Terry Nelidov: Manager, Advisory Services – BSR Hong Kong

Could you provide a brief overview of BSR: its history and current operations?

TN: BSR is a unique organization. We are a global business network with 300 companies, covering a broad range of corporate-sustainability issues. Our membership includes some of the largest mining companies, such as Rio Tinto, Anglo Gold Ashanti, Newmont, and Kinross. An important differentiating point is that BSR is a non-profit organization, not a company. This changes everything. Our mission is “to work with business to create a just and sustainable world”. We pull together a lot of different issues – like stakeholder engagement, strategic community development, human rights and governance – into one integrated approach that we call “local sustainable performance”. For us it is important because, while mining is a global business, it has local impacts and opportunities. It is really important to talk about local benefits to the community and sustainability, not just from an economic point of view but also from social, political and governance perspectives.

Last year, an opportunity came up for me to work in Hong Kong, which was exciting because we see so much happening in Asia, and Asian mining will really define a lot of global trends in the next 10 or 15 years. Our Beijing office focuses on state-owned enterprises in China; our Guangzhou office has traditionally worked with factories, supply chain and energy issues. Hong Kong we see as a gateway to Asia. Mongolia, Kazakhstan, Indonesia and the Philippines are key countries for us and our member mining companies, and there are obviously big opportunities to work with Chinese companies either domestically in China or overseas.

One example of our work in China was the project we did with Sino Gold, where a couple of years ago a very forward-looking general manager focused the mine’s community development on investing in the things that really matter to communities, rather than short-term give-aways – like buying soccer uniforms, church bells and soft drinks for parades.

We are all about integrating community and social responsibility issues into business models. It is fine for things like education to start in the Community Relations Department, but eventually it has to get into Engineering, Construction and Mine Operations. You know that if your mine is the only game in town in a small village 4,000m up in the Andes, in five years’ time the village’s technical and high school students are going to be your workers. It’s a win-win opportunity to invest in local education and building their capacity long before they enter the company.

What are the largest social outreach mistakes that big mining companies are making?

TN: I would highlight four challenges that companies tend to have. One is ‘getting it’. We often talk at BSR about whether a company really understands the importance of social and environmental issues to its business model. For mining companies, that is the first challenge. Their staff typically have backgrounds in engineering – where everything is predictable, precise and calculable – and these companies typically have more conservative management cultures. Social issues aren’t so precise and predictable, and sometimes are hard for engineers to understand. We help our companies understand the impact on business, i.e. what we call “getting it”.

When they do ‘get it’, their second challenge is having the required internal human capacity. It is difficult when you have two different worlds – the mining and engineering world, and the community world – which have to work together. It takes time to build the company’s capacity to not only talk to communities but really understand how they work and what their expectations are – there is a difference between communities’ wants and real needs – and then translate the message back to the mine and really integrate it into the DNA of the company.

The third challenge is pulling all the pieces together into a strategic approach. We have seen decades of mining companies giving away money to buy social license, without taking an interest in whether they are really building human development. When mining companies start operations, everybody comes to them asking for resources and support. The challenge is how do you pick three out of the hundred requests you receive, where you can make a real sustained contribution, leveraging your expertise and competence as a mining company. If a mine is around for 20 years, can the community look back at the end of that time and see that the mine development has made them fundamentally better off? In a lot of countries, we often we see that communities stop, five or ten years into the life of the mine, and ask whether they are better off than they were. If the answer is no, that is where problems start, because communities see billions of dollars leaving their land and being shipped off to other countries and don’t feel that their quality of life or own human development is any better now than before.

The fourth challenge companies have is knowing how to communicate the things they are doing. Again, an engineering framework is not a communications framework. Mining companies are not always the best communicators. It is a challenge for them to identify in a sustainability report what really matters to local communities, and then talk about it in a transparent way that can be understood, without lots of numbers and technical jargon.

How many Chinese mining companies are members?

TN: Sino Gold is an example of who we have worked with and we have worked on a couple of other projects where companies have asked us to maintain confidentiality.

We are excited to work with Chinese companies. Industry leaders worldwide really understand the business implications of social and environmental issues, and I think Chinese mining companies are just starting to catch up. I don’t think a lot of Chinese companies have the internal capacity to deal with CSR, so hopefully they will reach out to external service providers to help them build that capacity. In some ways, there is a high risk for Chinese companies as they expand overseas to countries in Africa and South America, where they may not understand the stakeholder landscapes, traditions and cultures when they enter. On the other side, there is also a giant opportunity for them. Very few Chinese companies are doing CSR, so those who really “get it” will become sustainability leaders in the next couple of years. We truly believe CSR will support their globalization business strategies. Many companies have done just that, and the field is now open for the Chinese.

What is your plan for the next five-year period in China?

TN: These issues in China will fundamentally change over the next five to 10 years. If you look back on Western mining companies 10 or 15 years ago, the big issue was safety. The industry had a terrible record on worker health and safety. The companies ‘got it’ – they invested tremendous time, and resources, and focus and made a real cultural shift. Now if you go to a big transnational mining operation anywhere in the world, you will receive orientations in safety immediately on arrival, and emergency equipment and evacuation procedures. We believe that that same shift is happening right now on community issues. We are optimistic because we saw how large, engineering-focused, conservative management cultures were able to change fundamentally on the safety issue. We believe they can change on the community issue, too.

We believe it will happen in China as the country opens up more to the rest of the world, and as Chinese mining companies go overseas. Safety issues are still more of an issue for Chinese mining companies than the rest of the world, but are becoming a priority. China does not have the same tradition of mining activist groups that you have in other countries, so how can you expect its companies to be able to engage effectively with them in new countries outside of China when they do not have that experience at home? This is where organizations like BSR can help them interpret foreign landscapes and adapt their responses to promote shared development rather than conflict. Chinese companies have to decide that this is a priority, like transnationals did years ago with safety.

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