Report on corporate responsibilities
Key issues of corporate responsibility
Corporate social responsibility (CSR), to be successful, needs an effective partnership between the government and the private organizations that exploit the local mineral resources. Generally, it is found that mining companies exploit the natural and human resources and do not compensate their loss. To achieve infrastructure development, the government has introduced various legislations, and the mining companies are encouraged to implement the CSR initiatives mentioned in the legislation. However, the majority of the CSR activities are performed by multinational organisations such as the Anglo American and De Beers while smaller companies have failed to initiate CSR projects. Most of the companies do not understand the difference between CSR and corporate social investment (CSI). They tend to invest in local schools and provide employment to the local population by encouraging self-help groups. However, there a is lack of clarity concerning the concept of CSR (Mabuza et al 2010, p. 3).There is a lack of partnership between the government and the multinational organisations such as Anglo American, which aim to show their interest in CSR. At the same time, due to lack of partnership with the government, business organisations are not able to achieve the welfare of the local population. CSR projects face the problem of lack of funding (Mabuza et al 2010, p. 3). The stakeholders are not involved in the CSR projects. Consequently, stakeholders are not able to express their views concerning CSR projects. Lack of implementation of CSR legislation is another problem affecting CSR in the mining areas of South Africa. The concept and the philosophy of CSR are not properly implemented in the mining areas. The mining companies also tend to abuse CSR projects to improve their credibility among the investors and the public. Consequently, they have not benefited the stakeholders including the local community. There is no mechanism to monitor the CSR in the mining areas of South Africa (Mabuza et al 2010, p. 4).
Even though South African mining companies have initiated various CSR projects, they have continued to affect the local population through hazardous mining activities. For example, the organisation Anglo American owns a copper mine in the country. It has been criticized for misusing the water resources in the locality and thereby affecting the local population. Another organisation Barrick Gold Corp was criticized for displacing more than 5000 people. It appears that companies initiate CSR projects to avoid legal complications, as there are legislative provisions with reference to CSR projects (Kleu 2014, p. 4).
The mining companies have not attempted to establish a cordial relationship with the local community. They have not strived to understand the problems of the stakeholders. Another issue relates to the lack of an appropriate reporting mechanism, which affects the ability of the government or nongovernmental organisations to monitor CSR initiatives of the mining companies in the region. It is found that traditionally mining companies in the region did not report regarding their CSR projects (Kleu 2014, p. 4). Recently, they have showed inclination to report to the government authorities. However, South African companies need to follow the model of mining companies of other developing countries that regularly report regarding their activities. It is not clear how mining companies are able to achieve sustainable development. It is important to achieve consistent economic growth while at the same time protecting the local environment (Kleu 2014, p. 4).
Mining activities in a region have a long-term impact on the physical and mental health of the local community including the workers. The community is directly and indirectly affected by the operation of mines. For example, mining disaster and migration can indirectly affect the people as they are compelled to manage stress in their personal lives. On the other hand, mining companies, through their operations, can affect the physical health of individuals. Persons can be affected by noise-related health problems (Heinecken & Prozesky 2010, p. 252). It is true that a few mining companies have initiated programmes to deal with problems such as HIV/AIDS and tuberculosis affecting the mining workers and others. However, in Africa, mining companies have not realized the impact of their activities on the mental health of the people. Scholars have initiated the debate regarding development. It is important to understand this concept. Development does not comprise economic growth alone. It is true that mining companies offer jobs to the local population. However, in the process they also cause environment degradation and contribute to noise pollution. Stress in the workplace can lead to mental health problems. Mining companies, through their CSR initiatives, should attempt to solve the mental health problems affecting the psychological wellbeing of individuals (Heinecken & Prozesky 2010, p. 252).
It is true that mining companies have understood the importance of the occupational health of the employees. Measures, consequently, have been introduced to maintain the physical health of individuals. At the same time, occupational health comprises not only physical but also mental health. The HR department maintains records of the workers who seek mental health assistance. This policy affects the privacy of workers, who may lose their credibility due to the stigma associated with mental illness. (Heinecken & Prozesky 2010, p. 269).
