Socio-Economic Model for the Convergence of Corporate Strategy and Sustainability

"Mining has always played a key role in the improvement of the quality of life, but also, it has been a source of environmental and social conflict. Despite the great progress in social responsibility and sustainability experienced in recent decades, the public image of mining remains low and mining projects and operations must face growing difficulties and demands, which results in increasing capital and operating costs. In practice, the objective of a mining company is to create value for its shareholders and therefore, the best approach to Sustainability would be to foster those drivers aligning sustainability and shareholders value, this is, the “Business Case for Sustainability” (BCS). Only under this assumption, convergence of corporate strategy and sustainability may be assured. This paper discusses partial results of a Research Project being carried out at the Catholic University of Chile, aiming to develop a social and economic model for the effective integration of the values of sustainable development in the strategy of mining companies and their stakeholders. INTRODUCTION Mining is fundamental for the wellbeing of our everyday life. But as important as these benefits are for humanity, the mining Industry has had negative environmental and social impacts. For these reasons, a closer relationship between “Sustainable Development and Mining” is more necessary than ever. The Brundtland definition of Sustainable development does not have a clear relationship with mining, but it provides the context. Under a strict interpretation of the Bruntlandt definition, stating that “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs” [10], mining would not be sustainable because the minerals are non-renewable resources. However, this research focuses on how mining can contribute to the sustainable development in the territories where the projects take place. In other words, this research follows the publication titled “Berlin II Guidelines for Mining and Sustainable Development” [9], which stated that “A mining project that is developed, operated and closed in an environmentally and socially acceptable manner could contribute to sustainable development. Critical to this goal is ensuring that benefits of the project are employed to develop the region in a way that will survive long after the mine is closed”. The potential conflicts between mining stakeholders arises from the interpretation of the concept “developing, operating and closing a project in an environmentally and socially acceptable manner”, and the impact on the economic objectives of mining companies. Nevertheless, the ability of mining companies to control new demands and expectations of stakeholders has threatened the implementation and continuity of their projects and operations. To deal with these issues this research analyses the “Business Case for Sustainability” (BCS). It refers to the process leading to a business and social-economic environment whereby shareholders value may only be optimum under a business strategy which fully integrates the values of sustainability. In the model proposed, the Business Case will start when the benefits are higher than the costs. Benefits not only associated with efficient use of resources, also benefits associated with avoiding difficulties to continue with the mining projects such as strikes, heavy penalties, loss of investment, and so on."