> Business risks facing mining and metals 2012 - 2013
Business risks facing mining and metals 2012 - 2013
6 Maintaining a social license to operate
Non-financial metrics are becoming increasingly important to CFOs - Strongly agree or agree
Base: All (247) ANZ (111) Asia (136)
The DNA of the CFO wheel
“Social license to operate has been ranked as a top six risk over the last five years as it represents a consistent long term challenge.”Helen Adair Executive Director, Climate Change and Sustainability Services
The consistent ranking of maintaining a social license to operate within the top six risks over the last five years demonstrates it is an important element of doing business as opposed to being a compliance exercise.
While the reputation of being a company which does the right thing can provide a competitive edge through better access to capital and solid government relationships , it is essential in being able to access the next project. Trends which challenge companies include:
Increased expectations — stakeholders such as governments and communities want more from mining and metals companies operating in their jurisdictions, from basic financial returns to benefits for the community and the country. To stay ahead, companies need to be proactive, timely and transparent in their dealings with these stakeholders
Acquisition challenges — Acquisitive companies need to be increasingly aware of the standards of their potential targets, moving quickly to set clear expectations of how they do business and build firm partnerships with stakeholders
Changing how business is done — companies are changing how they approach business by focusing more closely on building strong partnerships with stakeholders and communities right from the start so they are engaged and understand every aspect of the project.
Steps mining and metals companies can take to respond to this risk:
Incorporate risks to the social license to operate into the enterprise risk management framework with clear and proactive risk mitigation strategies
Embed these mitigation strategies in all critical business processes to ensure that an integrated approach is adopted
Encourage and engaging in community/employee debate over sustainability priorities
Integrate sustainability key performance indicators (KPIs) with productivity outcomes often in remuneration structures, e.g., increase in mine safety, reduction in water consumption and waste etc
Link sustainability outcomes to attraction and retention of the workforce
Improve speed to act on potential license issues
Encourage trusting and supportive relationships with all stakeholders to reduce security risks in troubled locations
Integrate sustainability objectives into all long-term planning
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