It is critical for mining companies to have regular interaction with important stakeholder groups for them to remain relevant and survive in a challenging business environment.
Earlier this year, Mining Journal conducted a survey to better understand the current performance of the mining industry regarding its engagement with stakeholders. The survey recorded over 800 responses. The results were recently published in a report that also aggregates commentary from industry and stakeholder experts.
Mining Journal Stakeholder Engagement – A report card: How are miners doing really? aimed to better understand the areas where the mining industry was performing adequately in terms of its engagement with key stakeholders, the areas it was failing, and crucially, the level of progress that has been made in the past decade.
Overall, the survey findings suggested that the mining sector had come a long way in adjusting its stakeholder engagement mindset in the past two years. However, there is still work to do in improving how operational practices were reported to stakeholders.
Understanding traditional stakeholder groups
When asked how well industry understands each of the three traditional stakeholder groups (investors, governments and communities), respondents showed a clear bias towards investors. This is most likely due to the historical focus on managing shareholders. What’s more, expectations of investors tend to be uniform. This contrasts greatly with the expectations of governments and communities that vary widely, making understanding more challenging.
Froydis Cameron-Johansson, Head of International and Government Relations at Anglo American, says in the report that understanding the nuances around these key areas is almost entirely about being prepared to listen. “You need to listen, listen, listen, listen all the time,” she reiterated.
Conventionally, there has always been an unfriendly relationship between the mining industry and civil society groups. This relationship has seen an improvement in recent years. In the report, Pippa Howard, Extractives and Development Infrastructure Director at Fauna and Flora International says that, “There has been a continuum of relationship from watchdog to full-on strategic partnerships. This has evolved through necessity, the mining industry has been exposed to risk and pressure from the NGO sector and over the years, has decided working with civil society groups is to its advantage.”
With the evolution of stakeholder engagement in the mining industry, responsible miners have moved from ad-hoc community projects to more sophisticated engagement programs, complete with measurable deliverables in an effort to build trust with stakeholders. Vitaly Nesis, Chief Executive at Polymetal International explained this change in engagement: “Ten years ago, we might have invested in upgrades to the local hospital and that was the end of it. Today, we look at the sick days of our workforce who have used that facility and then at metrics that might demonstrate improved performance in this regard as a result of that investment. The same applies to education rates, sanitation, sports infrastructure and so on.”
Understanding the needs of key stakeholders
According to the findings, major companies have an advantage over smaller juniors in terms of resources dedicated to engagement programs.
Cecilia Jofré, Chief Sales Officer and Director at IsoMetrix, agreed that the principles of engagement remained applicable regardless of size, and that measuring performance played a vital role in policing standards. “Obviously, one size does not fit all, and different stages of projects necessitate different tracking of metrics and understanding,” she explained. “But the idea is a basic management tenet, what gets measured, gets done. So, all companies, of all sizes need a management system, whether they do it on the back of spreadsheets or management system software that will depend on the appetite and risks they are managing.”
Environmental, Social and Governance (ESG) investing
ESG has become increasingly topical and one of the deciding factors among investors. ESG has been happening for a while according to Cecilia: “Socially responsible investing has been a theme for the past 20 years.” But there is no doubting the trend gathered considerable momentum recently with the launch of 500 ESG funds. The core message from investors is that they will not be investing in companies that cannot demonstrate they understand, and are committed to, ESG best practices.
Educating stakeholders on the importance of mining and improving mining practices
Miners have historically failed to educate stakeholders on the importance of mining and improving mining practices. A change in attitude in the mining industry has been meaningful, but there has been a lack of communication regarding that progress. This may be in part because the number of stakeholders and engaging thereof - has increased over time.
Engaging with stakeholders is crucial to the success of any mining organization. There is an increasing trend in the industry to move away from traditional mining practices and towards sustainable practices that consider impacts to stakeholders and the environment (not just the bottom line). The key outcomes of this report indicate that there are still hurdles in front of miners as they contemplate the next push towards more productive engagement, with a broadening set of stakeholders, but there is notable progress towards this goal.
IsoMetrix is a leading global provider of integrated risk management software. For over 20 years, we have been helping mining companies proactively manage their environmental and social risks. As a proud sponsorship partner of the Mining Journal Stakeholder Engagement, IsoMetrix can help you manage your stakeholder engagement programs.