HIV is a major disease affecting the mining workers, thereby leading to the loss of their productivity. Mining companies in South Africa do not attempt to enhance the skills of the mining workers, unlike automotive industries. Consequently, it becomes important for the mining companies to improve the health of the workers. For example, Goldfield Company loses $5 for every ounce of gold due to the workers suffering from HIV (Borzel and Thauer 2013, p. 78). The company invests in CSR projects to cure this disease so that the workers are able to maintain their health, thereby enhancing the productivity. On the one hand, the company can claim to have invested in CSR and on the other, it can find a solution to the problem of lack of productivity of the workers (Borzel and Thauer 2013, p. 78).
Mining companies also invest in CSR to enhance their reputation. They have strived to perform the duties of the government, which has failed to deal with the problems such as racism, poverty, diseases, and lack of employment affecting the low-income groups. Mining companies, consequently, need to bear the additional burden of achieving the welfare of the local population. At the same time, mining companies use CSR to enhance their public perception. They can attract enhanced investment from the financial institutions. In spite of CSR projects, the people in the mining areas suffer from social and economic inequalities. Mining companies are criticized for hiding their limitations through their CSR projects (Borzel and Thauer 2013, p. 79).
Multinational firms have invested in the CSR projects in the South Africa. The government, however, has not assumed responsibility for achieving economic growth of the mining area, as it depends on the mining companies to achieve welfare of the local population. There is no mechanism to share responsibility between the government and the companies. The latter are compelled to invest heavily in education and health. The local community also does not depend on the government to obtain basic needs such as employment, education, and healthcare. The CSR initiatives in the mining areas have affected the relationship between the government and the local community. The mining companies are able to negotiate with the local authorities to obtain concessions. The government has not devised a policy to preserve the resources, which are exploited by the mining firms. In the long-term, mining activities are likely to affect the local population. In Africa, gold and diamond exports have emerged as major foreign exchange earners. For example, in 2005 African mines produced more than 40 percent of diamond of the world. At the same time, mines affect the natural resources, as they are not renewable resources (Grant et al 2015, p. 137).
The government has not envisaged a strategy to preserve the natural resources of the country including diamond, gold, and platinum reserves. The CSR activities of mining companies are blamed for this development. The companies have not initiated strategies to deal with the long-term impact of mining on the locality. For example, environmental degradation is a side effect of mining activities. Similarly, mining activities can lead to the flow of money to the region, thereby leading to inflation in the locality. This development may affect the low-income groups as they fail to purchase basic amenities such as housing (Grant et al 2015, p. 138).
Best practices
The mining company, Placer Dome, has realized the need to understand the need of the members of the local community to provide solution to their problems such as lack of education, health, and social problems. The company, consequently, understood the differences between communities in the developed and developing world (Dashwood 2012, p. 153). The Placer Dome conducted Environment Impact Assessment and Social Impact Assessment (SIA). The latter was useful to the company to understand the health problems affecting the local community. For example, it was realized that people suffered from HIV/AIDS, and they needed individual attention to cure this disease. The company cooperated with the nongovernmental organisations to structure a programme to deal with HIV affecting large numbers of workers (Dashwood 2012, p. 154). A home based care programme was introduced, and the workers were encouraged to obtain assistance under the provisions of this programme. It became popular among the mineworkers. The programme attempted to educate the local community concerning HIV/AIDS. The company also understands the importance of partnership with other mining companies. This programme is considered as a model for the mining companies that attempt to improve health of the local community. It is apparent that the companies need to conduct a SIA before initiating mining activities in a region (Dashwood 2012, p. 154).
Mining companies in South Africa have initiated CSR projects, which are appreciated for their positive features. The companies such as BHP Billiton, Coal of Africa (CoAL) and SAB Miller have introduced policies that aim to enhance their reputation on the one hand and protect the interest of the local community on the other. BHP Billiton has established a trust in South Africa. The agency is responsible for initiation and execution of CSR projects. Attempts have been made to educate the employees and the local community and improve their skills. The company introduced measures to achieve sustainable development, by establishing schools and providing health facilities to the local people (Flores-Araoz, 2011).
