Two Cultures of Sustainable Development

CEPMLP Internet Journal Vol. 11, Article 7. 2002. The Center for Energy, Petroleum and Mining Law, University of Dundee
(First published in a reduced form in Mining Journal, Vol.388, No. 8684, May 2002.)

INTRODUCTION
For the past six years, the international mining community has been wrestling with the need for a new image, a new relationship between mining and society at large.  The impetus for this comes from the fact that in many countries mining is no longer considered socially acceptable, and a realization that for companies to maintain shareholders, access to capital and, indeed, access to land, the industry has to break with its historical image of rape and run.  This challenge is addressed in part through the move to endorse sustainable development as a necessary outcome of mining, but the industry is then faced with two distinct cultural visions of sustainability.  These different perceptions of sustainable development in developing and developed countries must be understood in order to meet the needs of all stakeholders.

Mining and Sustainable Development
Following a lead set by a few innovative companies that have experimented with policies and practices such as "triple bottom line reporting" and "socially responsible mining", the industry is now being drawn together under the banner of sustainable development or the more general term, sustainability.  Leadership is coming through the Global Mining Initiative (GMI) and the associated Mining Minerals and Sustainable Development (MMSD) project which are intended to help change the way the mining industry does business.  There is, however, a risk that this adoption of a common nomenclature could serve as a façade, a false front, unless there is common understanding of what is meant by sustainable development.  Most critically, this understanding needs to be shared by civil society and those groups particularly critical of mining.  If real change is to take place within the mining industry, and between it and society as a whole, it is essential that all involved are pushing or pulling in the same direction.

The term sustainable development is not new, it was first coined in the late 1970’s and came to prominence with publication of the report of the World Commission on Environment and Development, "Our Common Future", in 1987.  This study, also known as the Bruntland Report, provoked an ongoing debate as to how development and economic activity of all forms can change to meet the challenge of sustaining both a rising global population and the environment on which life depends. 
From the start, the mining industry has had problems finding a place in this vision, due in large part to confusion, or the perceived tension, both inside and outside of the industry, between the concept of sustainable development and the reality of renewable (or not) resources.  Clearly, mining is not based on the exploitation of a renewable resource - once the resource is extracted, it is gone.  For many people this means that mining, de facto, conflicts with the concept of sustainable development, which they associate only with the use of renewable resources.  Given this evident truth, how can mining claim to contribute to sustainable development?

Dimensions of Mining’s Relationship to Sustainable Development
A critical examination of the definition of sustainable development provides a basis for understanding potential roles for mining and the scope of the challenge for the industry. The original wording of the Bruntland Commission, which is widely regarded as the fundamental definition, describes sustainable development as  "development that meets the needs of the present without compromising the ability of future generations to meet their own".  There are three elements to the proposition – the implication that the environment is limited, the concept of needs, and the challenge of generational equity.

The environment has a limited capacity to sustain mining in two respects; the depletion and ultimate exhaustion of a finite resource (the ore body), as identified above, and through negative, destructive impacts on the biophysical and social environment caused by the process of extraction.

In terms of biophysical impacts, land is disturbed and plants, animals and water resources may be dislocated or destroyed in the mining process.  However, the international industry has been dealing with the environment as a management issue for many years and laws, guidelines and best practice for avoiding, minimizing, mitigating and recovering from impacts are very well established.  Some mining companies have reached the point where environmental management is part of their corporate culture, with external audits, ISO certification, collaboration with environmental groups, and awards for excellence.  Most importantly, an environmental ideal has emerged within the mining industry - that of stewardship – in which the company assumes responsibility for the use of the land, minimizing impacts and restoring the landscape once mining is over.  While many critics will challenge whether or not the industry has got much of this right to date, there is reason for confidence that the industry is a long way towards solving this part of the puzzle, providing that appropriate resources are dedicated to the effort.

In terms of the impacts of mineral extraction on the social environment, industry’s capacity to deal with this set of issues is quite different.  The social issues, if not new, are newly elevated in terms of the seriousness with which they must be addressed.  There is not yet much experience or skill within the industry; the management of social impacts is rarely integrated into how companies do business, and there is essentially no regulatory or legal framework to provide rules of the game.  Industry has just begun to learn how to tackle these challenges. 

Mining also has to handle the remaining aspects of the sustainable development equation– needs and generation equity, which are intimately connected.  Meeting current needs requires attention to how the risks and benefits of mining are distributed in order to meet the human development needs of today.  This represents 'intra-generational equity' concerns.  On the other hand, meeting future needs is addressed by inter-generational equity, which calls for the conservation of mineral resources and environmental integrity for the benefit of future generations.  It is at this point that, around the world, the mining industry is faced with two contrasting, yet complimentary cultural visions of societies’ needs, of how the industry is expected to contribute towards sustainability into the future.  Moreover, this tension, between intra-generational equity and inter-generational equity, runs throughout the debates on sustainable development - it is not unique to the mining industry.

