FUNDAÇÃO GETULIO VARGAS
ESCOLA BRASILEIRA DE ADMINISTRAÇÃO PÚBLICA E DE EMPRESAS
MESTRADO EXECUTIVO EM GESTÃO EMPRESARIAL
IMPACT ASSESSMENT AND QUALITY ANALYSIS OF CORPORATE
SOCIAL RESPONSIBILITY (CSR) PROGRAMS OF MINING
COMPANIES AND THEIR CONTRIBUTION TO SUSTAINABLE
DEVELOPMENT IN THE COMMUNITIES THEY OPERATE: CASE
STUDY: TENKE FUNGURUME MINING SA IN THE DEMOCRATIC
REPUBLIC OF CONGO (DRC).
Jaynet Desire Kabila
DISSERTAÇÃO APRESENTADA À ESCOLA BRASILEIRA DE ADMINISTRAÇÃO
DEDICATION
Ficha catalográfica elaborada pela Biblioteca Mario Henrique Simonsen/FGV
Kabila, Jaynet Desire
Impact assessment and quality analysis of corporate social responsability (CSR) programs of mining companies and their contribution to sustainable development in the communities they operate: case study Tenke Fungurume Mining SA in the Democratic Republic of Congo (DRC) / Jaynet Desire Kabila. – 2015.
142 f.
Dissertação (mestrado) - Escola Brasileira de Administração Pública e de Empresas, Centro de Formação Acadêmica e Pesquisa.
Orientador: Joaquim Rubens Fontes Filho Inclui bibliografia.
1. Responsabilidade social da empresa. 2. Desenvolvimento sustentável. 3. Administração local. 4. Indústria mineral. I. Fontes Filho, Joaquim Rubens. II. Escola Brasileira de Administração Pública e de Empresas. Centro de Formação Acadêmica e Pesquisa. III. Título.
ACKNOWLEDGEMENTS
Reaching this far meant that I had many shoulders to lean on all along the winding road and enduring journey.
To God the Lord Almighty for all;
My recognition and gratitude goes to:
My supervisor Professor Joaquim Rubens Fontes Filho, PhD for his valuable guidance and encouragement all along the preparation process of this thesis;
My family and friends, always supportive and caring;
All the participants physical and moral persons who contributed to this study in terms of their precious time and information;
The Tenke Fungurume Company for having accepted their Company to be the Case of Study for this thesis and to all the Company Executives, senior to junior officers for all their support during the field visits;
The habitants of Tenke and Fungurume areas for their valuable insight and information during the Focus Group Discussions, Interviews and field visits;
Thank you all for your invaluable and unconditional participation and support.
God Bless you all abundantly!
ABSTRACT
Purpose – This case study presents an impact assessment of Corporate Social Responsibility (CSR) programs of the TFM Company in order to understand how they
contribute to the sustainable development of communities in areas in which they operate.
Design/Methodology/Approach - Data for this study was collected using qualitative data methods that included semi-structured interviews and Focus Group Discussions most of
them audio and video recorded. Documentary analysis and a field visit were also
undertaken for the purpose of quality analysis of the CSR programs on the terrain.
Data collected was analyzed using the Seven Questions to sustainability (7Qs) framework,
an evaluation tool developed by the Mining, Minerals and Sustainable Development
(MMSD) North America chapter. Content analysis method was on the other hand used to
examine the interviews and FGDs of the study participants.
Findings - Results shows that CSR programs of TFM SA do contribute to community
development, as there have been notable changes in the communities’ living conditions.
But whether they have contributed to sustainable development is not yet the case as
programs that enhance the capacity of communities and other stakeholders to support these
projects development beyond the implementation stage and the mines operation lifetime
need to be considered and implemented.
Originality/Value – In DRC, there is paucity of information of research studies that focus on impact assessment of CSR programs in general and specifically those of mining
companies and their contribution to sustainable development of local communities. Many
of the available studies cover issues of minerals and conflict or conflict minerals as mostly
referred to. This study addressees this gap.
Africa, Assessment, CSR, Democratic Republic of Congo, Mining Industry, local
communities, Sustainable Development
LIST OF TABLES
TABLES Page
Table 1.1 Selected Minerals Production of African Countries, USGS 2005 6
Table 1.2 Cobalt Mine productions, Mining Reserves, Refinery production, 6
Refinery Capacity per Country. In metric tonnes (MT), 2006.
Table 3.1 Questions and Sub-elements of the 7Qs Assessment Framework
to be used for Impact Assessment 31
Table 3.2 Criterion of Study Sample Selection 33
Table 3.3 Criteria: 1,3,4,5 33
Table 3.4 Comparative Data for Top 5 Mining Companies 33
Table 3.5 Interview, Focus Group Discussions and Field Visit Respondents 40
Table 4.1 Geographical Distributions of Minerals in DRC by Province 54
Table 4.2 Illustration of the Main / Key Entities Charged with regulation
in the Mining industry and their Key responsibilities 59
Table 4.3 Tenke Fungurume Mining Company SA at a glance 63
Table 4.4 Presentations of TFM Community Development Programs 66
Table 4.5 Presentation of CSR Program and Detailed Projects of the
TFM Social Fund 67
Table 4.6 TFM Annual 0.3% Net Values of Sales to the SCF 71
Table 4.7 TFM Contributions to SCF per Program (March 2009 August 2015) 72
within the 7Qs Impact Assessment Tool
Table 5.2 Presentation of the TFM CSR programs/Projects within the
7Qs Impact Assessment Tool 77
LIST OF IMAGES & FIGURES
IMAGES Page
Image: 4.1 An excerpt on Draining of a continent: The Case of Congo 50
Image: 4.2 ‘The status of the Congolese Economy’ 52
Image 4.3: Map of the DRC with the New 26 Constitutional Provinces 56
Image 4.4: TFM Mining Concession Area 67
Image 5.1 Integrated Development Zone Total Area 93
Image 5.2 First Phase of the New Town Development in the IDZ area 94
Image 5.3 The TFM Resettlement process 94
FIGURES
LIST OF ACRONYMS
ARN Africa Natural Resources
APP Africa Progress Panel
APR Africa Progress Report
AU African Union
BAD Banque Africaine de Developpement (African Development Bank)
CEPAS Centre d’Etudes pour l’Action Sociale – (The Centre of Study for social
Action)
CSR Corporate Social Responsibility
DRC Democratic Republic of Congo
EITI (ITIE) Extractive Industry Transparency Initiative
ESI Environmental and Social Impact Report
GDP Gross Domestic Product
GRI Global Reporting Initiative
ICMM International Council on Mining and Metal
IFC International Finance Corporation
IFM International Finance Management
IMF International Monetary Fund
KPMG Klynveld Peat Marwick Goerdeler.
