Minefields and Mining

What a couple days we had! First a Royal Wedding watched by half of the Globe. Then Obama’s capture of Osama. And finally, for us here in Canada, an election with a scary winner.

Welcome to the world of ambiguity. Wills & Kate look like a nice couple and less fake than most of what has been on display by the British Royals in the last decades. But all this pomp, glitter and archaic ceremony? It’s 2011,folks, wake up! But we still preferred the ecstatic crowds Friday a week ago in London to those in Washington last week Sunday night. A middle-ages inquisition ceremony could not have been jollier - or should we say - barbaric. Osama bin Laden? Certainly a person that has some things to answer for. But do we buy Obama’s ‘brought to justice’ rhetoric? After all, according to many Bin Laden and his movement was largely an American creation in the first place. And then the Canadian election: the Bonsai-George-Double-U Stephen Harper has now a solid majority. He will ‘Americanize’ the country further until it can just apply for becoming the 51st state of those ‘South of the Border’. The same election though gave us also the victory of the centre-left NDP winning the biggest number of seats in history. A bit of pyrrhic victory though.

All in all a minefield for the ethicist. Which provides some space to talk about – why not – mining. In fact that industry has taken our attention here in our School in Toronto over the last couple of months. As it turns out, Schulich will launch later this year a specialization in ‘Mining and Minerals’ on the MBA program. A core topic for this new program in fact will be the social responsibilities and ethics of mining.

Now, that’s a minefield in itself. Our school prides itself on being the leading school in the world in integrating environmental and social issues into business education. How does this go together with getting into bed with the mining industry? An industry which has a fairly dubious legacy with regard to ethics and social responsibility as the main focus of a school focusing exactly on these issues? There was some debate among faculty about this.

For us, this question gave rise to some thinking, too. As academics, we can stay, as one of our colleagues sometimes put it, ‘small and clean’ – or one can get out there, engage with issues, actors and industries which are of big importance and get the hands a little bit dirty. For the time being, the latter approach seems to be more intriguing and rewarding. In the sense that our research and teaching might in fact have an impact on the real world.

Of course a closer engagement with mining surfaces the rather complex nature of the industry. On a recent visit to some goldmines in Turkey we were able to witness these issues from closer up. We visited the area around Canakkale, 3 hours southwest of Istanbul, where currently some substantial explorations in gold mining are taking place. On the one hand, mining can in fact have substantial positive impacts on economic and social development of communities. This of course assumes that mining companies (in this case Australian and Canadian firms) share employment, infrastructure and profits with local communities. The effect can be rather substantial as often mines are located in otherwise not very developed regions. On the other hand, the disruption of the environment and the pollution around mining operations are huge.

The push for responsible mining, as we witnessed on site, is challenged by a number of characteristics of the industry. First, mining in the early, exploratory stages is still pretty much a gamble. Hundreds of millions investment is needed before even the first drop of oil or the first ounce of gold can be mined. This puts a rather tight budget and intense investor scrutiny on the companies and will make extensive voluntary expenses on environmental or other social responsibility issues rather difficult to justify. Second, unlike the big mining MNCs such as Rio Tinto, Glencore or AngloAmerican, the majority of companies are rather small, especially in the early stages of mining. They often simply lack the resources, often also the awareness of managers who mostly have science/engineering backgrounds with little understanding of wider social impacts of mining. Third, and finally, mining predominantly takes place in contexts of rather poor governance and regulation where the immediate pressure on companies to avoid harm to the environment and local communities is rather weak.

This is certainly an educational challenge. One executive we spoke to mentioned, just as an example of the dimensions of social responsibility, that the manager of a large mining project he was involved in in Papua New Guinea is now more or less in charge of half of the GDP of this country. This entails responsibilities beyond just the immediate profitable management of the extracting operations (which is a 24/7 job to begin with). Those managers inevitably assume – whether they know it or not – wider responsibilities for economic, social and environmental development and welfare of a country. We consider this a stark challenge – in education, research and engagement with the industry and their many critics in civil society. We might talk more about mining in this space!

Business and climate change

Observant readers will notice that we've started adding some of our favourite blogs on business ethics-related subjects in the blogroll that you'll find on the right hand side of the screen. The latest addition is Climate Change Inc, the new blog on business and climate change by David Levy, a professor at the University of Massachusetts, Boston. Levy always has something pretty interesting to say, particularly on the politics of business responses to climate change. He's someone whose work we've found stimulating, and have always enjoyed bumping into him at conferences and collaborating on a few things along the way.

