Do Australian resource companies help local communities?

For more information about the author, see here.
To email Andrew, click here.
To see Andrew’s speaking videos on these topics, click here

Another way to bring the world out of poverty?

Introduction

Is development aid really the way to go to bring the world out of poverty? Perhaps a well-focused company can do more good? The following was first published in the Mining Journal published here on 22 July 2011.

Do Australian resource companies help local communities?

Recently Australian resource companies have benefitted from improvements in health and education in the developing world and Australian indigenous populations. Smarter and healthier people have led to better, more productive workforces.
For example, in the late 1990’s, adult malaria infections in Mozal, Mozambique stood at an astonishing 82%.  Such a high rate of infection was debilitating for the community and made employment and investment difficult. An anti-malaria campaign was launched. Within three years, malaria infections were reduced to a mere 8% of the adult population. Employment and investment increased.
Recently an indigenous group in the Pilbara of Australia lacked clean drinking water causing their health to be so poor that they could not be employed. Fortunately a water supply was built making a community ready for work.
The communities clearly benefitted from these programs with improvement in quality of life indicators and by making the regions more ready for investment.  At first glance, one would be forgiven for assuming that such programs must have been instigated by governments in conjunction with a United Nations or NGO initiatives.
However, these remarkably successful and widespread ventures were actually initiated by BHP Billiton and Atlas Iron.
Should these programs implemented from a business perspective, a community perspective, or a bit of both? How should programs like this be planned and success measured?
Companies realise that community Investment is often met with public scepticism created by the assumption that corporate gain should not be a motivating factor in community investment.
But why not? Why can’t a program have both a community and a corporate benefit? How do we show that a link with profit is a positive and sustainable fact, rather than negative?
If developing economy employment can be aligned with long term corporate interests and positive returns to shareholders, doesn’t this create the often sought after win-win scenario and a long term sustainable partnership?
Rio Tinto recently signed a land mark deal to guarantee long term investment in indigenous health, education and employment creation, in return for access to resources. Rio Tinto didn’t just pay cash – an easy way out – they took a long term view to convert the area’s natural resource into a human resource for the benefit the community, and yes, the shareholders.
According to the United Nations, $1billion is spent per year through the core funding of the United Nations Development Program to attempt to alleviate global poverty.
Between BHP Billiton, ANZ, NAB and Rio Tinto nearly $500 million per year is spent on community investment programs. This is half of the UNDP core budget from just four companies with Community Investment heads based in Melbourne, Australia.
When you add in the rest of the world, it is estimated that corporate Community Investment is worth in excess of $59 billion per annum. The entire UN system, including peace-keeping and political affairs has a budget of around $15 billion. Corporate Community Investment exceeds the total amount of the entire UN budget by nearly four times.
Surely then we need to reassess our role as the private sector in development? We should look to synergies with private sector development investment not just public sector development aid that would improve both community benefit and return to shareholders?
In the 50 countries the Australian government has an aid program, nearly $5 billion is spent annually in aid, and nearly $90 billion is earned bilaterally in trade. Most of this trade is in resource rich countries where Australian resource companies are amongst the leading players.
Perhaps it is time to look at linking the aid and trade agendas for benefits to companies, communities and governments.
This leads us to the question, can we foster a culture that not only celebrates but indeed encourages business involvement within social development? Why not look for social return on investment partnered with financial return on investment when planning corporate programs?
Given the breadth of resources and strength of dynamism wielded by the private sphere, there exists incredible potential for significant social impact in conjunction with enhanced shareholder returns.
It is worth returning to the case of BHP Billiton in Mozambique. Why would a multi-national corporation, a profit-driven enterprise such as this, involve itself with the social issues faced by a poor African country?
Simply, because the success of its program not only improved community health, but also reduced absenteeism in the workforce from 22% to 2%. Measuring the improved productivity established the long term viability of the project. Downstream measuring of financial impact is key.
In many instances, social return may work in conjunction with achieving a commercial return when measured. This measurement is an innovative and emergent new space. Australian resource companies are amongst the global leaders in this space.
Do Australian companies that cut there teeth learning lessons of inter-cultural workings in indigenous communities have an unexploited comparative advantage in expanding work into developing economies? 
Have Australian companies maximised their advantage?
If good business is to engage development and environmental concerns in a productive manner, then there exists an enormous potential for positive action beyond what has so far been explored. The most successful companies are looking to align these win-win opportunities with their business models.

More discussion like this is in: 

  
Advertisements

Your view is welcome. Please comment here.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s