Mines need to ensure a positive social and economic impact in their stakeholder communities

Together, ten of the world’s largest mining, metals and engineering companies reported social investments valued at US$1.2bn in 2013, according to research published today by KPMG International. Yet few of those companies are reporting the impact these investments are actually having on the people they are intended to help.

These findings are contained in Valuing Social Investment in Mining, the latest publication from KPMG’s Global Mining Institute.

The KPMG study reviewed corporate reports issued between 2012 and 2013 by the 10 largest global metals, mining and engineering companies. While they all quantified the inputs and outputs, these were primarily in terms of volume, namely the financial contributions made and the number of participants in a program.

Only one of the 10 reported any quantified outcomes, suggesting a lack of debate over the true impact of programs, both internally and with the communities they are serving. And only four of the mining companies surveyed published a detailed social investment strategy.

With 52 different types of programs across the group surveyed, the report finds that companies risk spreading their efforts too thinly, rather than focusing on a few priorities that can really make a difference. More money and a higher number of beneficiaries do not necessarily translate into greater impact.

Carl Adams, Head of Mining, KPMG Australia said: “Mining companies are very aware of the significant impact their operations have upon local communities and recognise the need to earn a ‘social license to operate’ – a kind of unwritten contract with workers, their families and other stakeholders.

“Mines are also incredibly complex operations spread across wide geographical areas. So vast sums are ploughed into social investment initiatives across broad categories like health and safety, education and training, infrastructure and recreation. But without a detailed business plan, this money is at risk of disappearing into a black hole marked ‘charitable donations.’ High profile events can score political points but may not necessarily generate the best long-term return on capital.”

Rohitesh Dhawan, Global Mining Leader Climate Change & Sustainability, KPMG, said: “The findings for mining companies mirror wider challenges revealed by KPMG research. Companies are investing huge amounts into social programs, despite the wider corporate focus on cost, post-Global Financial Crisis.

“A clear strategy for social investment is crucial for success yet currently there appears to be a ‘scatter-gun’ approach, with companies typically investing in five different areas rather than focusing on priority areas where the business can make the most difference. This does not help target the investment efficiently or maximize the benefits from the money spent. Measuring the impact on the ground can be challenging but it is key to learning how the effect of these programs can be improved.”

The Valuing social investment in mining is intended to help corporate responsibility managers and others involved in designing and delivering social investments to overcome some of the challenges to measuring and reporting on social programs.

It contains practical advice and a framework for better measurement and reporting of social investments and programs.

Valuing social investment in mining can be downloaded from: https://www.kpmg.com/au/en/IssuesAndInsights/ArticlesPublications/Pages/social-investment-mining.aspx?utm_source=media&utm_medium=email

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