The term sustainable development has been used for over forty years, yet it only became widespread after UN published the well-known Brundtland Report in 1987. When talking about sustainable development in the extractive industry nowadays, social investment comes out as one of the key components companies should focus on in order to obtain and maintain their ‘social licence to operate.’ As it has become a part of their day to day reality, industry leaders should be involved in supporting communities that have been, are or will be affected by their projects.
What Is Social Investment in the Extractive Industry?
For companies that operate in the extractive industry, social investment can take various forms: vaccination campaigns, training programs, scholarships, book or computer donations, building of schools, and many more. Whether social investment is rendered by obligation or choice, it is important to mention that even if provided support is well intended, companies must choose wisely how the funds they invest are spent. Even with the best intentions in mind, support can create a dependence of the community on the project and/or company, and outcomes can be damaging for concerned individuals in the long term. Furthermore, some investments, no matter how beneficial at the moment they are made – scholarships or computer donations for example – can be of short duration or quickly become outdated. Thus making social investment that is beneficial for communities and sustainable represents a significant challenge for extractive companies.
How Does Social Investment Become Sustainable?
Each one of us has heard the famous quote of Taoist Lao Tzu : „Give a man a fish; feed him for a day. Teach a man to fish; feed him for a lifetime.“ In terms of corporate social responsibility and social investment in the extractive industry, the same reasoning applies. If companies wish to make investments that will last years and benefit communities for several generations, they must take the necessary time and value human interactions in order to: understand communities’ needs, get involved with them and generate benefits that are sustainable. A real-life example could be:
Company X decides to invest into the local elementary school in a nearby community. In addition to providing funds and/or in-kind donations to help build new classrooms, Company X decides to invest into training programs for the school teachers and administrators. Their main goal with this investment is to allow the school to a)have better operations and b)provide a better quality of education to the students.
This is a good example of sustainable help, because teaching and management methods learned by individuals will be transferred to others. Of course, Company X cannot be guaranteed 100% that ten years from now methods they taught will still be used, but at least they made an investment that has the possibility to evolve with the community over time.
How can extractive companies implement good social investment practices?
Considering sustainability is an important component to successful social investment, one must keep in mind that many other factors are part of the equation when it comes to long lasting, positive investments in affected communities. According to the IPIECA , here are the key principles that should be applied by organizations that wish to implement good practices in terms of social investment.
To read more about social investment in the extractive context, consult our White Paper:
What Are the Keys to Transparent Social Investment in the Extractive Industry?