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Sustainable consumption and production tools: a summary applied to the mining industry

Publié le : 13/06/2009

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It is commonly stated that the mining and metals industry’s environmental and social performance is under increasing scrutiny from NGOs. Not only civil society in fact. The media, financial analysts, business partners, investors, shareholders, “conscientious consumers”, etc:  Today everybody wants to participate to a greener world, somehow. There's much talk of capitalism and sustainability being increasingly interrelated - that environmental and social impacts need to be included along with quarterly sales projections in corporate strategies and the financial bottom line. In fact, participation of the private sector to the global effort of reducing poverty, combating biodiversity loss, global warming, etc. is perceived by the general public as a new legitimate corporate value. They are many other individual business reasons for the mining industry to adopt responsible practices with respect to environmental and social management: access to land, reputation, which links to “licence to operate”, access to capital[1]. As the ICMM Secretary General puts it: “demonstrating a commitment to biodiversity conservation is now an essential element of sustainable development for the mining and metals industry”[2].

Of course this is not a matter of “greenwashing” and communication only. Serious innovation efforts and entrepreneurship courage is necessary to create sustainable policy environments. Compensations measures, such as building schools or hospitals, in addition to normal compliance with laws and regulations in place, does not appear sufficient to shows company’s commitment to participate to that necessary global effort. It even sometimes looks like an odd present, like “disconnected” from real life.   

Innovation however, and the strategically combined use of « Sustainable Consumption and Production » tools and instruments, which we briefly make a description below, gives companies the opportunity to show an integrated commitment to real life. Offering solutions, creating the momentum, fixing the headlines, can even helps them staying away of problems. Some companies even manage to pave the way to NGOs and other policy makers towards putting in place new practical tools, policies and expressions of environmental and social sustainability. Because they see the voluntary rules and norms more as a business opportunity then as a constraint probably.

In addition to the enforcement of “classic” state control regulations (such as environmental and social impact assessment, pollution control, social policies, etc., which are well-known) and certification measures, an honestly used and balanced mix of the third generation of sustainable management tools can put a company, its clients, partners, investors, shareholders, etc. in a virtuous position.

Companies tend to focus on their employees and on the surrounding local communities. But it should also consider a range of government and multilateral institutions with an interest in or responsibility for the management or protection of natural resources, investors or providers of insurance, conservation interests, including international, national or local NGOs as well as academic or research institutions. Even the consumer can feel involved in social management (see the backstory approach below).

Environmental policy tools: finding the good mix

These approaches are not adapted to all kind of activities. Each company shall strategically focus on one or more complementary instruments, depending on it’s own corporate culture and on the host country culture. They include regulatory tolls, economic tools, tools based on information and education and communication tools:  

Regulatory and contractual tools (compulsory or voluntary) :

· « Environmental impact assessments » and « social impact assessments » ;

· Standards and norms for production, wastes, water quality, dust, air pollution… but also for distribution and products quality. No need to put more emphasis on these first generation of “command and control” type of norms ;

· Voluntary and negotiated (contractual) instruments. Whether concluded with communities, administration and other local stakeholders or with business partners: distributors, transport, etc. This is an interesting solution because a highly flexible instrument. In the first case, they can include management plans. In the second type, social and environmental aspects can be specified.

Economic instruments:

· Voluntary taxes (on production, transport, etc. such as the payment of carbon credits to compensate the company’s « carbon footprint »). The idea is to give sense to money, then corresponding to a global cause, while helping local people. It can be externalized and given to an international conservation organisation, to projects, to foundations, etc. These funds can also be versed to the company own projects. We could for example think about the making of a marine protected area for a fishing industry, or the making of a community conserved area for a local factory, the investment in acres of protected forest (carbon sinks) in Brazil for a mining company, etc… ;   

· Green public procurement: They consist in buying green technologies for the company itself, such as solar systems, clean and energy efficient buildings, the use of recycle paper, bio-ethanol propelled machines, etc. This way, products, infrastructures and services have already « internalised the environmental costs ».