LACRPF Land Access, Compensation, and Resettlement Policy Framework (for TFM)
MAD Mining Africa Development
MMSD Mining Minerals and Sustainable Development
OECD Organization for Economic Cooperation and Development
PWC Price Water Coopers
UNDP United Nations Development Programs
UNDP HDI United Nations Development Programs / Human Development Index
USGS United States Geological Survey
UN United Nations
WB World Bank
WBCSD World Business Council on Sustainable Development
WBG World Bank Group
WESD World Earth Summit Declaration
TABLE OF CONTENTS
Content
Page
DEDICATION PAGE I
ACKNOWLEDGEMENTS II
ABSTRACT III
LIST OF TABLES IV
LIST OF IMAGES & FIGURES V
LIST OF ACRONYMS VI
CHAPTER ONE: Study Orientation and Basics
1.1 INTRODUCTION 1
1.1.1 Corporate Social Responsibility, the Global Context 4
1.1.2 Mining (Extractive) Industry in the Global Context 5
1.2 Contextual Background on CSR and the Mining Industry
in the Democratic Republic of Congo (DRC) 7
1.3 Study Justification 8
1.4 General and Main Objectives of the Study 10 1.4.1 General Objective
1.4.2 Specific / Main Objectives
1.4.3 What is Impact Assessment then? 11
1.5 Conceptual Study Approach 11
1.6 Limitations of the Study 12
CHAPTER TWO: Literature Review and Conceptual Analysis
2.1 Introduction 13
Content Page 2.2.1 The Global outlook on CSR and the mining Industry 17
2.2.2 CSR in the Mining Industry in the Democratic Republic of Congo:
An Overview of Legal Obligations 18
2.3 Contextualizing of the Corporate Social Responsibility and
Sustainable Development concepts 19
2.4 Corporate Social Responsibility (CSR) 21
2.4.1 Corporate Social Responsibility in the mining industry
2.5 Contextualising Sustainable Development 23 2.5.1 Sustainable Development, CSR and Theoretical Perspectives
CHAPTER THREE: Research Methodology
3.1 Introduction 24
3.2 Research Methodology and Design 24
3.2.1 Methodology 25
3.2.2 A Look at the Case Study Methods 26
3.2.3 Case Study as an Evaluation Research Method 28
3.3. Selecting and Defining the Case for Study 32 3.3.1 Study Sample
3.4 Research Action Plan 34
3.4.1 Structure of the Study 35
3.5 Data Collection Methods 35
3.5.1 Primary Sources 36
3.5.2 Secondary Sources
3.6 Data Analysis 42
3.6.1 Introduction
3.6.2 Qualitative Data Analysis 42
Content Page 3.7 Ethical issues and Trustworthiness of the Study 44
3.7.1 Trustworthiness (Integrity) 44
3.7.2 Ethical Issues 47
CHAPTER FOUR: Case Study Assessment
4.0 The Mining Industry in the Democratic Republic
of Congo (DRC) 49
4.1 Introduction
4.2 The Mining Industry in DRC: A brief history 49
4.2.1 Description of the DRC Mining Sector 54
4.2.2 The Mining Law and Regulatory Regimes 57
4.3 Mining Industry in the Sustainable Development Agenda 59 4.4 Sustainable Development and the Mining Communities 60 4.5 Tenke Fungurume Mining: The Case Study Assessment 61
4.5.1 A Brief History 61
4.6 Tenke Fungurume Mining CSR programs: An Overview 64
4.6.1 TFM Company Community Development (CD) 65
4.6.2 TFM Company Social Community Fund (SCF) 65 4.6.3 The Scope of the CSR Programs Coverage 67
4.6.4 CSR Programs Budget and Financing: An Overview 70
CHAPTER FIVE: Presentation, Analysis and Discussion of Results
5.1 Introduction 74
5.2 Presentation of Results 75
5.2.1 The Seven Questions to Sustainability (7Qs) Assessment
Content Page 5.3 Analysis and Discussion of the 7Qs Results 79
5.3.1 Introduction 79
5.3.2 Engagement 79
5.3.3 People 79
5.3.4 Environment 80
5.3.5 Economy 81
5.3.6 Traditional and Non Traditional Activities 81
5.3.7 Institutions and Governance 81
5.3.8. Synthesis Continuous Learning through periodic
Assessment results 82
5.4 Analyses and Discussion of Interview and FGDs Results 82
5.4.1 Introduction 83
5.4.2 Understanding CSR: What it entails for the Respondents 83
5.4.3 CSR and its Impact: General View 84
5.4.4 Health 85
5.4.5 Education 87
5.4.6 Infrastructure Development
89
5.5 Economic and Agricultural Development 94
5.5.1 Economic Development 94
5.5.2 Agricultural Development 95
5.6 Capacity Building 96
5.7 Community Resettlement Program 97
5.8 Environmental Program 101
5.9 Other Community Services 102
CHAPTER SIX: Conclusions and Recommendations 106
6.1 Conclusions 106
6.2 Recommendations 108
BIBLIOGRAPHY 1
ANNEXES 1
Interview Protocol Guide
Field Visit Photos:
Interviews
Chapter One
1. Study Orientation and Basics
1.1
Introduction
“ A transparent and inclusive mining sector that is environmentally and
socially-responsible…which provides lasting benefits to the community and pursues an integrated view of the rights of various stakeholders…is essential for addressing the adverse impacts of the mining sector and avoid conflicts induced by mineral exploitation…” -The African Mining Vision
Businesses, from a quick analysis and understanding of the above statement, should have
a ‘human heart’ in order to understand that if you want to settle in any environment you
have to be ready to become part of the puzzle and not an isolated or loose piece. This is
more of a reality at least in the developing world and in the emerging economies in Africa,
a continent today mostly revered as an important economic destination in terms of market
expansion, diversification and growth for regional, continental as well as global companies.
The Democratic Republic of Congo (DRC) is among the countries in the top on the list of
the most mineral endowed countries in the African continent and globally. Hence, the
country has become one of the economic destinations of global companies dealing in
precious, ferrous and non-ferrous metals.
