Milton Friedman, a renowned economist, is famous for declaring that corporate social responsibility is just prose – and that the actual business of business is to make profit. He argued that the desirable social ends such as creating employment, eliminating discrimination, avoiding pollution among others amounts to unadulterated socialism, which works against a free society. In his treatise Friedman wonders why business should have responsibility, arguing that only people should have responsibility.
The basis of his argument is that a corporation is an artificial person and, in this sense, may have artificial responsibility, no matter how vague. At the time Friedman postulated his controversial ideal, social responsibility of a business, the issues of climate change and environmental social governance had not taken centre-stage in development and economic literature.
Since the 1970s when he postulated his stance, a lot has changed on the development scene. Currently, climate change and environmental social governance have become central to the corporate social responsibility (CSR) of every business entity, as well as a huge global agenda. CSR emerged against the background of corporate environmental, social and ethical failures by some corporations. Currently CSR has moved beyond building clinics, hospitals and schools to providing environmental social governance that promotes business sustainability for the future.
Corporate governance
The principle of corporate governance expects that a company must be properly managed, and be alive to its social responsibility beyond shareholder interests. Good corporate governance procedures help to enhance the organisation’s reputation and increase attractiveness to investors and shareholders. Conversely, the stakeholder theory is the alternative principle from the viewpoint of business ethics.
The stakeholder theory is based on the premise that organisations do not just exist for the benefit of shareholders and investors, but represent the hopes, ambitions and objectives of a variety of stakeholders. Stakeholders in this sense represents any group or individual who can affect or is affected by achievement of the organisation’s objectives. While CSR reporting is currently voluntary, it is incumbent on corporations to incorporate a set of core principles in the areas of human rights, labour standards and the environment into their operations.
Global initiative
Two of the most comprehensive voluntary corporate responsibility initiatives are the UN Global Compact and OECD Guidelines for Multinational Corporations. The Global Compact aims to engage a variety of multi-stakeholders among both the private and public sector players, whereby companies are mandated to release annual communications on progress to promote universal social and environmental principles.
Over the past few weeks I have been reviewing the sustainability of some multinational companies, to assess their intentions of abiding by climate change and environmental social governance commitments. In this article, as in previous ones, focus is on Newmont Corporation – which is one of the biggest players in the mining sector of Ghana. In fact, Newmont is the biggest mining company in the world; and their sustainability plans in Australia, Canada, Mexico, Argentina and Dominican Republic have significant implications for us in Ghana. How is Newmont’s CSR and ESG reflected or replicated in Ghana?
Environmental stewardship
Environmental responsibility is now more critical in promoting not only corporate responsibility, but also corporate accountability; how a company manages it waste, its energy efficiency, promotion of biodiversity, sustainability indicators, carbon emissions have become yardsticks to measure the wealth and health of a successful business. Furthermore, social accountability entails health and safety at workplaces and community development. In its 2022 Sustainability Report, Newmont reported its commitment to avoid, minimise, mitigate and offset its impacts on the environment and proactively manage risks. Newmont says it uses science-based methodologies and best practices to promote environmental stewardship, including independent verification.
According to the report, Newmont adheres to and updates environmental standards that are protective of both human health and the environment at the facilities it explores, builds, operates and closes after business. The corporation further reports efforts at integrating environmental risk management into project development, business planning, mine operations and closure, and actively engaging supply chain and value chain partners to achieve improved environmental outcomes. The most critical issues include management of hazardous materials – to eliminate waste and protect human health and the environment during transportation, storage, use, recycling and disposal.
Climate transitions
In the previous reports, I highlighted the global movement to promote climate change and environmental social governance (ESG) and sustainability. Climate change has thus become non-negotiable for businesses, especially those in the high impact industries – with Newmont as a case study. Newmont views the mining sector as having a key role to play in the transition to a low-carbon economy, as well as supporting sustainable development. Transition requires investments in the implementation of new technologies and processes, including electrification of its Borden Mine in Canada; automated haulage system technology at the Boddington Mine in Australia; fuel-switching projects at its Tanami Mine in Australia; and piloting solar projects at our Akyem Mine in Ghana.
According to its current Sustainability Report, Newmont claims it supports Paris Agreement outcomes and the long-term goal to limit average temperature rise to well below 2oC and explore, develop and implement renewable energy and low-carbon fuel-switching opportunities. The company reports that it maintains and implements a Global Energy and Climate Strategy to ensure proactive and long-term management of physical risks related to climate change and the transition to a low carbon future.
Mercury
Newmont reports that it does not use mercury to mine or extract gold. The inhalation of mercury vapour can produce harmful effects on the nervous, digestive and immune systems, lungs and kidneys, and may be fatal. The Minamata Convention mandates companies to prevent the release of mercury into the environment. For this reason, mercury should be permanently retired from circulation, not sold or given away.
