Explain the context, concept, lessons and recommendations from the Norsk Hydro's Utkal Venture case study with examples from other mining companies.

There is a natural fit between the idea of corporate social responsibility and an organization’s stakeholders. MNC operating in international operations have to consider the home country, host country and society as shown in figure-2.

MNC face a big challenge to decide which stakeholders merit and receive consideration in the decision-making process. In any given instance, there may be numerous stakeholder groups both from host and home country along with society clamoring for company’s attention. For example, Norsk Hydro Utkal project in which Hydro’s five step project evaluation checklist promote the good beginning with what is best for financial shareholders. The list ought to better to be arranged focus on the needs of the environment and stakeholders first. The pyramid of corporate social responsibility is depicted in Figure 3, portrays the four components of CSR, beginning with the basic building block notion that economic performance, at the same time, business is expected to obey the law, business’s responsibility to be ethical and business is expected to be a good corporate citizen which comes under philanthropic responsibilities.

   

Source: Adapted from Carroll,Archie B.The Pyramid of Corporate Social Responsibility: Toward the Moral

Management of Organizational Stakeholders, Business Horizons, July-August 1991

ETHICAL ANALYSIS:-

The ethical component of CSR pyramid is an important component this section will analyze it more thoroughly in the context of stakeholders. One way to do this is to use major ethical principles such as those of justice, rights, and utilitarianism to identify and describe ethical responsibilities.

UTILITARIANISM:-

Utilitarianism is a moral theory according to which an action is right if and only if it produces more utility (or welfare or well-being) for all people than any alternative. For example in Norsk Hydro Utkal project the homes and lives lost by few hundred Orrissa villagers were more when compared with the lower cost lighter weight aluminum. Utilitarian perspective this was an unethical behavior as this act does not produces the well being or welfare of the society or community.

A lesson can be taken from Antamina mining company- Peru project which returned the majority of the money to the communities, which help them to construct road, build health clinics, improvement in the educational infrastructure and start of five electricity projects which provide access to 225 communities.

ETHICAL RELATIVISM:-

The prescriptive is that different groups of people ought to have different ethical standards for evaluating acts as right or wrong, these different beliefs are true in their respective societies, and these different beliefs are not instances of a basic moral principle. 

For example the Norsk Hydro Utkal project there was difference in Norwegian and Indian culture as seen in the power distance and masculinity-femininity culture parameters. Implementation of Norwegian culture by Hydro was not successful. In Indian culture it was not considered good that women should be hired for jobs or their was a issue of caste low and high caste faced by Hydro.

A lesson can be taken from BHP billiton Company which provided fund to NGO’s to promote Women issues under their banner.

ETHICAL ABSOLUTISM:-

According to proponents of ethical absolutism that there are certain universal laws that are so fundamental that they should under no circumstances be violated. Examples of such imperatives are that one should not torture or kill other people or no person should be imprisoned without a fair trail and more generally that human rights, such as freedom of expression should not be violated.

For example, Hydro in it Utkal project violated the human rights in order to acquire land by forcing the villagers to leave their home and police killing innocent villagers.  

CORRUPTION AND BRIBERY:- 

In some countries corruption involving bribes are so widespread that it is very hard for the MNC to operate without being involved. However Hydro had ‘no bribe’ policy, this policy must trump local Indian practices of corruption.

ENVIRONMENTAL IMPACT & HEALTH & SAFETY ISSUE:-

The mining companies need to promote the transfer of clean technologies by generating less waste and increase recycling; and encouraging self-regulation, environmental research and development, worldwide corporate standards, and partnership schemes to improve access to clean technology.

For example Hydro Utkal project the environmental pollution and health & safety issues were not considered which were followed in Norway like use of cadmium in the production process, the provision of asbestos gloves for workers and lack of an adequate waste treatment centre.

3. SUMMARY OF ISSUES

The most important conclusion can be drawn from the analysis is that there is much learning to be done by mining companies, and that they should acknowledge and confront their CSR challenges in an honest and transparent manner.

