Resources Policy 59 (2018) 495–505

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Resources Policy
journal homepage: www.elsevier.com/locate/resourpol

Corporate social responsibility, risk and development in the mining industry T

Tomas Frederiksen
University of Manchester, Global Development Institute, 1.007 Arthur Lewis Building, Oxford Road, Manchester M13 9PL, United Kingdom

ARTICLE INFO ABSTRACT

Keywords: In this article I examine how metals mining companies understand and act upon CSR as risk management and the
Corporate social responsibility consequences for community CSR projects. I begin by exploring the literature on CSR and development in the
Mining mining industry, motives for CSR engagement in the industry, and risk and risk management. I then draw on my
Risk research data to map how CSR programmes are seen as an important method of managing strategic challenges to
Development
firms — categorised here as reputational, operational or regulatory ‘risks’—and note how competition for capital
Accountability
and recent changes in the legal environment have furthered this process. A focus on CSR as risk management can
illuminate the poor development outcomes of community CSR projects, despite recent rises in spending. ‘CSR as
risk management’ introduces immanent limitations including treating CSR as PR, targeting those that pose the
greatest threat rather than those with the greatest need, excessively simplifying complex processes and focussing
on maintaining the status quo. In risk management thinking, CSR activities may be a high organisational
priority, integrated into central decision-making processes and subject to a great deal of investment, but still see
little progress towards inclusive development for those living closest to mining operations. I conclude by re-
flecting on what this means for future action and research.

1. Introduction: CSR, development and mining
Corporate social responsibility (CSR)1 and development have had a
rocky history in the mining industry. At the international level, since
the 1992 United Nations Conference on Environment and Development
in Rio, the mining industry has moved to reorient itself through a series
of global initiatives which elaborate ways mining can and does con-
tribute to sustainable development (Dashwood, 2012). Adopting global
standards of CSR is a key signifier of responsible behaviour in the
mining industry. These standards, and a series of policy and other
pronouncements, offer CSR as an important way for the private sector
to deliver development, linking economic and social goals to produce
‘win-win’ outcomes (DFID, 2011). Mining is central to debates on the
role of CSR in promoting development with CSR in the extractive sector
“arguably the most extensive of any corporate sector” (Slack, 2012, p.
180). The literature is near-unanimous on the growing engagement
with CSR in the mining industry and beyond, noting changed corporate
structures, increased staffing in CSR teams, greater reporting and in-
vestment in remedial and community development programmes
(Blowfield and Murray, 2011; Franks, 2015; Kemp, 2009).
Contrasting these international and policy efforts, research on the
local development impacts of the mining industry's CSR activities
paints a bleak picture. Decades of empirical research argue that these
CSR activities almost never live up to their aims and can have per-
nicious effects (Slack, 2012). Many empirical case studies of corpo-
rate-community relations and the impacts of CSR programmes for
those living with mining operations critique the ambiguous or out-
right negative environmental and social impacts of mining in the
developing world, (Bebbington, 2012; Bury, 2013; Hilson, 2012;
Himley, 2014). For critics, the contrast between the high promises
and limited development benefits (e.g. improved health and well-
being for local populations) from CSR programmes is evidence of
duplicity by mining companies; that CSR is a PR stunt, empty of
content (Kuyek, 2006; Slack, 2012). In these critiques, companies are
simply continuing in their previous modus operandi but with more
sophisticated public relations techniques. Critics argue companies are
unwilling to change their behaviours or invest the resources needed
to improve their impacts and development outcomes (e.g. improved
health and wellbeing for local populations) (Banerjee, 2001).
Changed behaviour, according to these critiques, requires greater

E-mail address: tomas.frederiksen@manchester.ac.uk.

1
For this paper, CSR is an ‘umbrella term’, taking in the voluntary and quasi-voluntary actions undertaken by mining companies to mitigate their environmental or
social impacts or improve the social or environmental wellbeing of the areas in which they operate (e.g. community investment, CSR programmes, mitigation and
compliance programmes); the extent and manner in which companies engage local, national and international stakeholders (e.g. corporate-community relations and
shareholder or stakeholder relations) and the actions taken by companies to either live up to or shape expectations society has of them (Blowfield and Frynas, 2005,
p.503; Carroll, 1979).

https://doi.org/10.1016/j.resourpol.2018.09.004
Received 6 March 2018; Received in revised form 31 August 2018; Accepted 12 September 2018
Available online 13 October 2018
0301-4207/ © 2018 The Author. Published by Elsevier Ltd. This is an open access article under the CC BY license
(http://creativecommons.org/licenses/BY/4.0/).
T. Frederiksen
corporate accountability (Blowfield and Frynas, 2005; Levy and
Kaplan, 2009; Utting and Marques, 2010).
A growing literature on the mining industry grapples with this ap-
parent contradiction: on the one hand new policy and apparent effort,
on the other little improvement on the ground. There are many reasons
CSR programmes, like other development interventions such as aid
programmes, may not produce inclusive development including in-
appropriate design of programmes, community resistance and adverse
political contexts.2 The interest here, however, is in the immanent
limitations of the CSR agenda in the mining industry – those factors
within the understandings and practices of CSR in the metals mining
industry which undermine the ability of CSR spending to improve the
lives of those who live closest to mine sites. In a competitive industry
with companies under great pressure to keep costs down, research has
pointed to how notions of risk are central to justifying CSR expenditure
(Campbell, 2012; O'Faircheallaigh, 2010). A highly risky industry, this
literature connects growing CSR engagement to the range and severity
of risks mining companies face (Hamann and Kapelus, 2004; Kemp
et al., 2016).
In this article I examine how metals mining companies understand
and act upon CSR as risk management and the consequences of this for
the development potential (i.e. potential to support inclusive develop-
ment) of community CSR projects. I begin by exploring the literature on
CSR and development in the mining industry, motives for CSR en-
gagement in the industry, and risk and risk management. I then draw on
my research data to trace the logic of how CSR programmes are seen as
an important method of managing strategic challenges to firms—cate-
gorised here as reputational, operational or regulatory ‘risks’—and note
how competition for capital and recent changes in the legal environ-
ment have furthered this process. In the next section, I analyse how this
framing has made CSR central to the operations of many mining com-
panies in recent decades and also limited the development potential of
these resources. Linking CSR and risk management prioritises specific
aims, targets and modes of CSR which undermine the capacity of this
spending to promote inclusive development. I conclude by reflecting on
what this means for future action and research.
2. Corporate social responsibility, mining and risk: the literature
In this section I introduce the literature on CSR and development in
the mining industry before summarising the different drivers for in-
creased engagement with CSR and research on the sociology of ‘risk’
and its role in the mining industry.
2.1. CSR and development in the mining industry
The literature is unanimous on mining companies’ rising engage-
ment with CSR since the 1980s (Franks, 2015; Kemp, 2009). Hevina
Dashwood (2012) charts the rise of CSR in Canadian mining firms
showing how in the 1990s, reporting on environmental and social
issues began, policies developed and finally board level positions with
responsibility for CSR were created. Several studies report increased
investment in CSR within the industry and attendant changes in
corporate structure (including new personnel and teams), decision-
making (including using new forms of expertise) and increased
community investment (Dashwood, 2012; Franks, 2015; Kemp,
2009). Today, medium and large mining companies without board
members responsible for CSR are the exception. A particular focus has
been programmes to promote local development around mining op-
erations. In 2012 the 15 largest mining companies spent a combined
$1.7 billion on community investment (Franks, 2015). Budgets have
increased the scale and scope of activities undertaken by mining
companies under the banner of CSR. While not universal, most
2
I explore some of these in Frederiksen (2018).
