Leading companies in the mining industry understand the benefits of developing strong stakeholder engagement strategies. Whether it’s a requirement for generating greater financial returns, a need to manage risks related to potential conflict in relationships, a duty to consult, or as part of a framework for developing a good public reputation, mining processes can affect a wide variety of stakeholders.
This case study attests to the value and benefits of stakeholder engagement in mining, demonstrating that increasing stakeholder support enhances the financial valuation of a company.
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A strategic stakeholder engagement and communications management process allows companies to view and control current and emerging social and environmental risks on a variety of levels. In some cases, it may even lead to the development of new and improved products and systems that build greater competitiveness.
Even more significant is that well-organized stakeholder engagement data gives companies information about the evolving expectations of the stakeholder groups who can impact the future of organizations.
Forces driving stakeholder engagement in the mining sector
1/ Government and financial regulations
- Regulations from both government and financial institutions have increased as they respond to stakeholder concerns for social and environmental causes. It is in the best interest of resource companies to prepare by engaging stakeholders early and establishing robust systems and tools to manage stakeholder communication to stay ahead of the curve.
- Increasingly the extractive industry may find that the financial community will also enforce stakeholder engagement principles on prospective borrowers.
2/ Reputation management
- Proper community engagement will help set a company apart and make it more successful in the long-term.
- The benefits are numerous: obtaining the social support necessary to conduct a project; increasing competitive advantage as a good corporate citizen; attracting and retaining employees, clients, investors, donors, members; and securing financing based on socially responsible principles,
3/ Better financial performance and risk mitigation
- Investors and other stakeholders often perceive a lack of transparency as a threat not only to environmental and social well-being, but also to the profitability of an investment. This can result in social and political instability in the form of community protests, shareholder activism, and employee uprising due to environmental, social, health, and safety concerns.
- Developing positive and cooperative relationships with stakeholders improves the likelihood that a project can proceed on budget and on time.
Strategically minded companies are realizing the value of adopting systematic, genuine engagement initiatives and thorough communication management practices – making it possible to manage key issues by creating an atmosphere that fosters understanding of stakeholder perceptions and expectations.
This leads to long-term benefits that can outweigh short-term costs, since stakeholder consent is often the most critical issue for a resource project’s long-term viability.