In Summary following are the main points:

• Due to globalization MNC need to consider not only the home country stakeholders but also the host country stakeholders along with the society.
• Business should not only consider maximization of return to shareholders but should also consider legal, ethical and philanthropic responsibilities.
• Understanding of local community values, norms & culture should be done.
• MNC should not contribute to violate international humanitarian law.
• Effective relationships required on the part of both the company and the community.
• MNC should take care of the environmental impact and other health and safety issues.

4. RECOMMENDATIONS

Mining companies need to develop a geocentric approach as ethnocentric approach by companies is not successful. Furthermore companies need develop a sustainable development program by implementing the policies at all levels of the companies. Also companies can use Harvard model of HRM which consider both the stakeholder interest and situational factors. Stakeholder Power interest matrix can be helpful in determining the key player among the stakeholders. A sample plan of social responsibility policy for Newmont mining company is shown in appendix-1 which can be used as a benchmark.  However following possible recommendation can be used to develop a best practice for organization operating in the mining industry.  

SHORT, MEDIUM & LONG TERM PLANS

SHORT & MEDIUM TERM PLANS:-

• Develop a company-wide operating policies, standards, and performance indicators for critical issues such as human rights, mine closure and rehabilitation, biodiversity, tailings management, water and energy use, and greenhouse gas emissions.
• Adopt a policy of best management practices where regulations are absent and standards are not set as in the case of Hydro Utkal project as there were no institution.
• Practically apply the sustainable development principles into decision-making.

• Complete the major initiatives of the sustainable development strategy including:-

1. Ensuring sustainable development principles are incorporated in the formal business performance measures.
2. Ensure ‘priority projects’ are planned and implemented in accordance with sustainable development principles.

• Conduct an audit of sustainable development progress ‘the way company is working’.
• Conduct an annual review of the priorities for the sustainable development principles and prioritize them accordingly.
• Develop six monthly updates of the sustainable development strategy to ensure continuous improvement & contribution to sustainability.
• Continue sustainable development & importance of corporate social responsibility and Ethics awareness programs and training for all employees and Managers before the commencement of mining project as well as during the project execution.
• Setting site and corporate performance targets for sustainability issues.
• Establishing stakeholder advisory boards in the host countries.
• A deeper understanding of the different economic and social impacts of business operations on local communities.
• Regular and public meetings with the local communities in language everyone can understand.
• Forum in which community, government and company meet periodically to discuss infrastructure development or maintenance.

LONG TERM PLANS:-

• Ensuring policies are long-term and cover all activities from exploration to provision of support for sustainable community businesses following mine closure.
• Review the mine closure policy and develop a policy for sustainable development as most of the projects are long term.
• Embed the cost for sustainable development programs before the start of the project.
• Transparency in decision making, communication and conflict resolution.

5. REFERENCES

Books:

• Deresky,H. Global Management, 2002 Pearson Edition
• JOHNSON,G. & SCHOLES, K (1999) Exploring Corporate Strategy, Prentice Hall Europe

Journals:

• Darryl Reed, “Resource Extraction Industries in Developing Countries,” Journal of Business Ethics 39, no. 3 (2002): 201.
• Amy Rosenfeld Sweeting and Andrea Clarke, Lightening the Lode: A Guide to Responsible Large-Scale Mining, Conservation International (2000): 9

Reports:

• Business & Economic Developments, Mining Sector Report (2004)
• No Dirty Gold report by Oxfam America & Earthworks

Databases:

 

• Springerlink www.springerlink.com.lispac.lsbu.ac.uk ( accessed on 16th Feb.)
• Market Line http://0-dbic.datamonitor.com.lispac.lsbu.ac.uk/ ( accessed on 16th Feb.)

Websites:

• www.hydro.com (accessed on 16th Feb.)
• http:// (accessed on 27th Feb.)   