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Resources Policy 59 (2018) 495–505
companies in the industry have changed their approach and level of
investment in CSR.
CSR programmes and behaviours hope to support development in
areas of operation. Both those studying development (Blowfield and
Frynas, 2005; Utting and Marques, 2010) and from the mining in-
dustry (Harvey, 2014) have met the entry of private sector actors into
the sphere of development with trepidation. Much of this unease
comes from concern around how private actors in the development
sphere bring approaches, logics and goals which either preclude or
are incompatible with the justice and equity aims of much develop-
ment work (Blowfield and Frynas, 2005; Utting and Marques, 2010).
In the literature, development is understood as a multifaceted process
of changing economic, social, political and environmental conditions
to sustainably enhance wellbeing and capabilities. The conceptions of
development adopted by mining companies are much narrower than
this (Banks et al., 2016). In one sense—that of what Hart (2001) terms
‘little ‘d’ development’ of the unfolding of capitalist processes across
space and time—mining companies have always been development
actors. It is their entry into big ‘D’ Development of planned inter-
ventions to improve the wellbeing of specific groups that has sparked
debate and is the focus here (Banks et al., 2016; Hart, 2001). The
interest in this study is how mining company CSR activities support
inclusive development rather than simply economic growth or redis-
tributing wealth from mining companies to surrounding commu-
nities.3 Mining company CSR activities seek to support development
through a range of means discussed below. These include skills
training, giving of agricultural inputs and activities closely aligned
with mining firm activity such as local content policies that support
purchasing services and goods from local businesses. The breadth of
activities undertaken by many large mining companies to promote
wellbeing in their areas of operation through their CSR departments
is often remarkable.
This increased engagement and resourcing for corporate social re-
sponsibility activities has frequently not translated into improved social
and environmental outcomes for those living near mining operations in
the developing world. Most analysts locate blame for this in the internal
dimensions of mining company behaviour. For example, Slack argues
that the gap between the rhetoric and reality of CSR exists because
“companies have not fully integrated CSR … into their business models”
(Slack, 2012, p. 179) while Kuyek dismisses CSR as rhetoric aimed at
“legitimating plunder” (Kuyek, 2006, p. 203). Both call for increased
accountability of companies to produce ‘genuine’ behavioural change.
Those more sympathetic to the efforts of the mining industry too argue
that the development prospects of the industry depend on “the extent to
which the private sector internalizes the environmental and social
consequences of development into business decision making” (Franks
et al., 2014, p. 7581; Kemp, 2009). This echoes the influential argument
that “fragmented” approaches to CSR are behind many of its failings
(Kramer and Porter, 2007, p. 80). These studies reasonably assume that
motives drive behaviours adopted and resources committed by com-
panies; that factors internal to companies have an important effect on
the development potential of CSR in the mining industry. They argue
that greater internalisation or integration of CSR into mining company
thinking will lead to improved corporate behaviour and local devel-
opment. Motives, then, have become a key area for understanding the
role and impact of CSR in the mining industry.
3
Hickey (2013, p. 3) sees inclusive development “as occurring when social
and material benefits are equitably distributed across divides within societies
(across income groups, genders, ethnicities, regions, religious groups and
others). These benefits necessarily comprise not only economic and material
gains but enhanced wellbeing and capabilities as well as social and political
empowerment being widely experienced.” For surveys of different approaches
to development see Kothari and Minogue (2001) and Peet and Hartwick (2015).
T. Frederiksen
2.2. Drivers of CSR in the mining industry
The dominant literature on understanding increased company en-
gagement with CSR activities has focussed on its relation to ‘the busi-
ness case’. Much discussion about CSR and its rise argues that it sup-
ports the goal of profit maximisation within companies; that there is a
clear ‘business case’ for CSR (Crane, 2008; Kotler and Lee, 2005). This
understanding is contentious. Despite the popularity of normative
concepts such as ‘creating shared value’ that argue that CSR activities
are in businesses’ economic interests, ironically, the clear cut business
case argument is undermined simply by its being debated for so long
without conclusive evidence (Kramer and Porter, 2007; Margolis and
Walsh, 2003). David Vogel argues that what business case there is for
CSR remains “niche,” e.g. for companies targeted by NGO campaigns
(Vogel, 2006, p. 3). This is a ‘niche’ into which much of the mining
industry would fit. While it is often difficult to make a clear cost/benefit
argument for CSR expenditure, it is clear that “profit-making now has
broader prerequisites” and that mining companies take these factors
into account (often through the lens of risk—discussed below)
(Trebeck, 2008, p. 351).
Researchers have argued these ‘broader prerequisites’ driving in-
creased CSR engagement are a range of strategic challenges for the
mining industry: a changing governance context, legitimacy (noted
above by Vogel) and conflict. One strand of research traces increased
engagement with CSR in the industry to a changing governance context.
This can be in response to ‘governance gaps’ at the global or local level
where the private sector takes on the role of providing public goods and
coordination where states are unable or unwilling to act (Blowfield and
Frynas, 2005; Levy and Kaplan, 2009; Newell, 2005; Scherer and
Palazzo, 2011). At the local level, particularly in developing countries,
the CSR programmes of large mining companies can fill gaps in weak
states’ public service provision such as supplying infrastructure
(Blowfield and Frynas, 2005; Campbell, 2012; Szablowski, 2007). An-
other large strand of research sees increasing investment in CSR as a
response to challenges to the legitimacy of the mining industry. Subject
to decades of civil society critique, in this view, CSR in the mining in-
dustry can be a rhetorical exercise to improve the image of a tarnished
industry (Hilson, 2012; Jenkins, 2004; Moody, 2007). At the local level,
legitimacy has been recast within the mining industry as having a ‘so-
cial licence to operate’ from host communities and nations (Morrison,
2014; Owen and Kemp, 2013). If legitimacy or the ‘social licence’ de-
teriorate, CSR is a way to ameliorate conflicts. Several studies see CSR
as an effort to reduce conflicts and maintain security around mine sites
(Hilson, 2012). Here, CSR initiatives effectively ‘buy off’ critics of
mining or those who have been ‘excluded’ from their land and resources
because of industry expansion. In this understanding, the wider trend
towards increased CSR spending is a response to growing conflict sur-
rounding mine sites globally (ICMM, 2015).
2.3. Risk and the mining industry
An important strand of research seeks to understand how mining
companies respond to these changed circumstances and demands and
integrate them into business decision-making through the lens of risk.