According to the Minerals and Africa’s Development (MAD), an International Study
Group Report on Africa’s Mineral Regimes, the development of mineral resources can
have diverse outcomes for different stakeholders implicated in the mining industry (MAD,
2011). These are diversified complications and consequences that cut across borders
depending on the countries and regions where the mining activities are taking place (ibid).
The belief that in the African mining industry, there are losers and winners in the mineral
extraction process has been held for a long time to the extent that it has been looked at as
a new type of colonialism commonly referred to as neo-colonialism. Such argument is
held to signify where rich countries dominate the poor countries’ economically such as in
and sell these minerals ore in their raw format to the developed countries where the refining
process is done. The refined product with a superior quality and added value is then sold
later at high prices sometimes over four hundred folds above the original purchase price.
This ‘winner and looser status’ can be attributed to the fact that there are disparities
between the stakeholders’ class whereby the broad interests of some key stakeholders such
as communities and even the state actors have been less secured and hence the sense of
vulnerability and exploitation. This narrative can surely be attributed to the continued high
poverty levels that characterize mining communities where these companies operate;
severe infrastructural deficits and contemporary build infrastructures that are prone to
climate change destruction and sometimes of low quality standard built. What is needed
to reverse this appalling situation according to Africa Mining Vision is for the developing
countries governments, especially African governments in this context “ to shift focus from
simple mineral extraction to much broader developmental imperatives in which mineral
policy integrates with developmental policy” (Africa Progress Report - APP, 2013).
Hundreds of trucks are loaded with minerals everyday and leave the mines for export
destinations, but it is argued by the communities living in the mining areas that the same
effort is not felt and witnessed on the ground when it comes to community development
agenda. This is a statement echoed in a mining community in the Eastern part of the
Democratic Republic of Congo in the Province Oriental in 2011 by members of one
community during a Social Humanitarian visit. This has been a centre of gravity that
sometimes causes social tensions between the communities and support groups of
‘vulnerable’ people on one side and sometimes the state, government entities who are seen as to be allowing such situation to prevail, and the mining companies on the other side.
Taking into consideration this discourse, felt and believed by different stakeholders on the
receiving end, the biggest challenges has been how to overcome the assumed if not proved
historical structural deficiencies of the mining industry. How can these issues be addressed
or how are they addressed today is a very key issue. This definitely calls for a long-term
strategy that focuses on the disparities evident and how the mining industry can contribute
efforts and strategies such as investing back in the communities through (sustainable)
Corporate Social Responsibility (CSR) programs.
The World Earth Summit Declaration (WESD) 2002 recognized that “ mining minerals
and metals are important to the economic and social development of many countries. While
minerals are essential for modern living, enhancing the contribution of mining, minerals
and metals to sustainable development include having efforts at all levels.” This implies
that it is globally accepted that mining can be and is a vehicle that can contribute to
sustainable (Community) development at the lower echelon of society to the national level
of a country as a whole, at the regional as well as at the continental level; especially in
those minerals resources endowed countries and continents.
This study approaches the idealism to realism by interesting itself in understanding the
contribution of the mining industry CSR programs by evaluating their impact on the
community they operate in. It further interests itself in whether those programs and projects
are executed in a way that they will effectively stand the test of time. This is during the
mines lifespan or beyond, long when the mines have been depleted and closed down. The
status of these implemented projects for instance infrastructures in terms of quality as
linked to durability, longevity as well as adaptation and resistance to standard normal wear
and tear cycle of the environment is an important issue that needs analysis.
The Africa Progress Panel1suggest that “foreign investors have a key role to play and
global companies operating in Africa should apply the same accountability principles and
the same standards of governance as they are held to in rich countries. They should also
recognize that disclosure matters.” Not doing so among other things “… hurt Africa and
weaken the link between (mineral) resource wealth and poverty reduction.” (APR,
2013:10). Least to say is that poverty reduction can be achieved through sustainable
development starting at the grassroots levels taking into consideration the Human
1 The APP is comprised of distinguished individuals from the private and public sector who advocate for
shared responsibility between African leaders and their International partners to promote equitable and sustainable development for Africa and is chaired by Koffi Annan, former United Nations Secretary General and Nobel laureate. (I would suggest it should have read African ‘countries’ and not ‘leaders’ as leaders represent countries and since International Partners is a general identifying noun and not individual
Development Index as one of the probable indicators. There have been efforts of disclosure
ongoing by Global Companies working in Africa case specific those operating in the
mineral mining sector. It would be interesting to do a comparative study of the said
companies that have operations in developed countries as well as developing countries in
order to understand the level of compliance to disclosure rules that they have adhered to.
There is a notion that mining companies spend money in CSR programs and most often
when they do, they usually do not take a keen interest to assure that the end result in terms
of quality goes hand in hand with sustainability. In other words, a commitment to build for
example a hospital or schools does not entail the verification of the end product in terms
of its quality, which will in other words determine in part one element of sustainability.
Hence, the issue of quality is sometimes if not mostly secondary.
1.1.1 Corporate Social Responsibility in the Global Context and Africa
Most of the literature that exists and available about CSR presents the debate in a global
context but very little if not limited empirical research presents the picture on the nature
and extent of CSR in developing countries (Visser, 2006). Most countries on the African
continent fall under this category of developing nations. However, there is a notable
exception that can be referenced in this CSR field, and it is the study that was carried out
by Baskin (2006) that looked into the corporate responsibility behavior trends of 127
leading companies from 21 emerging economies across Asia, Africa, Latin America, and
Central and Eastern Europe, of which he compared with 1700 leading companies in
high-income countries members of the Organisation for Economic Cooperation and
Development - OECD, (Visser, 2006). As noted further, only 2 countries from the 53
African countries were included but this was a global study on Corporate Responsibility
behavior.
It can be argued that the limit to two countries would not present fairly enough a
picturesque view of a diversified Africa whose development is demarcated across
geographical regions. For example, countries in the Northern part of Africa are more
developed than those found in Sub Saharan Africa. This demarcation between North and
characteristics (McKinsey & Company, 1982). Today, this demarcation has shifted further
to economic characteristics with South Africa and Nigeria, by most measures standing out
to be the economic powerhouses in and of Sub Saharan Africa. South Africa alone is
producing a third of the continent’s manufactured goods, with the highest exports statistics
and overall with the highest Gross Domestic Product-GDP (McKinsey 1982).
