The mineral exploration and mining sector faces a host of societal challenges that affect the company’s bottom line. Capturing the voices and concerns of project-affected communities can help to ensure a local community’s acceptance or approval of a company’s project or ongoing presence in an area, and may prevent possible stoppages of operations. If companies develop project-level grievance mechanisms to meet the unique needs and concerns that arise from their community of interest, they will be better positioned to respond to potential material risks affecting company operations.
Grievance mechanisms
In the context of the extractives industry, a grievance is an issue raised that has ascended to a degree of concern due to the interaction between a mining company and its community of interest. A grievance that is formally registered with the company may stem from a source of significant concern – for example, access to land, land acquisition, resettlement or noise pollution. The formal method of accepting, investigating and responding to community issues and concerns is called a project-level grievance mechanism (GM).
Typically, the concerns of a community of interest relate to various impacts to property and quality of life, livelihoods, human rights, the environment, land access and water quality. A grievance can result from either real or perceived impacts from a company’s operations, and can range from minor issues to more serious or deeply embedded ones.
Grievances that are not documented and responded to in a measurable way can result in considerable resentment and opposition toward a mining company. By what means, if at all, a company chooses to respond to the complaint raised by a community of interest will demonstrate to the community the degree to which the company takes an issue seriously. A well-considered company response will send a message to a community that may have a lasting impression on their relationship.
Depending on how a project impacts its local communities, grievances will vary by project stage and size. To a somewhat lesser extent, they will also depend on the type of commodity and, therefore, the nature of the operation. In many cases, grievances will be minimal at the preconstruction stage, peak during construction, be comparatively moderate during operation, and rise again during downsizing or mine closure. Typically, during the construction stage the scale of impact is elevated and the expectations of economic benefits are on the rise. Similarly, mine closure and downsizing will raise concerns about the community’s future options for economic prosperity.
Yet some types of grievances are more common and should be anticipated at all times, such as access to natural resources, access to project benefits (such as jobs) or flaws in the consultation process. Other grievances occur with specific project circumstances and therefore require a customized response, especially in the case of larger, more complex operations. These grievances can arise from the influx and in-migration of workers, the development of access roads and an increase in heavy traffic pollution, or human rights concerns over security forces.
Project-level GMs are not appropriate tools when there may have been an infringement of law. GMs are designed to address the concerns of the community of interest and are distinct from other mechanisms, such as employee/labour GMs and ethics whistleblower processes.
The importance of project-level GMs
In addition to proactively engaging stakeholders, it is also important to provide communities with opportunities to voice their concerns and grievances. Providing this space for communities will not only allow for exploration companies to monitor and evaluate whether their engagement activities are making a difference, but also prevent complaints from escalating into issues that pose serious risks to their operations.
Properly designed and implemented grievance management processes can benefit both the company and the community by resolving minor disputes quickly, inexpensively and fairly – with solutions that reasonably satisfy both sides. Project-level GMs can also help identify and resolve issues before they are elevated to levels of formal dispute resolution such as tribunals or courts.
For companies as well as communities, escalating a conflict to a court or other formal tribunal can be lengthy and costly, and may not necessarily deliver satisfactory results for either party. For companies, the negative publicity can cause even greater damage. By creating a project-level structure, the company can address the source of the problem more efficiently by offering tailored solutions that can cater to local needs and incorporate provisions to accommodate different groups within communities – especially disadvantaged populations such as women, minorities and marginalized groups.
A project-level GM also gives the mining company access to important community intelligence, which can assist in identifying and correcting weaknesses in management systems or production processes.
Best practices for feedback mechanisms
Best practices for project-level GMs include transparency, anonymity, timely feedback and clear documentation. Transparency, anonymity and timely feedback help to build trust between the company and the affected party. Consistently documenting the complaints received will provide the means to track changes, trends and patterns.
In addition, effective feedback mechanisms must be accessible (language, literacy and cultural factors do not present a significant impediment), consistent (similar complaints receive similar remedies) and made readily available to the public.
Mechanisms should also have multiple channels for community members to voice their concerns (for instance, meetings, a contact person or ombudsperson, or an address or website for written submissions); a system for documentation; a process for acknowledging that a grievance was filed; a direct reporting line that allows senior managers to be kept informed of issues that may pose a risk to the company’s project; and a process for obtaining third-party expertise when voluntary agreement or resolution is not achieved.
According to the International Finance Corporation’s Good Practice Note: Addressing Grievances from Project-Affected Communities, project-level GMs should be built on five principles:
- Proportionality: GMs should be scaled to risk and the adverse impact on affected communities.
- Cultural appropriateness: GMs should be designed to take into account culturally appropriate ways of handling community concerns.
- Accessibility: GMs should be clear and understandable, and available to all segments of the affected communities at no cost.
- Transparency and accountability to all stakeholders: GMs should be clear and provide a way for the community to hold the company accountable.
- Appropriate protection: GMs should prevent retribution and should not impede access to other remedies.
Continual analysis of community concerns and complaints will help adjust a GM’s design, if necessary. Projects should periodically review the adequacy of the grievance process, with the participation of communities, and agree on modifications. GMs should also provide stakeholders with an expected time frame for resolution when they file a complaint.
Undoubtedly, most project-level GMs will receive complaints that are inconvenient, inaccurate or falsified. Yet receiving such fraudulent claims does not preclude the fact that there exist serious issues within a company’s community of interest. A primary tenet of a well structured GM is that it must be able to distinguish between valid and invalid claims. A sector-wide analysis by the Centre for Social Responsibility in Mining at the University of Queensland found that having those who submit grievances commit to an entire claims process significantly reduces the number of superfluous and false claims made against mining companies.
The business case for project-level GMs
Recognizing and dealing with affected communities’ issues early on can benefit the company by reducing operational and reputational risks that may result from leaving such issues unresolved. These risks can have a significant and direct business impact. Protests, road and bridge blockages, violence, suspension of operations and plant closures are just a few examples of how the unsatisfactory handling of community concerns can directly affect a business’s bottom line.
According to the Mining Association of Canada’s Site-Level Grievance and Community Response Mechanisms Guide, project-level GMs deliver business value in the following ways:
- Project-level GMs serve as an early warning system, allowing the company to identify, investigate and respond to community concerns in a timely fashion before they have the potential to escalate and become material.
- The design and implementation of project-level GMs convey a powerful commitment and demonstration to the host communities and other stakeholders that the company is a good neighbour and is interested in hearing about and responding to concerns.
- When companies involve local community members in the design and ongoing improvement of GMs, along with a whole series of similar initiatives, companies take the steps necessary to, over time, build trust-based relationships with their communities of interest.
- By incorporating evolving international best practices on human rights, GMs are essential tools to demonstrate a company’s respect for human rights.
- Project-level GMs can avoid the unnecessary escalation of project-level community concerns to other non-judicial or judicial mechanisms.
- GMs can help avoid or mitigate negative publicity, non-governmental organization mobilization, government intervention and even shareholder activism by channelling grievances through a structured process.
Conclusion
Providing an ongoing, well-respected channel of communication for a community’s concerns will serve as a tool for building local trust through a common understanding on matters affecting all parties. This trust will go a long way toward strengthening stakeholder support for projects.
There may be many factors that will make it difficult to launch a project-level GM for the first time. These include challenges articulating the business case internally to senior management and concerns regarding the potential for unleashing a hornets’ nest of complaints that may lack legitimacy if such a system is implemented. However, communities are growing larger, closer to operations and more sophisticated in their ability to organize. Establishing an instrument for collecting community-of-interest concerns will keep companies engaged, informed and better positioned to respond to the needs of their communities.