This draws on a wider literature on ‘risk’—understood here as “the
effect of uncertainty on objectives” (ISO, 2018, p. 1) — across the social
sciences. This literature examines how risk has become a pervasive
concept in modern society, reshaping organisational and personal be-
haviour, and its effects, particularly for public decision-making (Beck,
1992; Hoffman, 2001; Husted, 2005; Kytle and Ruggie, 2005; Lidskog
and Sundqvist, 2012; Power, 2007). In the private sector, risks are
largely seen as threats posed to corporations’ operations and profit-
ability and risk management is “the application of policies and proce-
dures to the tasks of identifying, analysing and assessing risks, de-
termining the degree of exposure to risk that organisations can
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Resources Policy 59 (2018) 495–505
accommodate” (Francis and Armstrong, 2003, p. 376).4 Many re-
searchers are critical of how the shift to risk management privileges
certain forms of knowledge and actors in ways which exclude wider
groups from decision-making or narrows the terms under which debates
can take place (Beck, 1992; Lidskog and Sundqvist, 2012; Power,
2007). This is a voluminous literature. Here I note four tendencies with
the shift to risk thinking and management relevant to the current ar-
gument: (1) The recent growth in impact and scope of risk management
in the private sector has its origins in the finance and insurance sectors
(Emel and Huber, 2008). From these roots, risk analysis — the process
of comprehending the nature of risk and determining risk levels (ISO,
2009) — in the private sector brings a tendency to abstraction, quan-
tification and “non-field specificity” which obscures or plays down the
context-specific nature of risks and responses to them (Power, 2007, p.
13). (2) Risk management, though ostensibly about managing things
external to organisations, often leads to more insular, internally fo-
cussed forms of decision-making (Power, 2007). (3) Risks may reflect
real-world phenomena but they are socially constructed through risk
analysis and management. Risk identification and response selection is
a matter of human choice and thinking and shaped by power relations.
This process of social construction takes place within specific contexts
which give the risks identified and the responses to them context-spe-
cific attributes and consequences (Lidskog and Sundqvist, 2012). What
constitutes a risk and how it is managed varies from sector to sector
with important consequences. Much as the language conceals this, there
are distinct genealogies and constellations of risk and risk management
that the literature has mapped (O'Malley, 2012). (4) Private sector risk
analysis's “aura of scientificity” and aims of objectivity and making the
uncertain tractable and manageable have given it considerable man-
agerial appeal and widespread adoption (O'Malley, 2012; Power, 2007,
p. 29). This cultural authority and “political power is often invisible”
with research seeking to illuminate the justice and distributive impacts
of the rise of risk management thinking and behaviours in the private
and public sectors (Beck, 1992; Lidskog and Sundqvist, 2012; Power,
2007, p. 15).
Since the 1990s, ‘strategic risk management’ — taking in a wide
range of risks, managing them at the highest echelons of companies —
has become central to corporate governance in the mining industry
(Boatright, 2011; Power, 2007).5 Strategies for managing risk have long
been at the heart of the industry as mining is a risky business: long-
term, large, geographically fixed capital investments that are subject to
fluctuating global commodity prices and create substantial social, en-
vironmental and political impacts (Emel and Huber, 2008;
O'Faircheallaigh, 2010). Owen and Kemp (2013, p. 34), for example,
argue that “mining company decision-making is motivated by profit
maximisation and control of risk.” Many authors have noted that risk
management features in how mining companies think about CSR and
that this link has raised CSR on mining company agendas (Dashwood,
2012, 2007; Emel and Huber, 2008; Franks et al., 2014; Gilberthorpe
and Banks, 2012; Graetz and Franks, 2015; Kemp, 2009). Much of this
work critiques mining companies for linking CSR and risk management
and argues that doing so is inimical to promoting development (Kemp
et al., 2016; Kemp and Owen, 2013; Owen and Kemp, 2014, 2013;
Trebeck, 2008). There are several threads to this critique in the lit-
erature. For some, this focus on risk management prevents the main-
streaming of CSR concerns within company decision-making (Slack,
2012). For others, the conceptions of risk used by mining companies are
flawed as they conflate risk to people and risk to projects in a vague
4
There is also an important discourse around risk also including opportu-
nities rather than just threats in risk management thinking—that managing
risks well, or better than others, presents opportunities for profitability (Emel
and Huber, 2008; Kytle and Ruggie, 2005).
5
For Thomson, this process intensified after 2008 when competition for ca-
pital increased (pers. comm.).
T. Frederiksen
category of ‘social risk’, focussing on the latter (Kemp et al., 2016). A
key critique is that framing CSR within the business case or risk man-
agement curtails what resources can be used for and risks damaging or
limiting consequences (Blowfield and Frynas, 2005; Kemp et al., 2016).
Several authors critique this risk management approach—along with
the linked terminology of ‘social licence’—as being short term and thus,
in the long run, increasing risk for mining companies (O'Faircheallaigh,
2010; Owen and Kemp, 2013). For those keen to expand a company's
engagement with CSR for moral reasons, the threat of external ‘risks’
can be used to advance their arguments (cf. Prakash, 2000). Franks
et al. (2014) have sought to improve companies’ CSR performance by
showing how conflict translates environmental and social risk into
business costs.
Despite its noted prevalence, company perceptions of risk and their
application remain under-explored in the literature. Studies regularly
note but rarely interrogate risk, with most adopting the industry's own
generic language of ‘social risk’. One study which sought to interrogate
risk noted that “a key challenge of exploring the mining industry's ap-
plication of social risk assessment is the paucity of empirical studies on
this topic” and drew on published material to fill this gap (Kemp et al.,
2016, p. 22). This useful analysis stops short of mapping the linkages
between risk thinking and CSR in the industry. In this paper I use in-
terview data to analyse how mining companies framed a range of
pressures and processes as different types of risk and positioned CSR
activities as the central strategic response to them. I summarise the
logic which links risk thinking and CSR activities, an initial step in
understanding the configuration of risk in the mining industry. In the
next section I examine the concepts of risk used by the mining com-
panies studied—identifying three central interrelated strands of op-
erational, reputational and regulatory risk—and explore how CSR is
understood to manage these. I build on previous work on the role of risk
in mining company decision-making to link the increasing prioritisation
of CSR as risk management to two post-2008 dynamics in the industry:
(1) increased competition for capital (and ongoing integration of con-
cepts from the financial sector into mining company management
thinking); (2) rising legal risks faced by mining companies. Both trends
tie CSR behaviours to important lines of accountability for companies.
As a result of these trends, current literature can underestimate the
prioritisation of CSR within mining companies. The companies I studied
had committed to using CSR, integrated it into central decision-making
processes, and assigned substantial resources to CSR teams and pro-
grammes, but this appeared to have limited impact on local develop-
ment. In Section 5, I suggest that the poor results of CSR spending are
not due to low organisational commitment or lacking coordination and
integration but that the limitations of ‘CSR as risk management’ see
resources used in ways which do not support wider development in
areas of operations and note two ways this may be changing. I conclude
by summarising and pointing to future directions for research.
3. Methods
These findings are based on research undertaken in Canada, USA,
Ghana, Zambia and Peru between 2014 and 2018. This research was
undertaken for two research projects which explored (1) the impact of
international voluntary CSR standards on mining company behaviour
and (2) the role of politics in mining and CSR.6 Both projects examined
mining companies’ contribution to inclusive development in developing
countries. Those interviews focussed on corporate behaviour form the
basis of this paper though I also draw on findings from the second
project to understand community reception and development impact.
6
This second project sought to comparatively explore the politics of natural
resource extraction over time in developing countries, see (Frederiksen, 2017,
2018). Countries were chosen for their comparable long experience of metals
mining.