Indeed the above-illustrated scenario is also reflected in the CSR discourse in Africa. It is
by far South Africa that dominates the CSR literature in Africa (Visser, 2005a).
Notwithstanding, other minimal studies exist for example for Ivory Coast (Schrage and
Ewing. 2005); Kenya (Dolan and Opondo, 2005); for Nigeria (Amaeshi et al, 2006);
Tanzania (Egels, 2005), Mali and Zambia (Hamann et al., 2005), all in (Visser, 2006).
CSR is an important part and paradigm of mineral extractive industries today and more
than ever the need to adopt CSR measures and conducts are pressing more with the
globalization of the mining industry. As mining companies on the set are considered as
responsible for hazardous related outcomes that affect the communities they operate in,
they have adopted ways and means to address these issues and appease the population in
those areas by mitigating the negative impacts in these communities.
1.1.2 Mining (Extractive) Industry in the Global Context
Africa by far dominates the world’s precious metals and precious stones as the table below shows. In some selected minerals, Africa ranks among the world’s top producing
countries. Although Africa, for example, contributed only 9% in terms of bauxite’s world
production, it is interesting to note that US imports 29% of its bauxite from Africa (Africa
Natural Resources - ARN, 2008). And again, the resource reserve base of some of the
mentioned minerals is changing due to known high grade reserves discovery and
investments during recent years. The DRC in this context can be added to the list of gold
producing countries.
Below is a table (Table 1.1) from the United States Geological Survey (USGS) site that shows some selected minerals production in 2005 from African countries.
Source: (Africa Natural Resources, 2008)
Table: 1.2 Cobalt Mine Production, Mining Reserves, Refinery production, Refinery capacity per Country. Unit: Metric Tonnes (MT), 2006.
Africa, despite that its mineral refinery capacity is limited according to elements in (Table
1.2), has highly contributed to the significant supply of mineral ores being refined in other
parts of the world. Such is the case of China with a mine production of 2.300 MT in 2006
had the refinery production capacity of 12.700 MT of refined cobalt out of the total world
75 to 90% of the cobalt that China imported (and refined) came from the DRC as the table
above illustrates the differences (ARN, 2008:31).
1.2
Contextual Background on CSR and the Mining Industry in theDemocratic Republic of Congo
To date, very few literature work exist on the Corporate Social Responsibility in the mining
industry in DRC. Of those few literatures that exist, most have been commissioned by
International entities and Development partners such as UNDP, IFC, hence are focused on
specific areas of interest such as minerals and conflict (Dweidary et al), and are neither
necessarily interested nor particularly concerned with impact assessment of CSR programs
of mining companies. Others studies done have been commissioned by mining companies
in efforts to respect the legal requirements of the country and fulfill internal processes of
the company.
The 2002 DRC Mining Code enacted by Law no. 007/2002 of 11 July 2002 is the basic
legal document that governs the extractive mineral mining sector in the DRC and is
supplemented for implementation purposes by the Mining Regulations Decree
no.038/2003 of 26 March 2003 adopted by the Council of Ministers and published in the
official Journal of the Democratic Republic of Congo. The Mining Regulations fix the
practical modalities and procedures for the implementation conditions of the mining code.
It further regulates all other connected issues that were not directly detailed by the law.
The Mining Code determines a number of obligatory provisions to all titleholders of any
mining rights. Amongst those obligations, the law provides for how a titleholder should
relate to the local population in the mining areas in which they operate. Articles 477 and
480 of the Mining regulations provide for the implementation responsibilities of the Mining
Code by different administrative entities as determined by the law and also provide for the
kind of relation that should exist between the local communities and the operators of the
mining activities.
Article 69, point g of the Mining Code stipulates that in the application of the exploitation
license the interested party has to submit along “ a plan that shows how the project will
operations”. Furthermore, chapter IV of annexes to the mining regulations gives an
explicit description of what should compose the plan of sociological environment. Vital
articles can be summarized as follows2:
(i) Article 38 determines that the titleholder or operator must identify explicitly the
population living in the areas of operation. There are a number of detailed
orientation as to what it implicates;
(ii) Article 93 provides that security measures in favor of the local population in
these mining areas should be well elaborated and presented;
(iii) Article 124 and 125 states that the titleholder should provide a budget line for
activities to be taken against negative environmental impacts;
(iv) Article 127 requires that the titleholder must prepare and organize a sustainable
development plan with a precise calendar and budget of execution.
The specific above-mentioned articles among other numerous ones can be said to be the
basis of the legal foundation of the CSR in the Democratic Republic of Congo in the mining
industry. However, in general the implementation process of the legal framework and other
regulations seem to be a very big challenge for the country as many other priorities take
centre stage and often the follow up of the implementation process is sometimes relegated
to the second level. This means that although the CSR programs for communities are of a
compulsory nature, the implementation phase in effect of the outlined programs are not
necessarily given the same attention in the follow up stage.
1.3 Study Justification
The importance of a sound relation in any business environment between the shareholders
and its stakeholders internal as well as external cannot be over emphasized enough. In order
to have a good business nurturing and human living environment, a shared environment
needs to sustain the people living there and maintaining a good standing for the business
being conducted in those areas. Today, with globalization taking place at all levels and
aided by communication, we can hear a lot of forms of CSR, which have become some sort
2 All articles mentioned are based on the provision of the Mining Regulation and its annexes which
of an approach as well of businesses to increase their competitive advantage by addressing
external factors as well as internal factors.
To date as mentioned earlier, there is very limited research conducted concerning the
mining sector in the Democratic Republic of Congo that look into the CSR concept, CSR
programs and their impacts in the extractive minerals mining industry. The purpose of this
study is therefore to do an impact assessment of the implemented CSR programs and a
quality analysis of mining companies in order to understand their contribution to
sustainable community development agenda. It is important also to understand how CSR
programs of these mining companies contribute to the companies’ performance both in
terms of financially or non-financially gains.
Hence the purpose of this study is specifically classified as follows:
(I) For the mining companies’ stakeholders such as the communities involved, the policy makers and implementers at the national level;
Comprehend the role of the mining companies to exhibit ethical behavior and moral
management of the environment they work in according to guidelines that they have
to abide by and liaise that with the responsibility of assuring the implementation of
the said.
