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Ethical Corporation: By Invitation – Resources slump: Why oil and mining must garner social capital

Resources slump: Why oil and mining must garner social capital (Translation – we’d better get better at conning the public?)
Ethical Corporation (now THERE’s an oxymoron) 24 Nov 08 Many oil and mining companies are slashing investments as commodity prices collapse. For their own sake, the socio-political fall out will need to be sensitively managed
By Rob Foulkes and Daniel Litvin
Companies focused intently on cutting costs may be tempted to treat management of socio-political and sustainability issues as a luxury which they can live without while projects are on hold.

Clearly, legal requirements in this area need to be met: complying with environmental regulations for mothballed facilities, for example. But is there any sense in going beyond this – for example investing in community projects or stakeholder engagement programmes – while other investment is frozen?

In fact, while waste should be cut back in this area as elsewhere, strategically protecting key relationships during this period actually may be more important to companies’ long term success than any short term cash savings.

A feeling among host communities and governments that they have been cast aside by multinationals in the past has bred suspicion and resentment of foreign business in resource-rich developing countries. These feelings have underpinned successive waves of resource nationalism at great cost to the companies involved.

Research based on Critical Resource’s LicenseSecure™ methodology, which rates the health of the ‘socio-political license to operate’ of resource projects, suggests that frequently it is a foreign company’s handling of social and political concerns during a delay to a project that shapes the way the business is seen and treated by its hosts in the future.

Ethical Corporation: By Invitation – Resources slump: Why oil and mining must garner social capital

November 24, 2008 - Posted by Christina Macpherson | spinbuster