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By on May 14, 2014 - CSR Blog

In the last two decades, CSR (Corporate Social Responsibility) has become a core feature in business strategy especially for the extractive industry. Companies are striving more and more to run their businesses ethically, responsibly and with a conscience. Though admirable, it is important to pause and reflect as to why this is.

Oil & Gas and Mining companies know that their projects will inevitably come across problems and challenges. Even the best managed projects expect to hit turbulent waters and it is not a question of if but when. Many businesses have had their corporate reputations tainted due to environmental or social mishaps that have had dire consequences not only for people but also on profits.

There are no shortcuts to sound business

In the past, it was easier for extractive companies to turn a blind eye to environmental issues or negative social impacts. Unfortunately, in some cases, short cuts were taken in order to save resources and money. There was little or no oversight or regulation to force companies to manage stakeholder engagement for example. If a stakeholder was unhappy, who cares? No one will ever know.

Nowadays however, more measures on governance and more stringent regulatory regimes have been enforced, some of which are mandatory conditions for investment. And with the advent of mobile technology and advances in internet capabilities, it is all too easy for a stakeholder to post an incident on YouTube or Twitter. The power has shifted and companies have no choice but to change the way they do business.

It is good to talk about social responsibility and for a company to be perceived as socially responsible. At the same time, like it or not, companies have fewer choices. For example, a mining company which doesn’t have a stakeholder engagement management system can result in a stakeholder issue escalating into a grievance or even worse, to civil disobedience, strikes, and the eventual halting of operations. This can cost millions of dollars per day the mine is shut down. Is it worth taking the short cut when there is a risk that operational costs hit profits and public perception of company reputation? It has therefore become less a question of responsibility and conscience but rather more of good business sense. Has CSR become “Common Sense Reality”?

What the experts are saying

According to the International Institute for Sustainable Development here are just some of the benefits of embedding CSR in corporate strategy:

  • Improved financial performance;
  • Lower operating costs;
  • Enhanced brand image and reputation;
  • Increased sales and customer loyalty;
  • Greater productivity and quality;
  • More ability to attract and retain employees;
  • Reduced regulatory oversight;
  • Access to capital;
  • Workforce diversity;
  • Product safety and decreased liability.

At the heart of strategic planning

In truth, the real drivers for CSR initiatives do not only focus on corporate responsibility but also depend on sound business sense. So whether it is our On The Ground service, collecting social baseline data, managing land access, impact studies and compensations, or our BorealisIMSTM software, which enables our clients not only manage but also harness their social and environmental performance data to inform their decision making process, our business is to help our clients embed social and environmental performance management into the heart of their strategic planning to help them realize their overall corporate objectives. In doing so, we add value by freeing up time and resources to facilitate and enable innovation and thinking “outside the box”, which will be discussed in my next blog article. How can extractive companies use Social and Environmental Performance Management to power innovation?

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