Abstract
Large mining projects can generate highly inequitable outcomes, with affected communities bearing the burden of social and environmental costs while economic benefits accrue largely to domestic and foreign metropolitan centres. This raises important ethical and social justice issues, as does the finite nature of mineral resources, which can mean that current generations enjoy the benefits of mining while future generations bear the costs of environmental and social impacts that can continue long after mining ends. During recent decades two broad approaches, voluntary industry initiatives and government regulation, have been employed in attempts to achieve a more equitable distribution of mining’s positive and negative effects. Both have serious drawbacks. Industry initiatives are ultimately voluntary and may be abandoned in tough economic times; they can be highly variable across companies and projects; and they suffer from serious compliance issues. Public regulation can be inflexible, is subject to industry capture, and in many major mineral producing nations a ‘retreat from regulation’ is reducing its relevance. This article considers whether, and under what conditions, a third and emergent instrument, community development agreements (CDAs), can help overcome the shortcomings associated with industry initiatives and public regulation. It argues that CDAs have considerable potential in this regard, but that communities can encounter significant practical challenges in their negotiation and implementation. In addition, disparities in negotiation power between communities and project developers can result in inequitable agreements, indicating a continued need for government involvement to create a more level ‘negotiation terrain’.
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Notes
In some cases technological advance allows development of resources in physically remote regions, for example natural gas in deep water offshore from the Kimberley Coast of Western Australia. In others it allows exploitation of ‘unconventional’ resources close to major population centres, for example shale gas in the United States.
A third approach is to allow private markets to determine the allocation of the economic benefits, and the burden of environmental and social costs, associated with extractive industries. While not without its advocates in academia and industry, no government in a major mineral producing state has pursued this approach over an extended period of time. Indeed a number of countries that had moved in its direction in response to ‘guidance’ from the World Bank and the International Monetary Fund have recently retreated from it (see for example Fuentes 2011, pp. 92–99). The unwillingness of states to cede control of mining to the market reflects political pressure to guarantee an economic return to nations from resources seen as part of their birth right, and to respond to the negative environmental and social impacts associated with unconstrained private sector resource extraction (see for instance Horta 2012).
There is a huge literature that addresses the issue of what constitutes ‘corporate social responsibility’ or ‘corporate social performance’, and much debate about how CSR initiatives should be defined and understood and regarding their significance. It is beyond the scope of the article to address these debates in detail. Rather the goal is to identify core characteristics and consequences of corporate initiatives as these relate to community development impacts.
Some CDAs may take the form of Memoranda of Understanding or other non-binding instruments. Particularly in the contemporary periods, most either state explicitly that they are intended to be legally binding, or take a form that clearly indicates that they are contractual in nature and so enforceable in a court. In any case, in this context my argument relates to CDAs that are legally binding.
For example, in Australia there is a requirement under the Commonwealth Native Title Act for applicants for mining leases to seek agreement with Indigenous people who hold or claim inherent rights to land (‘native title’), while under many comprehensive land claim settlements in Canada there is a requirement for ‘Impact and Benefit Agreements’ to be in place before resource projects can proceed. In both cases there is enormous variability in the provisions negotiated across individual agreements.
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O’Faircheallaigh, C. Social Equity and Large Mining Projects: Voluntary Industry Initiatives, Public Regulation and Community Development Agreements. J Bus Ethics 132, 91–103 (2015). https://doi.org/10.1007/s10551-014-2308-3
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DOI: https://doi.org/10.1007/s10551-014-2308-3