Case Study:

 

• Norsk Hydro Utkal Venture Case Study, Gooderham P. & Nordhaug O.,  International Maangement Cross-Boundary challenges (2003), Blackwell publishing

TOTAL WORD COUNT: 2,334

6. BIBLIOGRAPHY

 

Websites:

•  http://www.newmont.com (accessed on 06th March)
• CorpWatch, www.corpwatch.org (accessed on 16th Feb.)
• Norwatch, www.norwatch.no/index.php (accessed on 16th Feb.)
• Mining news, http://www.theminingnews.org/ (accessed on 27th Feb.)
• Corporate Social Responsibility news wire  (accessed on 27th Feb.)
• The World Business Council for Sustainable Development (WBCSD)  (accessed on 16th Feb.)
• ,  (accessed on 16th Feb.)
• International Business Leaders Forum – IBLF,  (accessed on 16th Feb.)
• International Institute for Environment and Development,  (accessed on 16th Feb.)

7. APPENDIX

APPENDIX-1

NEWMONT Mining company Social Responsibility Policy

Newmont is an international mining company, primarily producing gold. The company has active operations, explorations and projects in North and South America, Central Asia, Australasia, Europe, and West Africa.

Newmont's future is dependent on its ability to develop, operate and close mines consistent with our commitment to sustainable development, protection of human life, health, the environment, and to adding value to the communities in which we operate.

To realize these commitments, every Newmont operation will:

• Develop and use systems to identify and manage risks, and provide accurate information to support effective decision making;
• Train our people and provide the resources to meet our social responsibility objectives and targets;
• Respect the Universal Declaration of Human Rights in its business operations;
• Respect the social, economic and cultural rights of indigenous people;
• Adopt policies and standards and operating practices that ensure ongoing improvement;
• Wherever appropriate and feasible, set operating standards that exceed the requirements of the local law;
• Assess our performance against our policies and standards.
• Demand leadership in social responsibility from all our people;
• Seek to share our success by partnering with stakeholders in appropriate community development programs;
• Consult stakeholders in matters that affect them;
• Strive to communicate our performance in an accurate, transparent and timely manner;

We understand the actions and conduct of every Newmont employee and contractor are the basis on which our stakeholders will evaluate our commitment to achieving the highest standards of social responsibility.

Since environmental, health and safety issues can affect the communities where we operate, we will carry out our Social Responsibility Policy in conjunction with Newmont's Environmental and Health and Safety Policies.

Environmental Policy

Newmont's Mission Statement of Environmental Compliance was established in 1991. It states:

Newmont and its affiliates (Newmont) intend to set standards of excellence with regard to environmental matters.

Three supporting policies provide definition to the Environmental Mission Statement.
The first policy is,

Newmont will, at all times, operate its facilities in compliance with applicable laws and regulations.

This is a non-ambiguous commitment by Newmont that requires all of its operations to comply with local laws and regulations that apply to its activities.

The second policy states:

Newmont will adopt and adhere to standards that are protective of both human health and the environment at the facilities it builds and operates.

This means Newmont will ensure that environmental factors are included in new and modified facilities. It also applies to discharge to surface of ground water, air emissions and the protection of aquatic and marine environments.

For the design and construction of new facilities, and the modification or expansion of existing facilities, this second policy requires Newmont adheres to the host country’s laws and regulations. However, in some countries, particularly developing countries, minimum design criteria and standards for mining and milling operations either do not exist or require a standard lesser to that which Newmont has set as a minimum of for the Company. In such cases, Newmont’s own (higher) standards are applied, often based on the Nevada Administrative Code governing the design, construction, and operation of mining facilities.

Similarly, when discharges to surface or ground waters are unavoidable, Newmont is required to comply with the host country’s laws and regulations. If country laws are non-existent, inadequate or incomplete, U.S. EPA primary drinking water standards will be deemed the appropriate standards for the protection of human health.

Emissions to air are also required to comply with the host country’s laws and regulations. Where those laws are non-existent, inadequate or incomplete, U.S. EPA national ambient air quality standards will be used.