Contribute and give impulse to a legal evaluation, review and amendment of
regulations that concern CSR policy;
Identify the existence of a tool for CSR impact assessment programs and in case of
non existence of such a tool advocate for the local adaptation or development of
one;
(II) For the field of study dealing with CSR and the mining industry;
Add andcontribute to the body of literature that already exist dealing with CSR in
the mining industry with case specific interest of this study the developing and
emerging markets in Africa with DRC as the country of case study. Why
developing countries because they represent the most rapidly expanding and
developing economies and hence the most lucrative growth markets for business
(IMF, 2006). With this comes into context the impact of the operations of these
1.4 General and Main Objectives of the Study 1.4.1 General Objective
This study is intended to gain further knowledge as well as contribute to the field of CSR
in the area of policy formulation that deal with the mining industry in the Democratic
Republic of Congo. To achieve this, the study embarked on the search for answers to the
below mentioned issues but first of all the task was to analyse mining companies’ CSR
programs contribution to sustainable development of communities they operate in by
further looking at:
The factors that lead to the mining company investment in CSR programs;
The significance of the CSR programs of mining companies to the group and the
communities they operate in;
The review of CSR programs input and outcome in terms of quality and
sustainability for communities.
The evaluation tools used by the mining companies to assess effective
implementation of their CSR programs.
1.4.2 Specific/ Main objective of Study
This study has in no specific way any intention to question whether the social investments
done by mining companies through CSR programs contribute to the development of
communities that they operate in and whether there are any added advantage to the
company itself. It is a generally agreed that CSR programs do and can contribute either in
a positive and /or negative way in the environment and communities they operate in. But,
this is rather, to understand such, in terms of impact assessment as to how much really of
that value is added in terms of addressing a need (relevance), changes accrued
(sustainability), and value for monetary investment (quality more than quantity) on the
basis of programs underway.
The main objective is to conduct an impact assessment of CSR programs of one of the
order to understand how such programs contribute if so, to Sustainable Community
Development and not simply Development. It further looks at challenges faced by the
selected company in the process and how they are overcome.
1.4.3 What is Impact Assessment then?
This study focuses on the impact assessment of the programs of a mining company and in
order to understanding what it is we take a look at what it involves. The International
association of Impact Assessment (IAIA) defines impact assessment as ‘the process of
identifying the future consequences of a current or proposed action’ (IAIA, 2009).
Fitz-Gibbon (1996) defined impact assessment as ‘ … any effect of the service or of an event
or initiative on an individual or group’. The impact can be positive as well as negative in
nature. Therefore this definition is the appropriate to be referenced for this paper as
measuring impact is about identifying and evaluating change (Streatfield & Markless,
2009). The whole idea is to get an understanding whether the programs are making a
difference in the people’s life in this case the local communities living in the zones of the mines’ operations.
1.5 Conceptual Study Approach
Leila Patel (2005) in her work on social developmental approach argued that this approach
seeks to make a link of social economic policies within a state a directed development
process involving civil society organizations and companies in promoting social goals
(Mushonga, 2012). Today, CSR as a concept refers to the general belief that is held by a
growing number of people that modern business have responsibilities to society that extend
beyond their obligations to the shareholders, stockholders, and or investors in the firm
(Archie Carroll, 2007).
The above has been the case in most developing countries in Africa as CSR practice is
legal binding and the legal requirements are embedded into different laws of the countries.
This is the case as has been noted with this study sample of the Democratic Republic of
the Congo. These provisions are found in the Fundamental Laws to legislative and also
executive generated legal rules and regulations of procedure and implementation. In an
have made it a point to include non-state actors and organisations as part of their
development partners in terms of funding, resource mobilization and implementing stages.
1.6 Limitations of the Study
This study is faced with a number of limitations. First the CSR discourses in Africa in
general and the DRC in particular are still in their early stages of development hence very
limited information is available in the field of research studies done. Most of CSR literature
available is on South Africa and few other countries as it has been noted earlier in the study
(point 1.1.1). For example in the context of the DRC there is no evidence till now in the
process of drafting this document of any independent study done on the particular theme
under study (Impact Assessment of CSR and mining companies) by any independent
researcher (moral or physical person) in the field.
Therefore, secondly, this leads in turn to limited literature relating to impact assessment
and sustainable development as more CSR studies conducted in DRC were more oriented
towards narratives examining the role of mining industry in relation to, among others,
armed conflict, peace building and good governance discourses.
And finally though not least, (Yin, 2016:146) evokes the fact that “experienced qualitative
researchers recognize that true neutrality may not exist”, and in fact the author of this study
does not fall in this category yet of being identified as an experienced qualitative
researcher. This implies that such a condition will have some consequences on the process
of probably data collection and more vehemently on the data analysis procedure therefore
making the data presented seems like a ‘negotiated text’ as the researcher’s point of view whether subjective or objective can affect the findings. Yin (2016: 286), emphasizes that
the author of the study who is at the same time the research instrument (i.e. the interviewer
Chapter Two
2. Literature Review and Conceptual Analysis
2.1 Introduction
This chapter takes a brief look at the academic and professional literatures on CSR in
general and CSR in mining industry, impact assessment tools and framework, sustainable
community development, mining companies in DRC and so forth. It further looked at two
sector and their contribution to sustainable development. Although there has not been an
independent assessment study conducted on any mining companies in the DRC, studies
conducted further afield in other countries have served as a basis for understanding the
field and raising issues that were not raised fully in those early studies carried out.
One common denominator of all these studies could said to be the fact that the mineral
mining sector all over the world is a sector that concerns the exploitation of ‘non
-renewable resources’ as the end result will be the same; depleted natural resources and
lifelong impacts to deal with. The biggest difference between countries who are mineral
mining countries is the way they deal with the present while sustaining for the future; after
the mines lifetime have been reached.
2.2 A brief Background of (Corporate) Social Responsibility
The concept of CSR is dynamic multifaceted and global and continues to be a contentious
matter around the world (Muthuri, 2012). There are a plethora of concepts that have
emerged to explain the concept and responsibilities of business in the society. Such
concepts are interchangeably used in different circumstances and different countries to
refer to the same practice but done with different modalities. These include such prominent
scholars and pioneers of the CSR dialogue that include; Giving (Friedman et al, 2005);
Grant making; Corporate Social Investment (CSI), Kapelus (2004) referred to it as
Corporate citizenship; and some recent development that has linked the concepts of
Sustainable Development and sustainability (Visser 2004) in Mushonga, 2012:18).