The new blog deals with all things business and climate change related, though with a particular slant towards politics and policy issues. We particularly liked this recent post on how the oil industry has recently resurrected its "carbon wars" strategy, including the mobilization of American citizens to protest against proposed climate change regulation. Here's what he says....

"....large numbers of Americans are suddenly getting excited about climate change. They are not, however, worried about rising CO2 levels and the impact on sea levels, hurricanes, or glaciers. They are jumping on buses and crowding into rallies to oppose the proposed energy legislation, which is intended to address climate change. Through placards, slogans, and speeches, the attendees demonstrate their concern that their very way of life – cheap fuel and electricity, even their jobs in energy-rich states – is under imminent attack. This threat is apparently more palpable and galvanizing than climate change, a distant and abstract concern, if not a hoax perpetrated by the same intellectual East Coast Europhiles trying to impose socialist medicine on beleaguered overtaxed Americans.

Perhaps a few of these angry citizens spontaneously joined the rallies in a state of high dudgeon after perusing the 1200 page Waxman Markey bill. Most likely, their transportation and placard messages were organized by Energy Citizens, whose website proclaims that it is “a nationwide alliance of organizations and individuals formed to bring together people across America to remind Congress that energy is the backbone of our nation’s economy and our way of life.” In fact, Energy Citizens was set up and financed primarily by the American Petroleum Institute (API), the US oil industry association, with support from the National Association of Manufacturers and other groups. It has contracted with a professional events management company to plan about 20 rallies against forthcoming energy and climate legislation in Southern US states, with a focus on energy producing states such as Texas. Member companies are encouraging their employees to join in. This project complements a massive increase in lobbying efforts by the fossil fuel industry in the last six months."

Fascinating stuff. And, as Levy notes, a real return to the oil industry's seemingly dead-in-the-water tactics of the 1990s when climate change denial was all the rage and various political strategies were deployed by the sector to derail the gathering climate change consensus. Levy goes on to offer an analysis of why the industry appears to have engaged in Carbon Wars round 2, but admits that a final conclusion is difficult to arrive at given the mixture of motives, interests and positions among some of the key players. However, as we mentioned not too long ago in relation to BP's "Back to Petroleum" strategy, a new conservatism appears to be blowing in the oil industry around sustainability issues (or at least the pretense of progressiveness has lost its allure), so there is much to be gained in the run up to Copenhagen by seeking to tweak the political climate towards a more accommodating pro-fossil fuel position.

Our best bet is that a range of different company strategies may start to emerge again which could derail any kind of univocal industry positioning, which seems to be the aim behind the latest manouevuring. But in the meantime, it looks like the main business action will be in the nonmarket (i.e. political) arena rather than in new market developments, at least until a new climate consensus is reached post-Copenhagen. Be sure to keep up with Levy's blog for all the latest developments.

For Asia, the future is green!

This week’s blog comes from Bangkok where CSR Asia is organizing it’s 2008 CSR Summit. It is a long time since Crane and Matten were in Bangkok at the Greening of Industry Network Conference in 2001 – which incidentally was their first joint conference appearance. What back then seemed a rather western idea and topic, parachuted into lovely Thailand to give some academics the excuse to travel to an exotic country on expenses, is now a living practice among Asian businesses.

More than 300 delegates, mostly from companies and NGOs, all over Asia gathered this week in Bangkok. For us it is a brilliant opportunity to check the pulse on business ethics and CSR in one of the most dynamic marketplaces globally. What is fascinating is to see how responsible practices begin to change in this part of the world. CSR in Asia started out very much as a supply chain driven idea, making sure that products manufactured in this part of the world were put together under acceptable conditions – from an ethics perspective.

Now though the tides turn slowly. The biggest issue seems to be the rapid decrease in water and air quality, decline in biodiversity etc. The Environment is highly on the agenda, making CSR a topic much more driven by local stakeholders in these countries. In many places in Thailand, China and Bangladesh, the impacts of global warming in terms of water supply from Himalayan glaciers, rising sea levels or d shifting weather patterns are really palpable. There was a fascinating session on business responses to climate change today – which not only highlighted the urgency of these issues but also showed a fascinating degree of creativity in corporate responses.

In the current, 2nd edition of Crane&Matten we started to include the Asian perspective, next to the North American and European one. We are just getting our act together for the 3rd edition – and one thing is sure: the Asian perspective will not only stay, but become more prominent. More Asian cases seem particularly challenging. If you have any material or suggestions, please join the conversation!