Corporate Social Responsibility in Mining Industry: A Management Tool for Sustainable Development

Sanjay Kumar Singh*, *Senior Manager (Mining), at Bishrampur Area,S.E.C.L.

1 .. INTRODUCTION 1 INTRODUCTION
The term Corporate Social Responsibility (CSR) includes environmental, social, and human rights-based impacts and initiatives of companies and many countries in both industrialized and the third world takes the concept and practices seriously. CSR is playing an increasingly significant role in companies narratives and practices, particularly in the case of mining. The international prominence of CSR in mining can be traced to minings potentially significant negative social and environmental impacts, and the related criticism levied at mining companies from governments, NGOs, and local community organizations. CSR also plays a special role in mining because of the inherent finiteness of the resource body and the environmental and social impacts related to mine closure.

CSR in Indian Context CSR in Indian Context

CSR is not new in India rather it has been traditionally practiced by Indian businesses since long time back as doing some charity and thereby contributing to the society by way of undertaking some community development activities - though ad hoc. However this very corporate philanthropy was not seen as an integral part of business as 7% of Indian companies by 1997 only demonstrated they had written policy on CSR. Corporate involvement in development tends to be ad hoc and CEO driven. Indian businesses perceive employees, their families, customers and shareholders as significant beneficiaries of their social responsibilities. Companies that work with communities do not necessarily distinguish between the privileged and underprivileged amongst them. Therefore the overall approach still seems to be driven by philanthropy rather than integrating it with core business activities.

CSR in the mining industry CSR in the mining industry

For mining companies, CSR is the manifestation of a move towards greater sustainability in the industry i.e. the practical implementation of the goals of sustainability. CSR is a means by which companies can frame their attitudes and strategies towards, and relationships with, stakeholders, be they investors, employees or, as is salient here, communities, within a popular and acceptable concept. In the mining industry, progress within the three dimensions of sustainable development (economic, environmental and social) could be achieved through economic development investment of generated revenues to ensure the future development and long-term livelihood of the communities (Epps, 1996); environmental protection minimizing the environmental impact of natural resource exploitation and land rehabilitated to allow successive use (Snchez, 1998); and social cohesion reducing the social and cultural disruption to communities, maintenance of stakeholder dialogue and transparency of operation .

CSR programmes CSR programmes

Obtaining a competitive advantage - community investment programmes are used to aid the awarding of concessions as companies appearing to be socially responsible are often favoured in this process. Receiving and maintaining a stable working environment CSR initiatives are occasionally initiated as a means of buying the local communities agreement to allow a company to operate. Managing external perceptions and maintaining a good reputation Managing CSR initiatives are used for Public Response purposes.

Mining, Minerals and Sustainable Mining, Minerals and Sustainable Development Project Development Project
Sustainable development requires net and equitable benefits, and the building of social capacity for the affected communities that continue throughout and beyond the closure of the mine and a companys CSR programme should address this. Auty (1998) notes that social capital the institutional and cultural base required for a society to function is very important for the social sustainability of communities. Some mining companies are making attempts to face the existing challenges in order to improve resource efficiency, and are undertaking stakeholder liaison exercises to prevent future confrontations (Cottrell and Rankin, 2000).

Company Objective of CSR Company Objective of CSR

As well as bringing mining revenues to an area and providing financial compensation for the loss of land, housing and livelihoods, community involvement initiatives that mining companies may employ include: Infrastructure improvements for example, building access roads, community buildings and schools. Community Health Initiatives - offering health services to employees and their families, and building and equipping hospitals and health centres for communities. Community foundations a fund generated by the company that is used for social investment purposes, these can also attract interest from external donors. Supporting small local businesses preferential procurement policies for local suppliers. Sustainable livelihood projects the purpose of these is to reduce the communities economic dependence on the mine, and develop alternative and sustainable employment opportunities for stakeholder communities. Micro-credit finance schemes these loans can be used to launch new enterprises, create jobs, and help economies to flourish.

Community is key to success Community is key to success

Investment Climate: Influencers

Law Security

Policy Supply Chain Politics

COMMUNITY

Investment Climate Infrastructure

Community becoming the biggest hurdle for growth

CSR in Mining Industries: Dependency CSR in Mining Industries: Dependency

Too great a dependence on a single commodity can be a problem mineral driven economies are vulnerable to fluctuations in mineral prices and exchange rates and other sectors, such as agriculture, may suffer as a result of a minerals boom. This is often described as the resource curse thesis where resource abundant countries display weak economic performance as the foreign capital inputs needed for mining impoverish rather than enrich a nation. This theory concludes that natural-resource-rich nations, such as India, are less likely to continue on an upward development curve than human- resource-rich nations. For example, overall in the 1990s mining countries with over 50% mining exports saw their GDP per capita fall at a rate of 2.3% each year (World Bank, 2002). However, the World Bank continues to push mineral dependency as a basis for development, despite its propensity to destroy sustainable local economies and create dependence on mining.