Lohman and Steinholtz (2003 in Mushonga 2012:17) have argued that CSR should be seen
as a combination of many areas, which include corporate governance, ethics,
accountability, sustainability and human rights. Today this is a reality as the concept of
CSR today evolves around all those sub-concepts but concepts of their own.
The notion that business has duties to society is firmly entrenched in the past several
decades although there is change in the way people view the relationship between business
and society. Archie Carroll (1979) and other researchers believe that we should judge
corporations not just on their economic success but also on non-economic criteria. Carroll
four responsibilities (Carroll, 2000, p.187) to fulfill to be good corporate citizens. These
are economic, legal, ethical, and philanthropic.
(I) Economic Responsibilities
Whereby economic responsibilities focus mostly on the elements that the corporation
[managers] has to adhere to in order to deliver to its shareholders the benefits and profits
awaited from the business interaction with their stakeholders specifically in this case the
customers and clients by delivering added value. This goes beyond this boundary to
encompass the need to take the interest of other stakeholders into consideration. This is
clearly observed in Novak (1996) where there is the outline of the 7 economic
responsibilities to be fulfilled in this category as:
(I) Satisfy customers with goods and services of real value,
(II) Earn a fair return on the funds entrusted to the corporation by its investors,
(III) Create new wealth, which can accrue to nonprofit institutions that own shares of
publicly held companies and help lift the poor out of poverty as their wages rise,
(IV) Create new jobs,
(V) Defeat envy through generating upward mobility and giving people the sense that
their economic conditions can improve,
(VI) Promote innovation,
(VII) Diversify the economic interests of citizens so as to prevent the tyranny of the
majority
(II) Legal Responsibilities
Legal responsibilities entail complying with the law and playing by the rules of the game.
Laws regulating business conduct exist because society does not always trust business to
do what is right by being self-regulatory. However, laws have certain shortcomings to
ensure responsible behavior: they are of limited scope and cannot cover all contingencies;
but rather merely provide a moral minimum for business conduct. Sometimes these laws
are reactive in nature, telling us what ought not to be done, rather than proactive, telling us
what ought to be done; and might be followed involuntarily out of fear of punishment rather
(III) Ethical Responsibilities
Ethical responsibilities can be said to overcome the limitations of legal obligations. They
entail being moral, doing what is right, just, and fair; respecting the moral rights of
individuals singularly and collectively; and avoiding harm or social injury as well as
preventing harm caused by others (Smith and Quelch, 1993). Ethical responsibilities are
those policies, institutions, decisions, or practices that are either expected (positive duties)
or prohibited (negative duties) by members of society, although they are not necessarily
codified into law (Carroll, 2001). They derive their source of authority from religious
convictions, moral traditions, humane principles, and human rights commitments (Novak,
1996).
(IV) Philanthropic Responsibilities
Carroll’s philanthropic or discretionary responsibilities of corporations refer to society's
expectation that organizations become or rather are good citizens by being involvement in
such voluntary activities through the support of programs benefiting a community or the
nation.
However, the business case for CSR is far from clear-cut. In general, empirical studies on
this topic are not conclusive (Griffin and Mahon, 1997; Margolis and Walsh, 2003). Even
though mining companies may face particularly strong incentives for ensuring their ‘social
license to operate’ (Humphreys, 2000) due to the long- term, location-specific nature of
their investment, company leaders and investors are still unsure about the relationship
between CSR and profits (MMSD (Mining, Minerals, and Sustainable Development) &
PWC (PriceWaterhouseCoopers), 2001).
There are a growing number of schools of theory and practice in the field of CSR
advocating that companies and other orgnisations need to behave in a socially responsible
manner through corporate self regulation, voluntary community initiatives and
environment consciousness (Jenkins, 2005). Therefore CSR is a helpful conceptual
Mining has had a considerable role in shaping human development as it significantly
impacts on neighbouring and hosting communities where its operations take place (Petrova
& Marinova, 2012). The attention towards this issue has increased in the last 10 years with
the way the mining impacts on local communities and how the local communities are seen
to address these challenges that impact on their lives. Therefore with this awakening, comes
widespread community demands for the relevant, direct and sustainable benefits from
mineral wealth have been identified as a recent phenomenon (MMSD, 2002) that needs
suitable response from companies operating in those areas and the government at local to
national levels.
Several studies have been realized concerning the responsibilities of mining companies
towards the communities they operate in. Labone (1999) concurs that mineral exploitation
must among other issues encompass social dimensions apart from the technical and
economic points of views. Davis (1998) acknowledges that the success of any mining
depends not only on technical and economic mitigation of negative impacts but on
community concerns as well, hence the importance of the CSR programs that have been
adopted by several mining companies. But in order to understand these companies’
contribution to sustainable development of communities they operate in an impact
assessment as a tool that can be used to evaluate the results of these CSR investments.
The CSR concept and associated actions have become a way to demonstrate a company’s
commitment to minimise the negative impacts that germinate from mining activities
(Petrova & Marinova, 2012) but also a means to address unfavourable living conditions
that affect the community within the areas of operation. But more today, expectations
about the contribution of mining are on the rise and communities demand higher levels of
local investment outside the immediate areas of operations (Petrova &, Marinova 2012
p.2). This situation has been further reinforced by the emergence of International
Standards, Codes and Guidelines.
In most of the developing countries of Africa and specifically DRC, the most used
conceptual framework can be identified as the legal and ethical responsibilities framework
make sure that they have ‘a license to operate’ within the communities by maintaining
peace through addressing negative impacts that affect the community as a result of the
changes effectuated in the ecosystem by the mining operations.
The company hence becomes an important player in the development of the society through
its participation in community development efforts in terms of financial and material
contribution to different efforts that are aimed to mitigate the negative impacts that arise as
a result of environmental manipulation. To understand how this process works of
mitigation, a Social impact assessment (SIA) has to be conducted by the use of an
assessment tool to eventually identify the impact from those contributions.
2.2.1 The Global outlook on CSR and the Mining Industry
The CSR issues have been discussed around the mining industry as elaborated in (Jenkins,
2004; Kapelus, 2002; Cowell et al.,1999,). Because of the limited non-renewable mine
resources, the environmental hazards from the extraction activities and bad working
conditions, mining industry is on the embarrassment position among economic
development, environmental protection and social impacts (Tilt and Symes, 1999).