There are typically no universally applicable or relevant standards to draw upon for the protection of terrestrial, aquatic and marine environments. As such, Newmont aims to protect aquatic, terrestrial and marine environments based on site-specific, risk-based water discharge standards. The risk-based approach is required to address the potential pathways of pollutants from Newmont facilities to the applicable environmental receptors. Again, the operating site must always comply with the host country’s laws and regulations.

The third policy:

Each Newmont operation will develop, during the design phase, and implement closure and reclamation plans that provide for long-term environmental stability and suitable post-mining beneficial land-uses.

Closure and reclamation are the completion of the life cycle of a mining operation. The post closure environmental condition and beneficial and uses of Newmont sites is the Company’s lasting legacy. Consideration of closure and reclamation must occur during the design of a project and must be included as an integral component during the life of the operation. The operations will be managed during the life of each facility in a manner consistent with full implementation of the closure and reclamation plan. The cost of reclamation and closure must also be included in all front-end project evaluations. Adequate financial provisioning for closure and reclamation will be provided for all operations.

To support the activities that are necessary to achieve compliance with the environmental mission statement and policies, Newmont is committed to providing the necessary human and financial resources.

To motivate and reinforce behaviors in employees (and contractors) that support the environmental mission statement and policies, compensation programs include a component linked to annual environmental performance targets.

Each employee (including contractors) will be held accountable for ensuring that those employees, equipment, facilities and resources within his or her area of responsibility are managed to comply with this policy and to minimize environmental risk.

Health Safety and loss prevention standards

Purpose

This Policy provides the framework for the development of Health, Safety and Loss Prevention (HSLP) Standards, Procedures and Guidance, which will address the control environment, risk assessment, information and communication, control activities and monitoring of Core Business Processes.

This Policy addresses the intentions and principles of Newmont with respect to effectiveness and efficiency, reliability of financial reporting and compliance with laws and regulations to achieve Core Business Activities as follows:

• Strategic and Action Planning: HSLP will provide assistance to HSLP strategic and action planning in line with the BETS planning model that identifies value and drives continuous improvement upon efficiency and cost controls.
• Risk and Opportunity Program: HSLP will implement a Risk and Opportunity Program that will enhance Newmont’s business performance through a common framework that can be utilized by any discipline or functional area.
• Five Star Program: With the cooperation of Environmental and Social Responsibility, HSLP will manage an integrated Five Star System and ensure that all applicable operations are assessed according to the standards established within the program.
• Safety Team: HSLP will establish and coordinate the meetings of a Safety Team in an effort to develop and manage global HSLP programs.
• Training and Competencies: HSLP will establish and maintain a common guidance to training and competencies for HSLP positions, the Safety Team, senior and general management and mentoring program support.
• Technical Advisory Support: HSLP staff will provide the service of HSLP technical advisory support for internal stakeholders and interact with external stakeholders, such as peer industry, universities and government agencies.
• Information Management System: HSLP will establish a central Information Management System with global access to current HSLP information. Key elements of this system include collection, analyses and reporting of consolidated global HSLP data and research information for advisory reports.
• Assurance: HSLP will provide assurance to required corporate programs through independent assessments, with a focus on HSLP practices and, when appropriate, Rapid Response activities.

Policy Statements

1. Newmont will identify health and safety exposures and hazards with the potential for injury and illness.
2. Newmont will adhere to Newmont Safety Principles, which includes health and safety leadership in all our people.
3. Newmont will implement and maintain a health and safety management system that identifies, assesses and controls health and safety risks.
4. Newmont will identify measurable objectives and targets that will drive the continuous improvement necessary to pursue an injury-free workplace.
5. Newmont will comply with relevant and applicable statutory and other requirements.
6. Newmont will promote positive behaviors to achieve superior HSLP performance.
7. Newmont will be reviewed by internal and external sources to ensure that the HSLP organizational goals are being achieved through conformance and compliance.
8. Newmont will publicly report its HSLP performance

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