Absorption of Investments Absorption of Investments

Rising Community Opposition a Nightmare

Orissa Jharkhand Andhra Pradesh Projects have faced protests/disruptions NGOs, interest groups, political parties catalysts Looming Threat of Cost & Time Overruns

Community Opposition: Why? 1 Community Opposition: Why? 1

Most mineral-rich clusters inhabited by population which relies on land for livelihood Land being central to their sustenance, displacement is a big issue Rising awareness of rights as a result of mobilization by NGOs, interest groups R&R policy landscape inadequate in addressing concerns Constraints on making land-for-land mandatory Community ill-equipped to take advantage of cash compensation Clamor for jobs but opportunities limited; skillsets paucity

Community Opposition: Why? 2 Community Opposition: Why? 2

Industrys commitment towards sustainable mining largely missing community &

Reliance on quick-fix/firefighting solutions Inability/Unwillingness to recognize community as the central stakeholder Over-dependence on government to show the way Unwillingness to go beyond compliance

Community: Core R&R Demands Community: Core R&R Demands

Consultation R&R customization Land for land

Skill up gradation

Environment Protection

Employment

Community Management: Why the Failure? 1 Community Management: Why the Failure? 1

Unthinking responses & patchwork strategies by government, industry R&R policies do not anticipate long-term adversarial trends R&R policies not backed up by other enablers Lack of transparency information No effort to expectations set about project

realistic

community

Community Management: Why the Failure? 2 Community Management: Why the Failure? 2

Concerns

Socio-economic context

PROJECT

Response

Social impact mitigation Projects suffer risk of failure if they fail to understand the community

CSR for Sustainable Mining Framework CSR for Sustainable Mining Framework

Comprehensive Social Impact Assessment (SIA) Community Development Plan Stakeholder Consultative Forum

Fr =

Better Management of Conflict: How? Better Management of Conflict: How?

c

Social Impact Assessment for CSR in Mining Social Impact Assessment for CSR in Mining

Process of assessing/estimating in advance social consequences, both positive and negative, of project developments/actions Components Assessment Mitigation Consolidation of Key Learning's Monitoring Audit Benefits Estimates social cost Increases stakeholder benefits Minimizes community resistance Reduces project disruption & increase project success Reduces project cost in the long run

Make SIA mandatory on lines of EIA; tie it to project approvals

SIA The Stages SIA The Stages

SCOPING
Project Nature/Size Socio-economic context Law & Policy

Stakeholder Consultation

Stakeholder Consultation

PLANNING

Baseline Data Collection Measurement Tools Prediction Techniques

IMPACT ASSESSMENT DISSEMINATIO N OF FINDINGS

Communication Strategy

RISK MITIGATION MONITORING

Implementation Strategy

Assessment of Mitigation Measures

Stakeholder Consultative Forum Stakeholder Consultative Forum

Information sharing & dialogue critical but platform missing Stakeholder Consultative Forums (project-specific for industry & mineral area-wise for government) Benefits Better understanding of stakeholder concerns More transparency and information sharing Lower mistrust between industry-government & community

Community Development Plan Community Development Plan

Envisages Assessment of socio-economic needs of community Designing of need-based development plans for expanding livelihood options

Benefits Increases goodwill for project proponent Enhances visibility of corporate social performance Contributes to goal of sustainable mining

Key Areas of community management in Mining

Social Risk posing biggest challenge to industrialization Social Risk more difficult to mitigate, and combined with other factors the risk landscape becomes more complex Incorporating best practices in community management key to minimizing conflict and achieving success

Role of CSR in Mining Sector an Indian Context Role of CSR in Mining Sector an Indian Context
Minerals are non-renewable and limited natural resources and constitute vital raw materials in a number of basic and important industries. The extraction of minerals from nature often creates imbalances, which adversely affect the environment and social. The key environmental and social impacts of mining are on wildlife, fishery and habitats, the water balance, local climates & the pattern of rainfall, sedimentation, the depletion of forests and the disruption of the ecology. Therefore management of a countrys mineral resources must be closely associated with her overall economic development and environmental, social protection & preservation strategy. India has huge mineral resources. Thus the mining industry is very important industry in India. The mining sector in India contributes approximately four percent to Gross Domestic Product (GDP) and is one of the largest employers in India, employing more than one million workers which are around four percent of the workforce. India produces 89 minerals, out of which 4 are mineral fuels, 11 metallic, 52 non-metallic and 22 minerals.