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Resources Policy 59 (2018) 495–505
252 people were interviewed in the course of the two projects, in-
cluding large metals mining company employees at all levels (97 in-
terviewees across 18 companies), government officials (31), local
community members and leaders (61), civil society organisations em-
ployees (27), academics (7), consultancies and industry bodies (21) and
international organisations and donors (8). I conducted interviews in
Ghana (81 interviewees), Zambia (47), Peru (95), Canada (27) and USA
(2). The quotes and examples in this paper draw primarily on a subset
of these which were audio recorded and transcribed—102 confidential
semi-structured interviews, 32 with employees of six Case Study Com-
panies (CSCs, detailed below). Notes were taken in all interviews and
analysed. I coded transcriptions of audio recorded interviews and select
interview notes in Nvivo using an iterative, partially theoretically in-
formed coding strategy (Bazeley and Jackson, 2013). Interviews were
named with an initial anonymised code at the time of interview later
replaced with a numerical code when imported in Nvivo. Interviews
examining corporate behaviour focussed on business strategy, regula-
tion, CSR decision-making and the impacts of CSR programmes. Inter-
view data were supplemented by analyses of corporate plans, reports,
policy briefs and the grey literature—focussed on CSCs. These data
were analysed to identify drivers of and debates around CSR at different
levels of company decision-making and across the industry. CSCs ex-
amined in depth were chosen in Zambia, Ghana and Peru. Two inter-
national mining companies were chosen per country as CSCs; one with
a good, and one with a weaker reputation for CSR and community
engagement. As a proxy for engagement with international CSR stan-
dards, one was also a member of the ICMM and one not. Interviews with
CSCs traced decision-making on CSR issues and their reception by local
communities. Access was secured with guarantees of organisational and
individual anonymity. Early findings were presented at academic con-
ferences and discussed with key informants to improve accuracy and
test theses.
4. Findings: CSR as risk management in the metals mining
industry
CSR engagement in the mining industry is growing. Almost all in-
terviewees within and observing the mining industry reported in-
creased spend on CSR in the last decade. Mining companies studied
described this adoption and expansion of CSR as part of a wider risk
management strategy. Every interviewee at the corporate level framed
pressures facing the industry as risks and CSR as a way of managing
these. One vice president for corporate affairs described their job as
being “responsible for non-financial risk management” another said, “in
my field, everything we do is about risk management” a third described
CSR as being “100% about risk.” Risk thinking pervades the mining
industry. EY and KPMG—leading global consultancies—frame their
annual outlooks for the industry in terms of risks. BHP Billiton,
Glencore, and Vale too, describe their CSR and sustainability activities
in the language of risk management (BHP Billiton, 2015; Glencore,
2015; Vale, 2015). In this section I begin the process of sketching out
how respondents in metals mining companies talked about risks and
connected this to CSR activities. I have systematised three main ways
respondents talked about non-technical and non-financial risks—as
reputational, operational and regulatory risks.7 These risks are inter-
related and not mutually exclusive; instead the risk categories proposed
reflect how respondents parsed complex phenomena through the lens of
risk. Table 1 summarises how these categories link to a range of risks
and examples of CSR responses undertaken by CSCs. The rest of the
section explores these categories of risk in turn and traces the logic of
how CSR activities were seen as a way of managing these risks. Map-
ping these linkages is a first step in analysing the role of risk
7
While arrived at independently, this categorisation parallels that of Kemp
et al. (2016) and Boatright (2011).
T. Frederiksen
Table 1
Risks and CSR Responses - Evidence from Cases.
Category Risk
Operational Operational disruption by
local community (e.g. road or
mine blockades, protests,
property or vehicles attacked,
mine site invasions)
Reputational Limited access to new areas/
deposits
Limited access to capital
Political/ Resource nationalism and
regulatory increased regulation
Future litigation
management in shaping CSR outcomes in the mining industry.
4.1. Reputational risk
A range of CSR programmes promote a positive image of the mining
industry and its activities. Reputation, respondents argued, is central to
the survival of mining companies. While shielded from direct consumer
pressure by the structure of the metals industry (most metals are sold
through intermediaries, not directly to consumers), reputation can cut
CSR response
Community engagement and
consultation
Reduce disruption to local
communities
Community investment
Support local security
services
Support for local elites
Support local and alternate
(non-mine) livelihoods
Community investment
Consultation with local
communities
Support for local elites
High visibility projects
Reporting/transparency
Demonstrate proactive
approach
Publicise existing efforts
Improve environmental
impact
Adopt international standards
Proactively go beyond
compliance
Proactively go beyond
compliance
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Resources Policy 59 (2018) 495–505
Examples from case study companies and countries
Case study company (CSC) 1 held monthly community meetings while the others held
them either quarterly, biannually or annually. All CSCs held regular (usually monthly)
meetings with local leaders, had community liaison officers who regularly met local
leaders and offices in local towns where community members could contact the mine.
4 of 6 CSCs spoke of systematic stakeholder mapping and used this information to target
engagement and investment.
CSC 5 sought to reduce impact by trucks by setting tight speed limits for company and
subcontractor vehicles and equipping police with speed guns and training them.
CSC 2 adjusted blasting times following complaints from local communities
All CSCs funded infrastructural investments in new schools (e.g. new buildings, teaching
materials) and medical facilities (e.g. new clinics, upgrading facilities, adding new wards)
and supported scholarships. Investment levels were up to $1mn p.a. during operations.
CSC 1 bought 2 new vehicles for the local police and supported the establishment of a
local fire service.
CSC 6 provided local police with free fuel for vehicles.
CSC 1 awarded contracts for some community investment projects to companies owned
by local community leaders.
CSCs 1 and 5 used local leaders to recruit ad hoc unskilled labour (offering patronage
opportunities).
All CSCs had local content policies to support purchasing services and goods from local
businesses.
All CSCs offered agricultural modernisation programmes to support local farmers
increased income generation. These included access to credit, advice and (sometimes free)
agricultural inputs.
After protests demanding jobs, CSCs 1 and 3 increased employment quotas for local
unskilled labour.
CSCs 1, 3 and 5 offered entrepreneurship and skills (e.g. hairdressing) training to local
communities.
Four CSCs invested large amounts during permitting and construction phase e.g. CSC 6
wanted to open a pit in a new area so focussed investment to build goodwill in
community, community asked at consultations: “What's in it for us?”
Companies in Zambia and Ghana are regularly involved in spraying to combat malaria
around mine sites
CSC 1 after being rejected by local community set up a weekly consultation forum with
local leaders which ran for over two years before permission was granted - resulted in
detailed written agreement, substantial community investment, local employment quotas
and a development foundation funded by the company.
CSCs in Ghana and Zambia had budgets to support Traditional Leaders’ festivals.
All CSCs had local content policies to support purchasing services and goods from local
businesses.
All CSCs were involved in funding local children's sports tournaments.
CSCs branded public infrastructural investments e.g. a CSC involved in funding road
improvements in Peru painted corporate logo on roads.
All CSCs include CSR and environmental issues prominently on their websites and
reference international standards. Five CSCs published separate CSR and sustainability
reports with the sixth including them prominently in its annual reports.
All CSCs have adopted some international standards and mention them in their
promotional materials and annual reports.
