Global Policy Forum

The Changing Role of Corporate Social Investment in the Extractive Resources Sector

Beyond_Voluntarism_Report_Final1Historically, corporate social investment has been represented as essentially a voluntary activity, linked to the broader corporate social responsibility (CSR) agenda. CSRM analysis of emerging trends in the global oil and gas and mining sectors suggests that this traditional view of corporate social investment is changing. In recent years leading resource companies have begun to use these investments more strategically to mitigate social risk, protect their corporate social licence to operate, and address growing societal expectations.






18 September, 2013 | Centre for Social Responsibility in Mining, McNab, K., Keenan, J., Brereton, D., Kim

Beyond Voluntarism: The Changing Role of Corporate Social Investment in the Extractive Resources Sector

In the broadest sense, corporate social investments are initiatives undertaken, funded, or otherwise supported by companies, where the intended primary beneficiaries are communities or other external stakeholders. Examples include: donations and other contributions to civil society groups and organisations; direct funding and delivery of social programs; under-writing the cost of social infrastructure (e.g. schools, hospitals and housing), setting up foundations; and, payments to externally-controlled funds that are earmarked for social purposes (e.g. improving education and health outcomes).

Historically, much of the social investment undertaken by companies has been quasi-philanthropic, but as the CSRM report lines out, in recent years leading resource companies have begun to use these investments more strategically to mitigate social risk, protect their corporate social licence to operate, and address growing societal expectations. Detailed case studies were undertaken for six of these jurisdictions: India; Indonesia; Kazakhstan; Nigeria; Queensland, Australia; and South Africa.

In some countries, the value of the social spend required by government, as a condition of project approval, now dwarfs the value of voluntary contributions made by companies. Some ostensibly ‘voluntary’ contributions have been negotiated in a context where the alternative to making a commitment would have been direct government intervention, or significant delays in obtaining approval. In some parts of the world, governments are also becoming more prescriptive about the process that companies should follow when determining social expenditure priorities.

The CSRM report investigates how governments are seeking to increase the development contribution of resource companies and by this exercise more control over corporate social investments in the companies. They also ask how resource companies should respond to these developments.

McNab, K., Keenan, J., Brereton, D., Kim, J., Kunanayagam, R. and T. Blathwayt (2012). Beyond Voluntarism: The Changing Role of Corporate Social Investment in the Extractives Sector. Centre for Social Responsibility in Mining, The University of Queensland. Brisbane.

 

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