Challenges in Indian mining sector

. Our Indian mining sector is facing several challenges, which are: Massive investment required in exploration and the up-gradation of technology. Mitigation of socio- environmental degradation due to mining. Adoption of environment friendly technology. Tackling of social issues like displacement of the population, marginalization of local communities and economic disparities in mining areas. Rehabilitation of closed and abandoned mine sites. The Government, at both central and the state level, has to address these issues by formulating appropriate policies and effectively implementing them for the overall development of the sector which is environmentally sustainable. In keeping above Challenges, the mining company will developed corporate social policy and also this become a responsibility.

Problems concern Mining sector Problems concern Mining sector

Labour and Employment issues Child labour Environmental concerns Impact on Community

Role of CSR as Integral solution

According to Business for Social Responsibility (2007), CSR brings not only risks for the mining industry, but also creates a set of opportunities. It can help companies secure their social license to operate, contribute in a meaningful way to sustainable development, and ultimately add value not just for shareholders but also for all of their stakeholders- for the communities and others who are affected by the companys operations. Mining industries must volunteer to undertake CSR as an integral business activity, which requires mining industries to integrate CSR into their business processes that includes formulation of a policy, development of programs, practicing CSR, measuring CSR and reporting CSR. A long term commitment is required and CSR must not be looked as a short term initiative. In order to institutionalising the CSR, Mining industries are suggested to undergo step wise activities as per followings: Activity 1 - to undertake the study of socio-economic and environmental impacts of mining in the vicinity. Activity 2 - to develop a framework of CSR - formulation of policy and development of programmes. Activity 3 - to develop strategies for operationalising CSR including partnership. Activity 4 - to go for social audit and certification.

Benefits to Mining Benefits to Mining

Reduces costs Satisfies customers Improves the corporate reputation/image Reduces challenges Employee retention and loyalty

Case Study: CSR in Coal India Limited

Policy on Corporate Social Responsibility of a Central Public Sector Enterprise is mandatory as per guidelines issued by Government of India from time to time. Moreover, as per Prime Ministers address on inclusive growth/challenges for Corporate India in a modern democratic society, business must realize its wider social responsibility. Corporate industry should invest in environment friendly technology and environment and ecology must be protected, safeguarded for future generations. Healthy respect for workers and proper investment in their welfare measures which should include proper care for employees health, their childrens education, pension and provident fund benefits. Corporate social responsibility must not be defined by tax planning strategies alone. Rather, it should be defined within the framework of a corporate philosophy which factors the needs of the community and the regions in which a corporate entity functions. To promote socially responsible media and finance socially responsible advertising. Through advertisement budgets and investments in media, socially responsible media can be encouraged to grow and to flourish.

CSR Policy for Coal India Limited

Corporate Social Responsibility of CIL is broadly framed taking into account the following measures:Welfare measures for the community at large including employees and their families. Proper rehabilitation of the land oustees/displaced persons based on R&R policy separately formulated and the expenditure on R & R issues would be included in the Project Cost. Contribution to the society at large by way of social and cultural development, imparting education, training and social awareness specially with regard to the backward class and generation of employment. Protection and safeguard of environment and maintaining ecological balance.

COAL INDIA LIMITED(CIL) & CSR in practice

Coal India ltd contributes around 85% of coal production in India. Coal India ltd is the largest company in the World in terms of coal production. Coal India ltd employees nearly 4.21 Lakh persons and is the largest corporate employer in the country. Coal India ltd is one of the largest Companies in the country, turnover being around Rs. 43,568.15 Million in 2009-10 Coal India ltd is one of the largest tax payer. Coal India ltd has Maharatan status.

Objective of CSR Policy in CIL

Focus on nation building; Socio-economic development; Rural development; Employment Generation-; Education; Health care; and Community support.

CSR Medical activities in Coal India & Its Subsidiaries.

The coal India Limited is also focus on the health sector for provide basic health care facility to people living in village as well as urban area. Such as, Medical camp general and issue base, Mobile clinic van in different-different area, Health Awareness programme (Aids, Family Planning etc) Mother & Child Care Project.