The view in the developed world – that mining is an undesirable activity incompatible with sustainable development - is familiar to any North American or European.  In fact it is probably the dominant sentiment in Europe today and reflects an opinion that mining pollutes, destroying and degrading the environment and should be stopped.  This perspective comes from the post-industrial culture of wealthy nations which have rich diversified economies, mature mechanisms for wealth distribution/redistribution by States/governments and have achieved a basic level of socio-economic well being (if not much equity) within their populations.  Their public is preoccupied with an environmental imperative for the need to preserve resources for future generations.  Their mantra is reduce, reuse and recycle when talking of metals and minerals.

The view in the developing nations of the world, including Latin America where the mining industry is particularly active, is markedly different.  Here mining is frequently regarded as an essential industry.  These countries are, in general, relatively poor, have limited wealth generating capacity and find mining to be an important engine for national economic development, certainly in terms of traditional macroeconomic indicators like balance of payments, foreign investment, central government revenue generation, etc.  Unfortunately, these same countries often lack the ability to effectively redistribute the benefits of such wealth generation, leaving significant portions of the population in poverty, and marginalised economically, socially, and politically.  Nevertheless, these nations, and especially their poor, aspire to gain the benefits of modern society.

In highlighting the tension between the two 'models' of equity in sustainable development, we do not wish to suggest that people in the developing world are not concerned about the environment.  Rather, that their needs are overwhelmingly social and economic, and of the here and now; how to get today's generation out of poverty and build strong sustainable communities.  Their imperatives are about production and employment, and the distribution of the wealth that is generated, while their environmental concerns are typically quite immediate and personal – uncontaminated water, food and air, and guarantees of protection to assure a healthy future.
The dilemma for mining is how to balance the environmental and social imperatives and become socially acceptable in both worlds.  In the developed world where there are head offices with shareholders and financial institutions looking on, and the developing world where, increasingly, the mines and exploration projects are located.

More especially, how does the industry deal with the fact that mines can win international awards for environmental performance and yet not be socially acceptable to the local community.  Even more perverse, for the people with a developed world point of view, is how to make sense of a mine such as OK Tedi, which can be labeled an environmental failure, the scandal of the environmental NGO’s, and yet be socially acceptable, indeed essential, to the local people and the government in Papua New Guinea.

It is worth noting that these cultural differences can also be found in Canada, a country generally regarded as part of the developed world.  Here the populations of the urban and sub-urban centers see mining as principally an environmental and inter-generational issue, while the rural, particularly the first nations/indigenous communities of the north regard intra-generational considerations such as community participation and access to benefits as major issues.  In a much-modified way, these same tensions can also be found in the USA between the dominant urban population and the resource dependent communities of the western and mountain states.

So how does the industry embrace sustainability?  Certainly some of the challenge of sustainable development is met through environmental management.  While the industry has not yet achieved a consistent standard of performance on environmental issues, and is still largely compliance driven due to the legal and financial regulations in place, it is reasonable to say that much of the industry has internalized the need for environmental management. Moreover, the fact that environmental responsibility is being internalized by corporate cultures provides confidence that, like health and safety, it has become a value that will now be maintained and even improved into the future.  In this way many of society’s current concerns for inter-generational equity in both the developed and developing world are being accommodated.

Where does that leave the social, intra-generational equity challenges of managing impacts, the distribution of risks and benefits, wealth distribution and of building and maintaining sustainable communities?

Intra-Generational Equity  - Where To From Here?
The industry response to this challenge is in its infancy, and still evolving.  Some of the leading companies have adopted policies and operating procedures based on the principles of respect for the community and local culture and the need for open, transparent communications and consultation.  They also strive for the mitigation of social impacts, enhancement of social and economic benefits and participation in community development.  These actions, however, are largely intended to facilitate good relations and earn a Social License to Operate rather than to meet sustainable development objectives.
Corporate actions beyond this level are often muted.  In part this reflects a perception that engaging with the community is an expensive proposition, fundamentally the responsibility of governments, and thus something industry should not become too deeply involved with.  Even where companies have become more constructively involved there is often difficulty in determining how to make meaningful contributions to local well-being.  In particular, there is ambiguity arising from confusion between social infrastructure (schools, hospitals etc) and social capital (the relationships and norms among people that facilitates collective action, access to resources, and the ability to self manage into the future). This is a critical issue since there is a strong tendency for companies to invest preferentially in social infrastructure because, unlike social and human capital, infrastructure is tangible, familiar and easily managed (defined, bounded, priced, completed). The preference for social infrastructure development is one of a number of strategies that perpetuate the paternalism and dependency of older models of providing benefits, and is not as likely on its own to contribute to sustainable development.  Both social infrastructure and social capital are important; a more holistic approach is required.