Two CSCs explicitly mention risk management as part of their CSR approach in public
materials.
All CSCs publicise their CSR activities through local and national media and their own
promotional materials.
All CSCs have adopted ISO140001 and made public commitments to improving the
environmental impact of their operations.
All CSCs have adopted some international standards and mention them in their
promotional materials and annual reports.
All companies went beyond legal compliance in some social and environmental areas and
worked to ‘appear to be good’.
CSCs 1, 3 and 4 sought to implement industry ‘best practice’ after coming under
regulatory and legal pressure at some mine sites.
to the heart of mining business models. Mining companies work
wasting assets; future company success depends on access to new
sources of supply. Thus, as far as poor reputation reduces access to
future resources, the public perception of a company is vital. Poor be-
haviour in one area of a company's operations is seen as a threat to the
overall company. As one executive said, “reputation stays with you …
when [company] looks at expanding”, while others talked about poor
reputation blocking access to some jurisdictions (see also
O'Faircheallaigh, 2010; Trebeck, 2008). CSC 6 reported “do[ing] more”
T. Frederiksen
in areas marked for expansion to generate community support. CSC 3
spent millions of dollars in three years of consultation and investment
to overcome resistance, linked to its history of community conflict, to a
planned new mine. CSC 6, unable to overcome its poor reputation,
spent millions seeking to build goodwill to expand in a new area but
local resistance thwarted progress. All CSCs had funded or built medical
and education facilities in their operating areas and all engaged in some
form of infrastructure development (e.g. roads).
A good reputation is key in another competitive area for mining
companies: access to capital. Pressure is uneven, but many respondents
described increasing investor interest in CSR strategies (cf. Banerjee,
2001). One executive described how previously investor interest was
“all about the ounces … the social stuff, that for a long time wasn’t even
there,” but now “we really look into that stuff”; while another described
investors asking, “are you checking boxes and keeping risk down?” All
CSCs had developed CSR strategies and adopted international voluntary
standards to demonstrate commitment to managing and minimising
risk to shareholder value. One interviewee talked of “pressure from the
international investor community” for increased CSR engagement and
adoption of standards. Another described how companies do not “do
this [adopt international standards] voluntarily” as “companies that
actually go towards this are the ones that are trying to get funding.” For
a growing number of institutions, particularly those signed up to the
Equator Principles,8 CSR strategies had effectively become a require-
ment for project lending. One respondent said “we can’t afford that
reputational hit to say you, you know, you’ve been kicked out of the
code or you’re non-compliant here. That affects everything, our share
price, local stakeholders, everything.” Where mining companies had
lending conditions requiring comprehensive risk management plans,
respondents saw these strategies and activities as compulsory, and often
subject to annual independent monitoring. Interviewees in two com-
panies reported that while they may fail audits and still maintain loans,
lenders required continuous improvement: “it's not an automatic you…
don’t score, you’re out, can we have our money back” one executive put
it. Instead there was a “very rigid corrective action plan” with strict
monitoring. Another interviewee described how “the financing process
really held us accountable.” Interviewees described lending require-
ments as on a trajectory of increasing stringency and saw adopting
international standards of CSR as a way of demonstrating a proactive
approach to these challenges.
Interviewees described the internet and social media and increasing
demands for transparency from stock exchanges and regulators as po-
tential sources of reputational risk. Companies have less control over
how and what information about their operations circulates. The rise of
the internet, social media and the globalisation of communication has
increased transparency in the mining industry as information flows
more freely between sites of production and consumption and across
different sites of production. Interviewees felt themselves to be under
greater scrutiny with less control over information flows than in the
past. As one executive put it, “when we go into a new community, the
first thing they do is Google us.” Another described how “the bar has
been raised… through internet and improved communications, all the
communities now are well aware of what's happening in every project”
and the standards companies are expected to comply with. When the
Engineering and Mining Journal launched a CSR column in 2013 it
opened by highlighting the threat of social media to the industry
(Kirschke, 2013a). One respondent reported that “companies are much
more aware of the consequences of being perceived to ‘off side’ even
with voluntary standards,” even when they are legally compliant—that
they may lose rights to access land and, with it, the resources upon
8
Private standards for project finance directly based upon the IFC
Performance Standards adopted by 90 large banks and finance institutions
globally which, between them, provide “over 70% of international project fi-
nance debt in emerging markets” (Equator Principles, n.d.).
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Resources Policy 59 (2018) 495–505
which the future of the company depends in the court of public opinion
(their ‘social licence’). Vedanta, for example, has found itself the target
of an international social media campaign to protect the rights of an
indigenous group whose land blocked access to a bauxite project in
Orissa, India (Kirschke, 2013b). Publicly listed mining companies are
required to disclose details of the social and environmental impact of
their operations to investors. For example, the Toronto Stock Exchange
(TSX), one of the world's largest mining stock exchanges which 5 CSCs
were listed on, maintains stringent disclosure standards. Companies
must disclose any ‘material information’ which would “be expected to
result in a significant change in the market price or value of any of the
company's listed securities” including environmental and social risks
(TSX, n.d.). Taken together, these requirements for doing business on
an important mining stock exchange lead to substantial disclosure re-
sponsibilities across the gamut of mining activities.9
Collectively, the reputational risks to individual companies are high.
Respondents reported that CSR, by portraying companies in a positive
light, was a key tool for improving company reputation across multiple
arenas. Senior corporate respondents saw CSR as an area where com-
panies can differentiate themselves by, as one put it, “demonstrating
leadership” in competitive capital markets while simultaneously al-
laying investor fears of risks. For other audiences, such as wider publics
and company employees, CSR programmes and reports highlight
mining's positive contribution, contrasting decades of reports on the
damaging impacts of mineral extraction.
4.2. Operational risk
For large mining operations, disruption by local communities is
potentially costly. It can be hard to imagine what threat rural com-
munities in the developing world pose multinational companies.
Mining company respondents, however, stressed the potential power of
local communities over operations. One executive described how “a bad
quarter won’t stop us but losing the social licence will break you.”
Forceful community reaction creates serious headaches for operations.
One senior CSR manager interviewed asked operations managers across
his/her company “How much would it cost if the local community
blocked the road?” The average answer was around $1 million per
day.10 Disruption around the Fenix project in Guatemala (discussed
below) cost Hudbay Minerals at least $212 million in lost asset value,
excluding the costs of ongoing litigation, its impact on share prices and
possible future pay outs (Hudbay Minerals, 2011).11
CSR programmes offer important tools for managing operational
risks. As an industry which often operates in complex ‘frontier’ en-
vironments and under sustained attack from civil society, CSR offers a
framework with which extractive companies can engage local com-
munities and legitimise their operations. All CSCs had seen community
agitation against their mines—most commonly blockades, but also pe-
titions to government to revoke their licence and attacks on company
property—and all sought to use CSR programmes to improve relation-
ships with local communities. An initial investment in CSR projects to
minimise future risks of operational disruption was an attractive pro-
position to respondents. A good CSR programme can, as one CSR officer
put it, “win… hearts and minds” in local communities. One Ghanaian
9
Though these disclosure requirements do not necessarily drive more
transparent behaviour and practice or produce effective accountabilities.
Interviewees pointed out that, while activists have reported companies to the
TSX for insufficiently disclosing issues at their mines, in the four cases to 2011,
none had been sanctioned by the TSX.