Community development
Quality of life at work place and living place contribute significantly in achieving the aims of the Company. The coal mines are mostly situated in isolated areas where facilities of modern living are lacking. Besides this, the nature of work of the employees engaged in coal industry is very difficult and hazardous. Keeping these facts in view, the Company has been endeavouring to improve the basic needs and facilities of the employees & community.

Sports & Cultural

Coal India gives special impetus for promotion of Sports

and Cultural activities for the employees & local peoples. Every year sports events in 15 different disciplines are organized by CIL and its subsidiaries under the aegis of Coal India Sports Promotion Board. Inter Colliery & Inter Area level sports & Cultural meets are also held in subsidiary level. Rural sports and Handicapped sports are important events in the subsidiary level.

Education

CIL as a part of its welfare & CSR activities has given considerable emphasis on providing better educational facilities to the children of its employees as well as those of local populace. The company is providing financial assistance/infra-structural facilities to schools running under agreement with CIL In addition Company is also providing financial assistance to Private Committees Managed Schools functioning under its command Area.

Coal India Scholarship

In

order to encourage the Sons/Daughters of the Scholarship namely Merit and General

employees of Coal India Limited, provide two types of Scholarship are being given as per the prescribed terms and conditions.

Other Activities

As a part of Corporate Social Responsibility, Grant/Donations/Sponsorship of events are also being given to renowned NGOs by CIL.

Coal India Helps (photograph) Coal India Helps (photograph)

Conclusion Conclusion
There are a number of issues that must be addressed if mining companies community involvement initiatives are to be effective, sustainable and prevent creating a culture of dependency. These are discussed in turn. Measurement The accumulation of social capital Are mining companies best placed to contribute to community development? Consultation

Conclusion.......1 Conclusion.......1
The social audit process must be improved and the effectiveness and sustainability of revenue deployment must be measurable and transparent. Governments must take more responsibility for regional development considering community needs at a macro as well as micro level. A successful and sustainable corporate community involvement strategy must: Assess and address the basic rights and needs of the community. Recompense any material losses. Allow all members of community to participate effectively in decision making processes. Be fair and equitable in distribution of mining benefits and decisions made. Contribute to a net benefit for social and economic capacity. Contribute to long-term sustainable development. Ensure that mining revenues are distributed locally and equitably and that there is transparency in this process. Not engender dependency.

Conclusion............2 Conclusion............2

Mining industry has been an important part of global economic backbone and has played a key role in development of remote regions of the country. With population growth, decrease in per capita land availability and many restrictions on land use, the industry is facing increasing land acquisition problems. The industry has suffered in the past from the bad reputation that it lacks concern for the socially disadvantaged people who are displaced or live in the nearby villages. The commendable community development work being done by many mining companies, the progressive R&R policy adopted by Mining companies and the transfer of lessons learnt from the World Banks Mining Sector Environmental and Social Mitigation Project to other mines would hopefully bring in a major change to the social dimensions of the mining sector in the country.

Reference Reference
Heledd Jenkins and Louise Obara Corporate Social Responsibility (CSR) in the Mining Industry - The Risk of Community Dependency. Ahiakpor, J.C.W. 1985. The success and failure of dependency theory: the experiences of Ghana, International Organization, 39(3): 535-552. Akabzaa, T. 2000. Boom and Dislocation: The Environmental and Social Impacts of Mining in Wassa West District of Ghana. Third World Network, Accra, Ghana. Aryee, B.N.A. 2001. Ghanas mining sector: its contribution to the national economy Arora, B. and R. Puranik. 2004. A Review of Corporate Social Responsibility in India. Banerjee, S.P. 2004. Social Dimensions of Mining Sector.IE (I) Journal-MN. 85():5-10. Business for Social Responsibility. 2007. Emerging Trends in Corporate Social Hopkins, M. 2003. The Planetary Bargain: Corporate social responsibility comes of age. London: Macmillan Press. Lahiri-Dutt, Kuntala. 2007. Illegal Coal Mining in Eastern India: Rethinking Legitimacy and Limits of Justice. Economic and Political Weekly. 42(49):57-66. Prajna Paramita Mishra, Harish Pranav Jagannath, Corporate Social Responsibility in Coal Mining: A Case of Singareni Collieries Company Limited Aditya S. N. , Ashish Burnwal , Dharmvir Singh, Harsha Chouhan , Sidharth lal, COAL INDIA LIMITED(CIL) & CSR in practice,XIDAS, Jabalpur

Any Questions ? Any Questions ?