From a government’s perspective, it demonstrates responsiveness to the legitimate interests of its citizens.

There is an institutional aspect to the design of effective responses. Good policies and good project-specific decisions may be ineffective in the face of limited institutional capacity to pursue or enforce them. In some instances, if certain outcomes are desired, there will have to be additional resources available. This means that resource requirements have to be identified and developed at an early stage or as early as possible.

Good industry practice may be referred to in a contract and may even refer expressly to a set of standards such as the IFC performance standards or to a standard-setting body such as the ICMM. The aim in such cases is to clarify the kind of good conduct that is expected. Many of these standards exist in the extractives sector, based on intergovernmental, multistakeholder, and industry association sources. While most of these are voluntary initiatives, they are highly influential in thinking about good practice.

One of the best-known examples of standards is that adopted by the IFC in 2006 and updated since then. These performance standards have been adopted by many other internationally operating institutions including the more than 80 financial institutions that have signed the Equator Principles. These standards cover social and environmental baseline and impact assessments as well as environment management plans, safeguards for indigenous peoples, and land acquisition and resettlement.

An emerging standard for the certification of mine sites has to be mentioned. The Initiative for Responsible Mining Assurance (IRMA) is a group of nongovernmental organizations, businesses that purchase minerals and metals for resale in other products, affected communities, mining companies, and trade unions and seeks to develop standards for environmental and social issues related to mining. These issues include labor rights, human rights, indigenous peoples and cultural heritage, conflict response, pollution control, and site closure. The goal is to produce a system of independent, third party verification to enable mines to “credibly demonstrate that they are operating in a manner that is consistent with healthy communities and environments and that leaves positive long-term legacies” (IRMA 2016). Already it has a draft Standard for Responsible Mining aimed at industrial-scale mines. This outlines a set of best practice requirements that mining companies are expected to adhere to; companies are expected to demonstrate compliance by participating in IRMA’s independently verifiable responsible mining assurance system. It should be noted that IRMA does not provide assurance for oil, gas, uranium, and other energy fuels.

With respect to decommissioning and closure, there are distinct differences between the decommissioning of a petroleum structure and the closure of a mine. The learning database differs greatly between mining and hydrocarbons in this area. While mining has been carried out for hundreds, indeed thousands of years in some places, the issues arising from decommissioning of hydrocarbons fields are relatively recent, particularly with respect to the many structures located in offshore fields. There is very little experience of actual decommissioning outside of the on-land and offshore activities of the United States. For countries with operations in deeper waters than the Gulf of Mexico, the North Sea provides some indications of the nature of the problem.

It is also generally understood as a series of processes that start at the time of project design and continue throughout the life of project operation. Preparation well in advance is crucial to effective decommissioning and closure.

Research too has demonstrated some particular challenges with respect to ASM (see box 9.8). Whenever possible, ASM has been separated out from large-scale mining in this chapter.

Environmental

The reduction of environmental impacts can have a positive benefit for employment. It can provide opportunities to develop local skills while mitigating the carbon footprint of EI activities and their effects on climate change. Promoting renewable fuel sources of energy and energy efficiency are important initiatives in this respect. Local producers of

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