10
Similarly, Franks et al. put the cost of a conflict with the local community
at “roughly US$ 20 million per week of delayed production” for a large-scale
mining operation (2014, p. 7576).
11
Going back further, O’Faircheallaigh lists projects that failed after billions
of dollars investment following opposition and conflict including, Rio Tinto's
Bougainville mine (O'Faircheallaigh, 2010).
T. Frederiksen
executive argued CSR investment led to “a much lower chance of
community uprisings and… disruptions in your operations”; a Zambian
respondent talked of minimising “backlash.” Mining operations are
under constant development and community relations managers re-
ported a near-constant concern that these activities would spark con-
flict. In the words of one CSR officer at CSC 3, “we are being paid to
avoid crises.” Some communities—particularly in Peru—were clear
about using the threat of disruption to extract benefits from companies.
One Peruvian community leader described “my job is to make sure
[mining company] delivers on its promises” to provide tangible benefits
for his community members. He then threatened “we’re calm here, but
at any time we can make a radical claim.” Community demands fo-
cussed on jobs. Unable to meet this demand without undermining
profitability, many CSCs sought to boost community income without
offering jobs directly. For example, CSCs promoted farming moder-
nisation and livelihood improvement activities, providing training,
credit and inputs, to enable farmers to move into more lucrative areas
such as livestock (e.g. chickens, fish, guinea pigs) or cash crops (e.g. oil
palm, sugar cane, avocados). Another common approach was to use
activities to generate support from local elites. All four African CSCs
maintained budgets to support local traditional leaders’ ceremonies;
three CSCs used local leaders to recruit ad hoc labour and three ac-
knowledged using companies owned by local political leaders as con-
tractors. While many mining companies have survived without ex-
tensive CSR programmes for decades — and history is replete with
examples of mining companies, if they have national governmental
support, riding out local opposition — respondents saw serious conflict
with communities as a failure of effective CSR which would carry
substantial financial and reputational costs (cf. O'Faircheallaigh, 2010).
4.3. Regulatory (or political) risk
Investment in CSR can be a proactive response to the threat of in-
creased regulation or legal action. Being seen as good corporate citizens
can be a strategy to avoid increased regulation of the industry which
could be costlier and stricter than self-regulation. The challenge ex-
pressed by one consultant at the 2012 PDAC conference was: “change
or be changed”—that the mining industry either clean up its own act or
be forced to do so. The public relations function of CSR here is plain. By
demonstrating moral virtue—‘winning hearts and minds’—respondents
sought to allay pressure to regulate company behaviour and gain access
to and build goodwill amongst regulatory authorities with the power to
impose costs (cf. Dashwood, 2007; Prakash, 2000). Mining company
managers were mindful of the political risks of resource nationalism
and saw CSR as an important way to show that mining was contributing
to national development. One Zambian industry insider described CSR
as a response to rising resource nationalism by “appearing to be good”
to influence national debates about minerals regulation and taxation.
Some companies target their CSR projects at improving their standing
with regulators. In Zambia, Glencore-owned Mopani opened and staffed
two cervical cancer screening centres after the First Lady made a speech
on the topic (ZANIS, 2012). While cervical cancer screening is lacking,
and is a cruel illness, it is hard to see it as the most pressing health
challenge for women in Zambia.12 The choice of focus, and to name the
clinics after the First Lady, later invited to open them, point to other
motivations.
Widespread changes in mineral policy and the institutionalisation of
Environmental Impact Assessments (EIAs) within mineral permitting
have seen elements of CSR become effective regulatory requirements in
some areas and lending requirements for many banks. Not necessarily
formally codified by regulators (though often by lenders), EIAs in
Ghana and Peru and more widely, are increasingly required to include
12
Zambia has high maternal mortality rates, low levels of maternal health-
care and poor healthcare access in rural areas (Ensor et al., 2013).
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Resources Policy 59 (2018) 495–505
social and human rights concerns (cf. Dupuy, 2014). Changing ex-
pectations of corporate behaviour had effectively introduced new steps
into the permitting and lending processes for new mining projects.
Respondents described regulators requiring increased engagement with
the potential social and environmental impacts of operations and, for
some private funding (including the IFC and Equator Principles), an-
nual third-party monitoring.13 One respondent described government
investigations of their social and environmental impact: “They audit in
quite a lot of detail. It's not cursory by any sense.” Another described
the regulator “taking a keen interest on community issues.” Re-
spondents in Ghana, Peru and Zambia described how allotting financial
compensation for displaced communities was previously enough. Now,
both lenders and host governments expected substantive community
consultations and detailed resettlement action plans as part of the
permitting and due diligence procedures of project planning. In Ghana,
the Environmental Protection Agency (EPA) insisted on being on re-
settlement planning committees to discuss which communities should
be compensated and the terms of the compensation. One company re-
settlement described how for one group they had opted for financial
“compensation, but the EPA said, “resettle them,”” so they resettled the
group. Respondents described using CSR activities to avoid future li-
abilities, should environmental regulation continue to become stricter.
One manager spoke of “operating in a way that will be seen as accep-
table this year, seen as acceptable next year, and in five years is the way
you need to operate.” Adopting and implementing international CSR
standards here was a strategic move to reduce future risks of increased
costly regulation and maintain operational freedom.
Notably, recent civil prosecutions in British and Canadian courts for
actions conducted by subsidiary companies overseas has produced new
risks affecting mining company behaviour. These cases are, in the words
of one industry representative, “very attentively watched”. The most
watched in Canada is the Choc v. Hudbay suit before Ontario courts. In
the UK, Tanzanian claimants are suing Acacia Mining (formerly African
Barrick Gold). In both these cases, the mining companies are accused of
negligence in human rights abuses. Hudbay Minerals is alleged to have
committed human rights abuses during evictions around its Fenix mining
project in Guatemala. Acacia Mining is accused of pollution and human
rights abuses against illegal artisanal miners at its North Mara site in
Tanzania (Business and Human Rights Resource Centre, n.d.). These
cases present a substantial financial risk to the mining companies in-
volved. Hudbay sold the Fenix property after the suit began at a $212
million loss (Hudbay Minerals, 2011). In the immediate days after news
of the North Mara abuses reached the Canadian media, Acacia Mining
had the fastest falling share prices on the FTSE250. They continued to fall
by 30% in the following 3 months, wiping around $500 million off the
market capitalisation of the company.14 Similar cases are being brought
by civil society groups against Nevsun Resources (Eritrea), Tahoe Re-
sources (Guatemala) and Vedanta (Zambia) (Hasselback, 2014). The
number of prosecutions is growing. Though none of the recent wave have
reached their conclusion, Monterrico Metals (Peru) settled out of court in
2011 for an undisclosed amount (BBC, 2011).
While these are not the first time the courts have been used to
change mining company behaviour, these cases set two important
precedents in London and Ontario courts—key global centres of mining
finance. First, they establish the principle that mining companies
headquartered or listed in the UK and Canada can be held accountable
for actions committed overseas by subsidiaries.15 Previously the
13
This not to argue that the rise of the use of EIAs automatically leads to
improved practice. With poor monitoring capacity in many developing coun-
tries, EIAs can become paper exercises. Though, treating them as such is a risky
strategy.