Mining companies it is argued, always operate in targeted areas without, sometimes,
consideration of legitimate and ethical regulations, this is because often times, mining
parameters are situated in the larger rural areas, and move to other areas after enormous
extraction and damage of the surrounding mine environment (Jenkins, 2004). Moreover,
the mining industry always hires indigenous employers but provides poor working and
living conditions. As a result, there appears to be a global tendency by communities and
Non Government Organizations, which doubt the development of mining industry from
sustainable aspect and approve the emancipation of the indigenous (Kapelus, 2002).
Based on the evidence and analysis of the data to be gathered, this study will come up with
recommendations and suggestions on how governments, businesses and communities can
individually or collectively address problems identified.
In the Mining Code, specifically articles 202 to 206 and the Mining regulation article 404,
have outlined obligations by law that mining societies and those involved in the mining
sector in general have to adhere to. The Mining Code and the accompanying regulations
provide a very comprehensive set of rules that govern the mining sector in all identified
areas that relate to the extractive industry. Issues addressed are acquisition, transfer,
operation and termination of mining rights, environment protection, cultural heritage,
protection of neighboring communities, and tax and customs incentives. This legislation
also has provisions concerning environment norms applicable to mining activities that also
include stone quarry rights and all other extractive activities.
Every mining company is by law legally bound to implement community developmental
projects in the limit of their mining concession and at times in the provincial limits of their
areas of operations. What is to be done though in terms of programs and projects is
proposed by the mining companies themselves but they have the responsibility to make
sure that implementation of the said takes place as presented in the Environmental and
Social Impact Report (ESI), a study that needs to be carried out and the report required to
be presented to designated government entities before any exploration or exploitation
license approval and rights can be granted.
2.3 Contextualizing of the Corporate Social Responsibility and Sustainable Development concepts
Corporate Social Responsibility and ‘sustainability’ are two terms that are mostly used in
describing social and environmental contributions and consequences (both negative as well
as positive) of business activity (Jenkins & Yakovleva, 2005). This is at least well so in the
mineral mining sector. More literally the sustainability concept has experienced an
evolution the past decades as sustainability in terms of corporate and business has steadily
broadened to encompass other broader social economic issues such as health, safety,
labour, community development from the initial focus on philanthropy and environmental
But is Corporate Sustainability, a term that is used to refer to essential and long term
corporate success for ensuring that markets deliver value across society. Is this more of a
strategy for the survival of the companies than strategies vehemently developed with the
first and foremost intention of servicing the societies in which they operate in? It can be
argued that without these companies’ operations in those societies or communities, there
are some issues that would have never been of concern but because of the transformation
taking place it demands demands that such measures to be adopted to safeguard against
overlapping effects. In the UN Global Compact3 the opening phrase is ‘Corporate
sustainability is imperative for business today’, meaning that for business to survive, to be successful, to continue producing intended results the corporate structure has to be
sustaining, to be able to survive.
The document further suggest that ‘ The well-being of a workers, communities and the planet is inextricably tied to the health of the business’, suggesting that these interest groups earlier mentioned survival is incontestably dependable on the status quo of the
corporate hence the business. I would argue that it is a two-way dependence lane. The well
being of one depends equally on the other but again, after all, communities existed long
before the existence or coming into being of today’s sophisticated businesses that trail
behind them all kinds of laudable and regrettable outcomes. The more sophisticated and
advanced the world becomes the more appropriate and adequate measures are needed to
address the status quo. For example the issue of climate change and its impact on the
environment was not highest on agenda in the 18th to 19th century during the industrial
revolution, a period predominantly agrarian, where rural societies in Europe and America
became industrial and urban.
With industrialization, the iron and textile industries along with the development of the
steam engine, played central roles in the Industrial Revolution. And neither prior to the
industrial revolution where manufacturing was often done in people’s homes using hand
tools or basic machines was an issue. Although it has been acknowledged that
3The UN Global Compact is the world s largest corporate sustainability initiative that has produced a
industrialization brought about an increased volume and variety of manufactured goods
and an improved standard of living for some, it also result in often-grim employment and
living conditions for the poor and working classes. Hence, it can also be argued that; ‘The
well-being of a business is inextricably tied to the health of the workers, communities and
the planet’. In this case the two concepts are dependable.
[Corporate] sustainability can then be understood as a discipline by which companies
ensure their own long-term survival as well as a field of thinking and practice by means of
which companies and other business organisations work to extent the life expectancy of
ecosystems, communities in which they operate and economies that provide financial and
market context for corporate competitive edge and survival in order to fulfill specific
objectives. (Elkington, 2007). This is the case why CSR and its contribution to sustainable
development has become an important topic that is under constant debate to-date non more
than the mining industry (Jenkins & Yakovleva, 2004), whereby the CSR agenda has
become the increasing need for individual companies to justify their existence and
document their performance through disclosure of their social and environmental
information (Jenkins & Yakovleva, pg. 271).
CSR is a term that has been defined by the World Business Council on Sustainable
Development as “the continuing commitment by business to behave ethically and
contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.” This involves the integration of economic activity with environmental integrity, social concerns, and
effective government systems and the goal of this being sustainable development.
On the other hand, Sustainable development has not been a term that has acquired a
consensus note on what the definition should be. However, the most widely acceptable
definition is the one used in 1987 by the World Commission on Environment and
Development that meets the needs of the present without compromising the ability
of future generations to meet their own needs4
This definition has acquired broader support because of its ability to integrate multiple
layers of meaning and some profound implications while at the same time allowing
flexibility within defined boundaries and its possibility to be applied to the development of
many activities and sectors (MMSD, 2002 p.21).
Other definitions include the one in the ICUN joint publication with UNEP and WWF on
their report ‘Caring for our earth’ that looks at sustainable development as ‘ Development
that provides real improvements in the quality of human life and at the same time conserves the vitality and diversity of the Earth’. It could be said that this second definition is more explicit and brings out key terms that have not been referred to in the early Brundtland
Commission. However both definitions are technically broad and many elements are
undefined. It is for sure impossible to practically define every single key term in a definition
statement.
One wonders how we can be able to guarantee that the needs of tomorrow will be met
when the needs of the present cannot or are not yet able to be sufficed? And what would
those needs of the future be as we live in an everyday ever changing world that is
sometimes not feasible to predict the needs of the current generation in precise terms? For
example rise in migration and immigration, armed conflicts, terrorism, refugees’ influxes,
population explosion and forth. It is important to recall that sustainable development is
threatened by climate change, land cover change (more and more land mass desertification
taking place) and overexploitation of natural resources (Valli Moosa,
2007).