Permanent retirement means legal disposal using environmentally safe practices or placement in long-term, safe storage as defined in the US Mercury Export Ban Act. Above all, Newmont underscores its commitment in supporting global initiatives to eliminate use of mercury in the artisanal and small-scale gold mining sector, and work with locally sponsored artisanal and small-scale gold mining entities to adopt mercury-free mining practices. However, the continuous use of mercury by the artisanal and small-scale gold mining sector gives cause for concern and calls for state agencies with oversight responsibilities to be proactive.
Cyanide
Related to mercury is cyanide, another chemical the mining sector has been grappling with. The chemical is used to refine gold, but its application has become an environmental hazard. Ideally, companies and small-scale gold operators are required to obtain certification before using it. According to Newmont, it is abiding by the International Cyanide Management Code; thereby demonstrating its commitment to safely and responsibly managing cyanide. The Code is comprised of nine principles intended to improve the lifecycle management of cyanide, reduce exposure of workers and surrounding communities from harmful levels of cyanide, minimise impacts to the environment, and enhance response actions to cyanide-releases.
Water as a human right
The most critical issue in the mining sector is water resource management. In the wake of illegal mining, water-pollution has become one of Ghana’s development and economic challenges. In the past, multinational mining companies were responsible for polluting water-bodies with cyanide spillage. But illegal mining has become the biggest threat to our water-bodies and environmental sustainability. In its 2022 Sustainability Report, Newmont recognises access to water as a human right and proactively engage with stakeholders to preserve Ghana’s water resources.
It also reports its support for partnership with key stakeholders to implement sustainable solutions in watersheds in communities it operates. “We maintain and implement a Global Water Strategy to ensure proactive and long-term management of water-related challenges; including access to supply, management of extreme climatic events, collaborating on evolving regulations, and balancing mine water-use with agricultural, industrial, municipal, social, cultural and ecological water uses,” says Newmont.
The global mining giant underscores it committed to improving a strong governance in water management and efficiency, through active engagement with stakeholders. “We are committed to ensuring access to clean water, sanitation and hygiene (WASH) for all employees in the workplace, and collaborating with government through capital and expertise to improve community WASH and other water initiatives where we operate.”
Stakeholder engagement
Stakeholder engagement has become the viable formula for companies to gain the social licence to operate in communities. Newmont reported its constructive engagement with communities and relevant stakeholders within its area of influence across the world. In Ghana, Newmont operates in Ahafo Kenyasi Mine and Akyem in the Birim North district of the Eastern Region. The extent of Newmont’s community engagement has been a bone of contention between the company and the communities; however, the company’s presence in the communities has created several economic opportunities for youth.
Mr. Thomas Williams Jefferson Cook Dankwah, Executive Director of Hanssen Global UK and Ghana Ltd., is one of the advocates pushing for an enhanced stakeholder relationship between Newmont and its host communities in Ghana, to promote a mutually beneficial relationship. Due to the poverty levels of Newmont’s communities in Ghana, its focus should be on local economic development; such as sharing knowledge, building capacity, and contributing to meaningful partnerships and collaborations for long-term peace and stability.
According to Newmont, it supports a transparent governance approach to sustainability and stakeholder engagement. This is delivered through:
- Systematic analysis and management of risk and opportunities,
- Building trusted relationships with collaborating partners and other stakeholders,
- Promoting science and evidence-based evaluations and;
- Enhancing multi-stakeholder capacity to address shared challenges and opportunities.
Human rights
It is refreshing that Newmont has reported its commitment to respect the dignity, well-being and human rights of employees and the communities in which it operates. Human rights violation has been among the key issues of Ghana’s mining communities since mining began in the 1880s, with the heavy security at mining sites to protect company assets and properties. Community agitations are often based on economic and social neglect when community people wallow in abject poverty.
Hence, the controversial view of Milton Friedman that businesses must focus on making profit for their investors has been challenged by emphasis on the stakeholder theory. This calls for community engagement, visioning and focus group discussions to agree on what communities need. Thus, social awareness in business demands a commitment to being economically, socially and environmentally sustainable.
Newmont declares that: “We commit to implementing the OECD Guidelines for multi-national enterprises and the United Nations’ Guiding Principles on Business and Human Rights. We are committed to respecting internationally recognised human rights as defined by the United Nations Universal Declaration of Human Rights, and we expect our employees and business partners to respect those rights”.
Of particular interest is the company’s report that it is committed to understanding and respecting the cultural heritage, rights and norms of local communities. “We will work in cooperation with Indigenous Peoples to manage cultural resources that fall within the area of our operations’ influence on an ongoing basis.” At the least, Newmont appears to be integrating good corporate citizenship into its organisational culture, but it is unclear whether its CSR and environmental social governance interventions apply across the board, say in Canada and Australia, as in Ghana.