14
Share prices recovered after the parent company Barrick Gold changed its
corporate structure and practices.
15
This principle was established in Australian courts through proceedings
T. Frederiksen
‘corporate veil’ of operating mine sites through owned but legally se-
parate entities was thought to be enough to protect the parent company
from many forms of liability. Second, these cases directly reference
international voluntary standards which the mining companies have
either adopted or engaged with (Webb, 2015). These cases are based
upon tort of negligence: that the companies were negligent in their
duties and that this had negative outcomes for the claimants. Proving
negligence involves establishing a ‘standard of care’, a standard against
which negligent behaviour can be measured. These cases used inter-
national standards the companies claimed to follow. The Monterrico
Metals case, for instance, focussed on implementation of Voluntary
Principles on Human Rights and Security. Thus, if a company adopts
CSR standards but does not implement them, and following the stan-
dards would have prevented abuses, courts can find companies negli-
gent. Adopting international standards for public relations purposes
without implementing them and changing company behaviour creates
risks for mining companies.16 In the companies studied, risk manage-
ment captured a range of pressures and tensions for the mining industry
and posits CSR standards and behaviours as coherent strategic response.
5. Analysis: CSR, risk management and inclusive development
In this section I consider the rise of risk thinking in mining company
decision-making and how this curtails the ability of CSR spending to
promote development before reflecting on how this might be changed.
5.1. Risk, CSR and decision-making
The rise of understanding CSR and international standards as risk
management in mining companies has emerged, I suggest, in part from
its usefulness in corporate decision-making and coordination and re-
levance to influential stakeholders. Firms are not unitary actors, CSR
often means different things at different levels of a company hierarchy
(Rajak, 2011). Despite this, the language of risk translates well across
disparate elements of a company. Risk management frames a wide range
of issues and pressures and helps coordinate responses. It enables the
messy world of social, environmental and political pressures to speak an
economic tongue of impact and probability. In an industry with few se-
nior figures trained in the social sciences, risk and CSR frequently be-
come proxies within mining companies for processes outside of pro-
duction. Concepts of risk play an important role in the most important
decision-making fora within companies. As one executive put it, risk
management is the language which “works in the boardroom.” Pioneers
of changed industry practice in the 1990s drew on the language of risk
management to sell the benefits of increased engagement with CSR to
doubtful companies and boards. Risk links the targets and tools of CSR
with important lines of accountability in companies — to the board and
shareholders. As the understanding that dominates centres of authority
within mining companies, ‘CSR as risk management’ comes to pervade its
expressions, funding, and measures of success.
I am not suggesting here that framing CSR as risk management
explains all corporate behaviour in the extractive sector, or that it
produces a uniformity of approaches to CSR and actions. There remains
a diversity of reasons for adopting and approaches to, CSR in the mining
industry. If CSR practice is linked to finance mechanisms, then there is a
variety of these. Not all CSCs engaged in the same kinds of project fi-
nance to the same extent. Further, different institutions have different
organisational histories and capacities which shape how they react to
(footnote continued)
against BHP Billiton's OK Tedi mine in the 1990s (Kirsch, 2014).
16
Civil prosecutions have yet to be successful in Canada, though they have
led to out of court settlements in the UK and Australia. Respondents reported a
sense amongst many in the industry that these cases are unpredictable and will
eventually succeed—a threat respondents described as influencing behaviour.
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Resources Policy 59 (2018) 495–505
similar pressures (cf. Trebeck, 2008).17 Instead, I am outlining a per-
vasive approach to understanding CSR adopted across the higher
echelons of decision-making of mining companies studied, an approach
which has consequences for its ability to promote inclusive develop-
ment.
5.2. Risk, CSR and inclusive development
As far as risk management is a key motivation for adopting CSR
practices within mining companies I suggest it helps explain why (a)
substantial resources may be committed to CSR projects and (b) why
this does not translate into improved development outcomes for those
living closest to mining company operations. I see four reasons for this:
First, there is still ample room within this understanding for CSR to
be primarily a public relations strategy aimed at presenting the industry
and specific operations in a good light. For many of the pressures dis-
cussed in Section 4—particularly reputational, but also regulatory,
risks—there is an economy of images at work: it remains easier to
change image than practices, and being seen to take CSR seriously can
alone achieve some corporate objectives (Utting, 2005). As has been
amply argued in the literature, and elaborated above, companies
commit resources to high profile CSR projects but not those with the
greatest potential to support development (Banks et al., 2016;
Campbell, 2012). Indeed, companies may commit resources simply to
be seen to be committing resources, rather than responding to com-
munity needs. When CSR programmes are public relations tools, the
context in which they occur matters little, along with accurate needs
assessment, expertise in development project delivery, and effective-
ness. The resulting programmes are supply- rather than demand-driven
(cf. Gilberthorpe and Banks, 2012).
Second, within risk thinking, the priorities being acted upon are not
those of the poorest or those with the most potential to benefit from
CSR programmes. The risks being measured and acted upon are those to
investors. As Blowfield and Frynas (2005, p. 508) put it, “a stake-
holder's recognition is contingent upon the business case for that re-
cognition.” The targets of CSR spending driven by risk manage-
ment—particularly for operational risk—are those who pose the
greatest risk to the operations of mining companies and those with the
greatest ability to reduce this risk (O'Faircheallaigh, 2010; Scherer and
Palazzo, 2011). Many of the intended audiences of CSR are not at the
local level. Resources spent this way are less likely to lead to inclusive
development. As noted above, CSR resources in the six CSCs were fre-
quently targeted at local elites. In a generous assessment, this could be
seen as directing resources to communities through local elites, but
even this raises ample opportunity for elite capture of the resources and
there is evidence of this (Frederiksen, 2018; Banks et al., 2013).
Third, the propensity towards simplification concurrent with the
managerial language of risk (and the related concept of the ‘social li-
cence to operate’) can undermine the development effectiveness of re-
sources committed (Kemp et al., 2006; Owen and Kemp, 2013). CSR
and risk management represent archetypal moves to render messy de-
velopment problems technical and amenable to action (cf. Li, 2007;
Scott, 1998). Mining companies can do great damage on the basis of
poor understanding of local communities in the developing world as
experiences like Hudbay's Fenix mine demonstrate (Hilson, 2012; Slack,
2012). As Kemp et al., (2016, p. 398) argue, “many operations do not
seek external input in the risk assessment and ranking process” leading
to flawed and inadequate analyses. While effective decision-making
relies on simplification, this is frequently taken too far. Multiple officers
spoke of needing “to speak a language they [senior managers] under-
stand” and conform to company communication norms. As one puts it
17
Indeed, my own research has highlighted how local conceptions and his-
torical experiences of development shape mining company practices in Ghana,
Peru and Zambia (Frederiksen, 2017).
T. Frederiksen
starkly in a related study, “I have to turn everything into a pie-chart or a
histogram or it doesn’t even get considered, it's just words” (Kemp,
2009, p. 10). In the mining companies I saw, the dominant tendency
was the simplification of the social world to fit the understandings of
trained engineers and geologists rather than increasing their social
understanding (cf. Franks et al., 2014). Predominantly unilinear moves
towards simplification and quantification undermine efforts to improve
the social and environmental impact of mining operations.
