Sustainability in the Resource Industries - a discussion series

Hello, dear readers, and thank you for checking this out. Over the next few weeks I will be laying out some thoughts on the application of sustainability thinking in the resource industry. These are my thoughts, and there is no allegiance to any specific company, system, or standard endorsed through the series. I hope to give you some things to think about and suggest some possible approaches. If you have questions about what is posted, or ideas for future columns, please feel free to contact me directly. Of course, public comments are also welcome, but I don’t promise to respond to them all. 

I don’t pretend that anything in these columns is ground-breaking, but I hope it ties together some disparate threads from the wide area that is encompassed in modern sustainability practices. This is not primarily intended for experts in the area; such experts likely won’t find much new here, although they may find some things that they want to think about and debate further, and as a believer in creative conflict I am alw,ays interested in a good debate.  But if you are curious, not intimately involved with the expanding area of sustainability, wondering where we might be going from here, questioning your own role as a member of our society, or wondering how your company can improve both what it does and how it’s viewed, I hope you might find some nuggets in here.

There are typically 4 main areas considered in sustainability: environmental matters, social matters (relating to the public), employee matters (relating to the workers), and governance matters (relating to how the company makes decisions and compensates the executive for their performance). We used to talk about this as ESG (environmental, social, and governance). I have always considered true sustainability to include a 5th component – fiscal sustainability. Ultimately in our market economies, companies need to make money to continue operating and providing benefits to investors, employees, and communities. And individuals are only empowered to make sustainability choices to the extent of their available resources, including money, time, and others.

In this series, I choose to look primarily at environmental, social, and employee matters as these are finally controlled at a site level, although the tone and approach from the highest levels of the company are important, and availability of resources is critical. I choose to leave governance out - as important as it is, governance is really directed and controlled from the corporate and board level. Of the remaining factors, which is most important? That is a stakeholder view issue - different stakeholders will differ on the relative importance. 

However, related to the governance issues in our companies and society, I will declare some basic positions and philosophies that I believe are important to consider as we look to build/maintain a functioning society. For transparency, I lean more towards the Nordic than the American model. 

Environmental matters are fairly straightforward in content: impacts are related to inputs (energy, chemicals, etc), outputs (products, byproducts, wastes to land, water, and air), and footprint (land clearing, waste deposition, sensitive or endangered species, etc). All of these impacts are generally considered as negative, but some level of negative impact is to be expected as a byproduct of the value generation process of the resource industries. Life cycle impact analysis can quantify the overall impact of many of these categories, including direct impacts and indirect impacts such as the production and shipping of inputs and shipping of outputs to customers. This same analysis can show very interesting comparisons between companies competing in the same industry, whether due to different processes or different resources.

On the social side, we have both positive and negative impacts. Employment is provided, often with substantial training and skills generation for local workers which can add benefits to future generations. Supply chain needs of modern industries can often create a second value stream of contractors and suppliers in the local and regional community. Taxes and royalties are paid which, if properly used by the host governments, can provide substantial benefits to local, regional, and national populations. However, there are often negative social impacts as well. Some of these can be managed to a neutral or net positive, such as potential displacement of people from the facility area. Others are unequivocally negative. For these purposes, I include health and safety as it relates to the public under social matters; the public is not generally exposed to the same workplace hazards as workers, but can be affected by a company’s activities. Ample evidence exists of various forms of pollution causing acute and chronic disease, and of significant incidents causing widespread impacts including death. These are usually related to accidental release of materials (for example tailings from a dam failure, or manufactured chemicals from equipment failures or human error).

Employee matters are also usually relatively straightforward and generally center around human rights, labour conditions, health and safety, workforce diversity, and opportunity and compensation. Perhaps these all devolve back to a broad view of human rights. 

Lastly, I will speak to some of the burgeoning issues around the attempts by companies and society to improve transparency and behaviour through reporting, management, and compliance systems. So buckle up and stay tuned, I will try to put out two columns a week for the next month. I appreciate feedback, whether direct or public.

Next issue, Part 2 – Making Useful Comparisons