CoAL has concrete plans to generate employment and support the local population. Its Vele coking coal project has the target of creating 30,000 jobs over a period of thirty years. The company has also committed $70 million to achieve this objective. (Flores-Araoz, 2011) SAB Miller has created a model for sustainable development and environmental protection. The mining companies can follow the example of SAB Miller, a company, which operates in the brewing sector. The mining companies can also follow the example of the Standard Bank, as it has allocated 36 percent of its CSR funds to provide quality education to the local population (Flores-Araoz, 2011).
Mining companies in South Africa showed inclination to enhance their investment in the CSR projects. This development can be explained by using the stakeholder theory. According to this theory, a business organisation is accountable to not only the shareholders but also other stakeholders such as the employees, government, environment, and members of the society. By employing the principles of sustainable development, the company is able to enhance its own profits on the one hand and provide service to the local community on the other. According to the economic agency theory, the aim of the company should be earn profits, and it should not be bothered by its impact on the environment and local population. However, most of the global organisations have accepted the stakeholder theory and they are likely to take the local communities into confidence before initiating a mineral extraction projects. Scholars suggest that the companies need to incorporate CSR as the part of the long-term strategy of the organisation (Busacca 2013, p 7).
Various advantages of application of stakeholder theory in the context of exploitation of natural resources are mentioned. For example, the organisation can prove that it conducts business in a socially responsible manner. It can also achieve social and economic welfare of the local population, which is likely to support its future projects in the region. The CSR initiatives enhance the reputation of the organisation (Busacca 2013, p 8). It is also possible for the business organisation to negotiate with the local NGOs in obtaining their support their operations in the region. In the long-term, the mining companies in the regions such as South Africa are able to enhance their profits by investing in social responsible projects. The companies need to comprehend the principles of stakeholder theory and apply the same in the actual business context (Busacca 2013, p 8).
The companies that have invested in the mines of South Africa have comprehended the need to understand the problems of the local population. The mining companies have decided to cooperate with each other to achieve sustainable development of the region where they operate. For example, the companies such as Randgold Resources, AngloGold Ashanti Ltd have decided to donate $ 3 million to the government of Mali, as the government faced the law and order problem. The mining companies have realized the need to respond to the political crises in their regions. The company Anglo American believes in sustainable development. To achieve this objective, the company has invested in a water treatment plant. The company produces gypsum. Its byproduct is used in the construction of homes. The company provides employment to the local community by diversifying its business interests (Kirschke 2013).
The company Anglo American has initiated CSR projects in the Northern Cape Province of the country. The Kumba iron ore region comprises HIV infected people. The company has entered into a dialogue with the local community. It has allocated nine vehicles, which visit different areas to provide service related to diagnosis and treatment of illness affecting the local community (Kirschke 2013).
Apartheid is a problem that affected the white-majority regions of the country. A Truth and Reconciliation Commission has been established to protect the interest of the mining community. The commission has showed that the mines, in the past, exploited the local population. The mining companies need to cooperate with the government to minimize the impact of their activities on the local community (Kirschke 2013).
Harmony Gold Company operates in the different provinces of South Africa. It has provided guidelines concerning its strategy to improve the social and economic conditions of the community. To achieve this objective, the company interacts with the community and other stakeholders including the NGOs and the government. It is has implemented the recommendations of King III report, which suggested the CSR reporting process (Harmony 2010, p. 1). The organisation has understood the need to educate the local people so that they are able to improve their social and economic conditions. It follows the model of Integrated Development Plans. The company has supported the government in achieving the welfare of the population. It has supported the CSR initiatives of the Chamber of Mines and National Business Initiative (Harmony 2010, p. 2).
