The Evolution of CSR Practices

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A few years ago, it was still possible for the leader of a mining company to question the relevance of sustainable development and responsible practices. Today, what people want to know is how efficient a company is in its corporate social responsibility practices (CSR). What is the motivation driving this shift towards CSR? We get the facts about what has really changed. We focus on the evolution of practices with Patrick Grégoire, Vice-President and co-founder of Boréalis, who has over ten years of CSR experience on major international projects.

Vincent Frigon: What is the source of this trend among oil, gas and mining companies?

Patrick Grégoire: There is of course the economic downturn that encourages people to ask: where is my money going? When resources are scarce, people ask more questions before buying or investing. This undoubtedly has implications on business decisions. More importantly, there is mounting pressure from our societies; people are demanding a more responsible attitude and more tangible results. Investors and governments are therefore more likely to choose companies that show concern for sustainable development issues.

Today, from a business stand point, CSR is considered a must-have. To meet the requirements of large investors and host communities while showing no concern for social and environmental impacts is almost inconceivable. Especially as investment in projects led by so called responsible companies are often perceived as less risky.

Corruption is also gradually losing its appeal. Companies turning to shady dealings have more to lose than in the past, given mounting anti-corruption measures. Several countries have adopted laws in this area that promise significant penalties to offenders. A number of companies are paving the way by adopting their own codes of good governance. Many are also aware of the flipping nature of governments. Authorities can overthrow decisions made by its predecessors if the previous government was believed to be corrupted.

V.F.: Policies adopted by mining and oil and gas companies show a commitment to improve practices; however there is sometimes a gap between action and intention. Why?

P.G.: The difference is that companies show more concern for sustainable development issues. This generally is more than a mere show of intentions. Today, CSR practices goes beyond social, moral or environmental considerations: it is intimately linked to company credibility. That said, CSR must go through a profound change in the planning and managing of mining and oil & gas projects. It isn’t enough to have a policy; one must also have the organizational capacity to implement that policy. That capacity is what is sometimes lacking. This handicap interferes with results on the operational level and invariably has an impact on business performance.

V.F.: How does this problem translate on the ground?

P.G.: Most companies rely on external CSR consultants for their international projects, particularly in developing countries. This is good because it gives them access to expertise that they do not otherwise have. However, external expertise should not become an axillary crutch. Unfortunately what we have sometime seen on projects are external consultants who, for lack of internal resources, become de facto project managers, instead of the company. This approach might cause a company to shrink from its commitments and impede its understanding of what is happening on the ground.

V.F.: Are we not asking too much too soon?

P.G.: No, because only the company can lead the boat to shore. Consultants can help companies by proposing solutions, but sometimes there can be conflicts of interest between consultants or with the company. This is one of the reasons for which companies have to efficiently plan their internal resources in order to manage CSR commitments. Companies must also be equipped with good social performance software and trained personnel in the field.

V.F.: Where do we go from here?

P.G.: On large projects, companies are increasingly aware that they must take stakeholder concerns into account. Benefits for the most proactive companies in this area are well documented: greater community ownership of the project, a more motivated and committed workforce, easier conflict resolutions etc… Benefits are not necessarily perceivable in the short-term: sustainable development is something to be planned for the long-term and we know that it is no easy task for companies to commit for long periods. However, those who succeed on that path stand to be more competitive as governments and populations favor businesses who adopt a responsible approach.

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