Tools based on information and education:

· Making of “sustainability reports”: The company regularly informs the public, partners, and shareholders on its green and social performances ;

· Diverse guaranties on the origin of the product used and on the processes. For example, companies are finding themselves held responsible for the whole backstory of their products (as illustrated by the film “blood diamonds”). “A product's backstory is everything that happened to get the object or service to us, everything that will happen behind the scenes while we use it, and everything that will happen after it leaves our lives.

· Fair trade networks ;

· Labels, such as the « Forest Stewardship Council Label (FSC) » for wood. These labels can also guaranty the respect of social norms ;

· Certification; a whole array of industries are now coming into compliance with third-party accountability systems that certify whether or not that company's actions meet basic environmental and social standards ;

· Traceability of products and processes, etc.

Conclusion

The choice of appropriate measures, their combination and their timely implementation are crucial. It should be tailored to the company’s culture as well at to the local demand and international trends. Selected tools and procedures should first of all be enrooted in country’s culture and practices. For example, when managing natural resources and social aspects in Senegal, negotiation and concertation of all the stakeholders is a key to success. We could imagine setting up such a concertation group as a basis for some policy work done or implementation of a global management, with projects, etc. In addition, communication should not only be top down but also bottom up to account for and recognize diversity of interests involved. Use of local language is important as well as sensitization and capacity building. Use of local or national external organisations (such as facilitators) can help developing a spirit of trust and collaboration, etc. In a word: the processes and communication are as important as the tools used.

One solution is to go step by step, by conducting a feasibility study and by testing different tolls in combination, probably with a good balance between the three kinds of instruments (regulation, economic, information) to progressively reduce the company’s environmental footprint.

By Laurent Granier, Director and Principal Consultant Ecocy 

[1] Particularly where project finance is to be obtained from one of the investment banks that are signatories to the Equator Principles, which apply the Biodiversity Performance Standard of the International Finance Corporation (IFC) to all investments in excess of $10 million. In April 2006, IFC adopted Performance Standard 6: Biodiversity Conservation and Sustainable Natural Resources Management, which replaced IFC’s Operational Policy 4.04: Natural Habitats of 1998.

[2] Good Practice Guidance for Mining and Biodiversity, published by International Council on Mining and Metals (ICMM), London, UK, 2006.

Selected bibliography 

- Benefit Streams from Mining in Tanzania: Case Studies from Geita and Mererani. Siri Lange in cooperation with ESRF, Chr. Michelsen Institute  (R 2006: 11) ;

- Good Practice Guidance for Mining and Biodiversity, published by International Council on Mining and Metals (ICMM in association with IUCN), London, UK, 2006 ;

- Transparency and Accountability in Africa’s Extractive Industries: The Role of the Legislature, edited by Shari Bryan & Barrie Hofmann, National Democratic Institute for International Affairs, W DC, 2007 ;

- The impact of extractive industry activities on the rights of local communities ASADHO /Katanga, NIZA briefing paper 2007 ;

- Undermining Communities and the Environment: A Review of the International Finance Corporation’s Environmental, Health and Safety Guidelines for Mining, Bank Information Center – Center for Science in Public Participation – Earthworks – Oxfam International – WWF International, September 2007 ;

- A mine of information? Improving communication around the Rio Tinto ilmenite mine in Madagascar, Panos London, October 2007;

- Mali, Mining and human rights. International fact-finding mission report, FIDH, September 2007 ;

- Carbon footprints in the supply chain: the next step for business, the Carbon Trust, UK, 2007 ;

- The Trade and Environmental Effects of Ecolabels: Assessment and Response, UNEP (date ?) ;

- The use of economic instruments in environmental policy : opportunities and challenges, UNEP, 2004 ;

- A legal framework for the integration of environmental, social and governance issues into institutional investment, UNEP finance initiative, 2005 ;

- Defining Global Business Principles: Options and Challenges, IIED, 2004.

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