The government had issued a document, Black Economic Empowerment (BEE). The Harmony Gold Company has attempted to implement the provisions of this document to empower the blacks who were discriminated during the apartheid regime. Harmony Gold Company has created a committee, which analyses the applications received from NGOs and other organisations interested in implementing CSR projects in the mining regions. The committee gives reason for selection or rejection of an application for funding. It has also established a committee to oversee the CSR activities. The committee identifies the areas that need CSR initiatives. It reports to the government and other stakeholders concerning the programmes initiated by the company to improve the standard of life of the people in the mining regions (Harmony 2010, pp. 4-5). The company follows the stakeholder model while implementing the CSR projects. Even though it funds projects, it does not participate in its execution. At the same time, the recipients of funds from the company need to submit a quarterly report concerning their achievements and the use of the fund. Evaluation and monitoring of CSR initiatives also comprise analysis of compliance with the legislations such as BEE. The company obtains feedback from the stakeholders. This feedback is useful in improving the quality of service offered to the stakeholders. At the same time, the company can ensure that the fund is employed for the stated purpose (Harmony 2010, pp. 7-8).
Recommendations
The companies that have invested in the mining sector of South Africa have realized the need to implement CSR projects. However, they should identify various issues that affect their ability to provide service to the stakeholders including the local community and the government. The mining companies need to interact with the government, the local community, and the NGOs to ensure that the project solves the problems of the local people. Financial investment in financial projects is not sufficient to solve the problems of the people in the mining regions. They suffer from physical and mental health problems. There is a need for individual and community-oriented HIV/AIDS awareness programmes. The CSR policy of the company should include the recommendations of the Kings III report and BEE. It is important to empower blacks who suffered from abuses in the mining areas. It is important to comply with the legislative provisions related to CSR in the region. The company should show sincerity while implementing the CSR projects. They should not be initiated merely to enhance the reputation of the organisation. The companies need to conduct SIA apart from EIA to analyse the possible impact of their operation in the region. An attempt should be made to improve the social and economic conditions of the local community. At the same time, it is important to avoid long-term negative impact on the community that may suffer from physical and mental health problems due to lack of employment and economic opportunities. The mining companies need to monitor and evaluate the CSR projects. The companies are likely to affect the local natural resources. They may exploit water available in the locality. Attempts should be made to avoid abuse of resources such as water. Companies should cooperate with the government authorities to improve the life of the community. There is a need for periodic review of the CSR activities so that it is possible to mitigate their limitations in the future.
References
Borzel, T.A. & Thauer, C 2013, Business and governance in South Africa: Racing to the top?, Palgrave MacMillan, Hampshire.
Busacca, M 2013, ‘Corporate social responsibility in South Africa’s mining industry: Redressing the legacy of apartheid’, viewed on 10 April 2015 2015, <http://scholarship.claremont.edu/cmc_theses/632>.
Dashwood, HS 2012, The rise of global corporate social responsibility: Mining and the spread of global norms, Cambridge University Press, Cambridge.
Flores-Araoz, M 2011, ‘Corporate social responsibility in South Africa: More than a nice intention’, viewed on 10 April 10, 2015, <http://www.consultancyafrica.com/index.php?option=com_content&view=ar ticle&id=835:corporate-social-responsibility-in-south-africa-more-than-a-nice- intention&catid=82:african-industry-a-business&Itemid=266>.
Grant, J.A., Compaore, N. & Mitchell, MI 2015, New approaches to the governance of natural resources: Insights from Africa, Palgrave MacMillan, Hampshire.
Harmony 2010, ‘Corporate social responsibility policy’, viewed on 10 April 2015, <https://www.harmony.co.za/downloads/finish/30-policies/253-corporate- social-responsibility-csr-policy>.
Heinecken, L. & Prozesky, H 2010, Society in focus – change, challenge, and resistance: Reflections from South Africa and beyond, Cambridge Scholars Publishing, Newcastle upon Tyne.
Kirschke, J 2013, ‘CSR, sustainability and the mining business’, viewed on 10 April 2015, <http://www.e-mj.com/features/3240-csr-sustainability-and-the-mining- business.html#.VSe2a9yUfx0>.
Kleu, SD 2014, The extent of corporate social responsibility reporting within the South African mining industry, University of Johannesburg, Johannesburg.
Mabuza, L., Msezane, N. & Kwata, M 2010, ‘Mining the corporate social responsibility partnerships in South Africa’, AISA Policybrief, no. 15, pp. 1-5.