Finally, we should question whether CSR projects that understand
beneficiaries as “disruptive threats” and operational risks can deliver
inclusive development (Boatright, 2011, p. 167). Framings of risk and
CSR produce a governable terrain, a sphere of action for mining com-
panies which makes local community concerns more visible and
amenable to intervention, but in ways which can marginalise their
ability to make radical claims and demand inclusive development.
Owen and Kemp (2013, p. 32) raise a similar objection to the industry's
use of the term ‘social licence to operate’: “read through the lens of a
sector under continued ‘threat’ from external stakeholders, the in-
dustry's use of the term is interpreted here as an effort to disguise or
silence opposition.” What space is there for development when the
measure of project effectiveness is the absence of disruption to opera-
tions? The danger here is that CSR within risk management thinking
becomes a tool for pacification and maintaining the status quo around
mining operations, rather than an opportunity to share the wealth and
benefits of extractive enterprise. If development requires social change,
and CSR spending is directed towards maintaining the status quo, then
‘CSR as risk management’ can be regressive for development.
5.3. CSR and risk management and justice
CSR as a risk management practice does not paint an encouraging
picture for justice and inclusive development. This is despite re-
configured, or increased, accountabilities for mining companies. Two
key themes identified in the previous section—connection to the fi-
nancial sector and growing legal challenges—both produce or increase
accountabilities for mining companies. For critics of mining company
engagement with CSR, the absence of accountabilities prevents CSR
being more than ‘window dressing’ (e.g. Blowfield and Frynas, 2005;
Slack, 2012). Instead, here, I suggest there is good reason to believe
these financial and legal accountabilities are driving increased en-
gagement with CSR within the industry. The companies I studied were
engaging substantially with CSR and meaningfully integrating it into
their decision-making processes at the highest levels. However, they are
doing so through the rubric of risk management.
If risk is a language with currency amongst corporate decision
makers, then exploring ways in which this same language can be de-
ployed without falling into the traps discussed above is important.
There is a “general absence of justice in … CSR narratives” and apoli-
tical understandings of risk perpetuate this (Hamann and Kapelus,
2004, p. 87). Under what conditions can ‘talking risk’ produce more just
outcomes? Charting its current formations and logics—as I have begun
above—is a necessary first step to opening up space for inclusive de-
velopment within a framework of risk. Activists may be ahead of re-
search here. MiningWatch Canada, for example, framed their recent
report critical of Northern Dynasty Minerals’ Pebble mine in Alaska, as
a report for investors on hidden risk (Kuyek, 2018). The report opened:
“Investors are strongly advised to fact-check the information published
by Northern Dynasty Minerals” (p.i). By targeting existing lines of ac-
countability, activists aim to reshape corporate behaviour through
language and appetite for risk. Jody Emel (2002) noted similar tactics
in the 1990s campaigns against Freeport McMoRan's Grasberg mine and
remains pessimistic about their ability to fundamentally change beha-
viour. However, there are reasons for some optimism. Timing is im-
portant. MiningWatch are applying pressure before project permitting
has completed, rather than after it has generated returns for investors,
as at the Grasberg mine. There is also evidence that investors are
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Resources Policy 59 (2018) 495–505
becoming less tolerant of environmental and social risk. Many fund-
s—including the world's largest, Blackrock—are increasingly interested
in ‘ESG’ (environment, social, governance) issues when investing
(Kynge, 2017). Further, adopting international standards has created
new criteria against which mining company behaviour can be assessed
and used in courts. As one litigant involved in the civil cases described
earlier put it, “my main job is to create risk”, seeking to use civil liti-
gation to regulate the companies through risk. Both the risks and the
opportunities to shape mining company behaviour in ways which may
support inclusive development are changing, though the challenges
remain great.
6. Conclusion
In this article I have offered an overview of how CSR is understood
and acted upon in the metals mining industry within risk management
thinking and discussed the consequences of this for supporting inclusive
development through community CSR projects. The article opened by
posing the conundrum of the apparent growing effort around CSR and
the prevalence of criticism in the literature that the development po-
tential of CSR remains unrealised. This leads to criticism that companies
are being duplicitous when they say they are taking CSR seriously or
have integrated it into their decision-making. I then explored the lit-
erature on CSR and development in the mining industry, motives for
CSR engagement in the industry, and risk and risk management. In the
following section I examined three main ways mining companies con-
ceptualised a range of social and political processes as reputational,
operational and political risks to be managed through CSR activities.
The role of competition for capital and new legal challenges in driving
CSR engagement were noted. Wrapped in the strategic vagueness and
apparent calculability of risk, many mining companies have adopted
expanded CSR programmes as part of their risk management strategies.
The discussion then turned to how a focus on CSR as risk management
can illuminate the poor development outcomes of community CSR
projects, particularly after recent years have seen a rise in spending.
‘CSR as risk management’ introduces immanent limitations to its de-
velopment potential including treating CSR as PR, targeting those that
pose the greatest threat rather than those with the greatest need, ex-
cessively simplifying complex processes, and focussing on maintaining
the status quo. In risk management thinking, CSR activities may be a
high organisational priority, integrated into central decision-making
processes and subject to a great deal of investment, but still see little
progress towards inclusive development for those living closest to
mining operations. I then discussed how activists are using logics of risk
around access to capital and court cases to shape corporate behaviour.
This initial analysis of risk in mining company CSR decision-making
raises many questions. No claim is made here as to whether these efforts
to manage risks work as intended. Mining companies believe they do
but the literature remains sceptical and systematic study has not been
attempted. Further, questions remain of why some things come to be
seen as risks to be managed and others do not. As Garsten and
Hasselström (2003, p. 252) remind us, “those in charge of defining risks
are in key social and political positions” and should therefore be in-
terrogated. Equally, it is not clear how similar ‘risk management’ is in
different organisations. Companies use the same terminology, but my
initial enquiries reveal a diversity of practice. Risk is a polyseme and
there is reason to believe ‘risk management’ is too. The justice im-
plications of this move towards framing CSR as risk management in the
mining industry are potentially profound and merit further research.
Could some approaches to risk management and CSR decision-making
be more or less likely to produce unjust outcomes? Might the semiotic
slipperiness of risk and CSR not be inherently antipolitical? Future re-
search must equally be alive to the space opened up for engagement
and influence by ‘CSR as risk management’ as much as it charts the
possibilities foreclosed.
T. Frederiksen
Acknowledgements
The research described in this paper was supported by a
Government of Canada Commonwealth Post-doctoral Research
Fellowship, University of Manchester School of Environment,
Education and Development Seed funding, the DFID/ESRC funded
Effective States and Inclusive Development Research Centre [grant
number PO5113] and Hallsworth fund at the University of Manchester
and a British Academy Postdoctoral Fellowship [grant number
pf130031]. This paper has benefited from feedback from presentations
at the Annual Meeting of the Association of American Geographers,
Ryerson University, Development Studies Association Conference,
Green Economy in the South Conference, Mining and Political
Transformations in Africa Conference and from MSc Environmental
Governance students at the University of Manchester. The anonymous
reviewers, Kojo Asante, Tony Bebbington, Gavin Bridge, Matt Himley,
Frances Jones, Khalid Nadvi and Melanie Ströbel all provided helpful
feedback on late drafts of this paper. All remaining errors and omissions
are my own.
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