Consider this jaw-dropping game-changer: Tens of billions of dollars are being spent each year on a form of business-driven altruism that many outside the resource industries still have never heard of.
It’s called Corporate Social Responsibility (CSR), and it’s become an increasingly important buzz term in the business world, especially in the globally-diversified mining industry.
Exactly how important is CSR? Just ask the deflated management team at Vancouver-based South American Silver Corp. Or ask the company’s frustrated, out-of-pocket shareholders.
The aspiring silver and indium producer waited too long to implement a CSR campaign as it pushed for the development of a mine near the remote Andean community of Malku Khota in Bolivia. Meanwhile, anti-mining activists convinced the local population to violently oppose the company’s activities, which eventually led to the seizing and nationalization of its mineral assets by the country’s leftist government in 2012.
With many millions of dollars spent on the project before the expropriation, it is of little surprise the South American Silver’s stock tanked.
Yet, some mining companies still balk at the nominal cost of CSR. To them, its true value is hard to measure. Which makes it all too easy for them to regard CSR as window dressing that drains their coffers and misdirects corporate energy.
However, recent studies have shown that this outdated mindset has become a liability for each and every company that is reliant on winning hearts and minds in the under-developed foreign jurisdictions where they operate. In fact, this research reveals that CSR has many benefits that contribute to a corporation’s bottom line.
Moreover, it’s fast-becoming absolutely integral to the long-term survival of many capital-intensive businesses that operate in Latin America and other emerging economies. So suggests a 2012 study carried out by Tima Bansal, executive director of the Network for Business Sustainability at Western University’s Richard Ivey School of Business.
Another cautionary report, published by the accounting powerhouse Ernst & Young in 2013, reveals that the threat of resource expropriation has increased significantly within the last several years. It attests to a growing feeling among government and indigenous peoples that they are entitled to a share of the mineral resources which foreign companies (including many Canadian miners) commercialize in their territories.
“Mining and metals companies are forced to balance the expectations and needs of their many stakeholders,” the report states. “When they fail to meet expectations or fully understand needs, it can result in strikes, supply disruptions, shareholder activism, community unrest and governments using their power through resource nationalism.”
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