Hence it is surely a non-ending debate but one thing is for a fact; CSR programs contribute
to development in this context community development but the hanging issue is: could it
be classified as sustainable development? How do we measure the sustainability factor of
those developments taking into consideration that it is still a challenge to determine with
4 Breaking New Ground: The report of Mining, Minerals and Sustainable Development Project,
precision our needs of today and at the same time predict the needs of the future generation?
Humbly, this would make a good case for further study.
2.4 Corporate Social Responsibility (CSR)
2.4.1 Corporate Social Responsibility in the mining industry
Corporate Social Responsibility (CSR) is playing an increasingly significant role in
companies’ narratives and practices particularly in the mining industry. The world’s
mining industry is flourishing due to Africa’s abundant mineral resources reserves. The
international prominence of CSR in mining can be traced to mining’s significant negative
social and environmental impacts, and the related criticism levied at companies involved
in the business of mining from governments, non government organizations (NGOs), and
local community based organizations (e.g. Banerjee, 2001; Third World Network Africa,
2001; MMSD - Mining, Minerals, and Sustainable Development), 2002.
Companies today are motivated towards business case for CSR by focusing company
efforts at responding to stakeholders, minimizing negative impacts, and maximizing
positive impacts and are said to have a positive effect on profits, at least in the medium- to
long-term (World Business Council for Sustainable Development, 2000; Holliday et al.,
2002).
2.5 Contextualising Sustainable Development
2.5.1 Sustainable Development, CSR and Theoretical Perspectives
One of the greatest challenges facing the business world today is integrating economic
activity with environmental integrity, social concerns, and effective governance systems.
In the context of the minerals sector, the goal should be to maximize the contribution to
the well being of the current generation in a way that ensures an equitable distribution of
its costs and benefits, without reducing the potential for future generations to meet their
own needs. Minerals development can also bring benefits at the local level, however, recent
adversely. The social upheaval and inequitable distribution of benefits and costs within
communities can also create social tension. (UNDP HDI report 2014)
The minerals industry cannot contribute to sustainable development if companies cannot
survive and succeed in their operations. And even so not all investment in development
programs will result into sustainable development. There is a thin line that separates the
two as sustainability looks at long-term benefits beyond today’s production and benefits.
The Corporate Social Responsibility theoretical view adopted for this research is that
introduced by Caroll (1979) that argued that the idea about CSR is based on four levels;
namely economic, legal, ethical and philanthropic responsibilities. There are a number of
empirical studies that suggest that culture may play a role in a way priorities in CSR are
defined by Caroll in (1991) that a Company needs to adhere to. More of CSR and the
theoretical approach were earlier discussed in 2.2
Chapter Three
3. Research Methodology
3.1 Introduction
In this chapter the qualitative research methodology used for this study is explained, and
the principal method of research used; the case study approach is elaborated. This includes
inter alia a discussion of the concepts, strategies, and the approaches used from data
There are two distinctive research methods used by different disciplines in conducting
research in social sciences; the qualitative and quantitative research methods. The mixed
method approach (the use of both qualitative and quantitative) is also constantly used now.
Qualitative research has become a mainstream form of research as many different scholars,
different academic and professional bodies put it to use. For the purpose of this research,
the qualitative approach was preferred as it enables a researcher to conduct in-depth
studies.
3.2 Research Methodology and Design
Research method has been referred to as a technique for data collection (Mouton, 2000) in
(Letsoalo et al, 2013), and hence involves the systematic mode, procedures or tools used
for collection and data analysis. Methodology on the other side used to refer to the overall
approach to research linked to a theoretical framework in the process of a study. Ary (2003)
and Somekh & Lewin (2005) support this view when they contend that methodology refers
to the collection of rules, principles and theories that underpin an approach under which a
research study is conducted.
Methodology therefore is important as a procedure (Mouton, 2000) and as an overall
approach to the research process from its theoretical underpinnings (Collis & Hussey,
2003) that a researcher uses to collect, condense, organize and analyze data in the process
of conducting research in the social science.
3.2.1 Methodology
Qualitative research methods are a diverse set encompassing different approaches (Elliot
& Timulak, 2005) such as empirical phenomenology, grounded theory, ethnography,
protocol analysis and discourse analysis. This list in not exhaustive as Yin (2016) in his
book Qualitative Research: From Start to Finish, clearly points out with supporting
examples that the method has a more broader area of inquiry with an array of specialized
types or different variants and that there is no formal typology or inventory of such variants
that has been conducted so far. There are however 12 commonly recognized variants in use
to come up with a definition and how to distinguish it from other types of research. He
forewarns that due to it relevance to different academic disciplines and professions, it has
proven arduous to arrive to a concise agreed upon definition.
However, (Polkinghorse, 1983) in Timulak & Elliot suggest that there is a commonality of
some features in that all these qualitative methods rely on linguistic rather than numerical
data, and employ meaning-based rather than statistical forms of data analysis, thus giving
it a common definition of a sort. However, Timulak & Elliot (2003) recall us to attention
by suggesting that using distinguishing features such as the unit of measurement in words
or numerical appear not to be a credible way of characterizing different research
approaches. There are some distinctive features (Elliott, 1999) suggests, that are of far
more importance in coming up with at least a descriptive definition of the approach. Such
features (Timulak & Elliott, 2003: 147) as:
Emphasis in understanding phenomena in their own right (rather than from
some outside emphasis);
Open, exploratory research questions (versus closed-ended hypotheses);
Unlimited, emergent description options (versus, predetermined choices or
rating scales);
Use of a special strategies for enhancing the credibility of a design and analyses
(see Elliot, Fischer and Rennie, 1999); and
Definitions of success condition in terms of discovering something new (vs.
confirming what was hypothesized).
This use of features approach in an effort to distinguish qualitative research including its
specialized types, from other forms of social sciences is acknowledged by Yin (2016).
Therefore no single use of one data collection method would have made justice to this
study. The context and essence of the topic under study would have not been fulfilled from
one source of evidence. A multiple approach was necessary as different stakeholders are
involved and in order to assess the impact of the CSR programs under question as the
involved players play different roles from the programs’ inception to the implementation