One of the important shifts in thinking and approach is to see the economy of the region with a mine in it, rather than how the mine might interface with the local economy.  This is moving from a ‘mine-centric’ planning focus (absolutely logical starting point for the mining company) to a sustainable development planning focus that leverages the mine’s economic activity to strengthen the future economy of the area.  The key is to identify economic opportunities desired by the community which are either outside of mining or linked to mining but not entirely dependent on it.  Once those opportunities are identified, some of the economic activities, or the revenues generated by the mining activity can be used to create an economic base that will continue on after the mine has closed and so sustain the community into the future - to create sustainable communities. 

Investment has to take place in such areas as intellectual capital (to which building schools may make a contribution), natural capital, and social capital, as well as social infrastructure.  This involves investing in people, their education, organizational and administrative skills, business development and also, most importantly, social and cultural activities identified by the community. Often the community requires help building the capacity to manage its own affairs in the face of rapid social change, to develop businesses that take advantage of new opportunities, and to establish markets for their products. Fundamentally, we are talking about community development and how the mine may be a positive participant in the process.  Investing in social capital in tandem with mutually agreed upon priorities for social infrastructure is highly cost effective in the long term as it builds self-sufficiency and helps the community translate short term benefits from resource extraction into long term benefits for the community’s future.

Making this Happen
But the companies can not and should not be doing this alone.  Government has a role in facilitating commercial activity, including development that incorporates the concepts of sustainability.  This requires more than political will, there has to be capacity.  Unfortunately, most countries and governments 0lack this capacity, be it in developed of developing regions.  This shortfall, as well as the serious absence of financial resources in many countries adversely affects the ability of most governments to participate and cooperate with the private sector to create the very best integrated development opportunities for communities.

Furthermore, local and regional demands for access to the benefits derived from mining puts additional pressure on companies. Often this demand is not associated with an effective call for the application of sustainablity principles, rather there is a more general call for the "fair" distribution of economic wealth from the project.  This expectation, often a demand, may be met through the flow of tax revenues back to the area of exploitation to provide benefits to the communities, but that is in fact rare.  Where government is weak, absent, non-distributive, or not active in providing for the population, the company may be forced to act as surrogate for government and supply infrastructure, basic services and social assistance to the community, while still being taxed by the same government.

To date, government responses to this situation have been limited in number, tentative and in one of two directions; the provision of incentives for the companies or, more frequently, through regulation.  For example, Honduras, Bolivia and Papua New Guinea all have tax provisions, which are intended to encourage investment which benefits the community.  The regulatory approach is typified by the situation in Indonesia where mine developments under current Contract of Work agreements are required to include a community development program.  Similarly, in Nunavut and the Northwest Territories of Canada, an Impacts and Benefits Agreement with local communities has become a requirement before project approval will be given in the Environmental Impact Assessment (EIA) process Other governments are moving in the same direction.  Peru, for instance, has recently released draft EIA regulations that place the responsibility on the company to demonstrate social acceptance of a mine and, by implication, that it is providing benefits to the community. 

The trend appears to be towards regulation, both directly by statute and through policy pronouncements, although it is of note that, with few exceptions, neither the current regulatory approaches nor the fiscal incentive programs require that the community benefit meet the principles of sustainability. There are signs that this will change, however.

Papua New Guinea is embarked on a program of regulatory reform that is intended to see the principles of sustainable development applied to the mining sector.  Nunavut has similar intentions, as do Peru and the Dominican Republic, among others.  It is to be hoped that the policy and regulations produced from such national projects reflect the cultural imperatives and heterogeneity of the population and thus help the private sector meet both local and global expectations.

Conclusions
Mining has a place in an economy based on the principles of sustainable development that goes well beyond the basic need for resources from the ground. This perspective does not endorse mining and other forms of investment or resource development uncritically - the point is that the development can meet additional criteria.  The challenge and the opportunity is to provide for inter-generational equity as a component of environmental stewardship while simultaneously providing for intra-generational equity by generating improved opportunities for socially sustainable development by the local communities.  The industry has the opportunity to take a leadership role by adopting these principles to help create sustainable communities and so defy the critics.  This will, however, require learning new skills and creating corporate cultures that support them.

At this time, the legislative regimes provided by governments appear to be the weakest link, but this is likely to change quite quickly.  Early initiatives designed to ensure benefits reach the local community are already being superceded by attempts to provide a regulatory framework based on sustainable development.  In this regard, the industry is well positioned to engage with government to discuss the nature of new legislation.  The MMSD project has the potential to provide further detailed information how and where incentives and regulations could be applied that ensure both inter- and intra- generational sustainable development objectives are met.  A concerted effort would then be justified to a create models of legislation which might be adopted by governments world wide and in this way assist mining meet the expectations of its many stakeholders.