e3 Plus: A Framework for Responsible Exploration

CSR, Mineral Exploration and the Challenge of Accountability

Bernarda Elizalde, Program Director Sustainable Development

Prospectors and Developers Association of Canada● October 27, 2010 ● 4th Annual Risk Mitigation and CSR in Africa and Emerging

Markets ● Toronto

Number of companies in the global mining industryJunior Interm. Senior Govt. Other TOTAL

Canada 1087 21 7 1116

Australia 498 21 4 1 3 527

U.S.A 102 5 3 110

Europe 102 6 8 1 117

Africa 29 5 5 39

Latin America

13 13 4 1 31

Rest of World

10 17 8 5 40

Source: Metals Economics Group, 2007

Projects financed in Canada

5093

1228

583150

1056

310

688

81

314

125

359

Of the 9987 mineral projects held by TSX and TSX-V companies, 49% are outside of Canada

Source: InfoMine, Compiled by TSX, January 2008

CSR performance of industry sectors

Source: Globescan 2009

CSR performance of industry sectors over time

Source: Globescan 2009

CSR context and realities

Evolving Expectations

On the ground: Dependent on local circumstances – Context specific

Confusion between Philanthropy and CSR

Pressure from Civil society, media, and other stakeholders

No common definition for CSR

SME’s “hand made” CSR strategies

Environmental SocialHuman Rights and ethical practice

CSR Research by PDAC

1. Mining Exploration, Corporate Social Responsibility and Human Rights: Untangling the Facts, Seeking Solutions

(Odell Research and Consulting 2006)

2. Corporate Social Responsibility: Movements and Footprints of Canadian Mining and Exploration Firms in the Developing World (Canadian Centre for the Study of Resource Conflict, 2009)

3. IFC Compliance Advisory Ombudsman (2008-09 Annual Report)

Corporate Social Responsibility

The Business Case

CSR study: Movements and Footprints of Canadian Mining and

Exploration Firms in the Developing World - (Oct 2009)

171 alleged violations by mining companies around the world since 1999 • 33% involved Canadian companies

• 56 alleged violations ⁄10 years = 6 per year---------------------------------------------------------------------- 110 complaints processed by IFC/CAO since 2000

• 8 complaints involved 4 mining companies, including 1 Canadian and 1 partly Canadian-owned company

What kind of alleged incidents are these?

A Framework for Responsible Exploration

INFORMATION

ACCOUNTABILITY

e3 Plus Reporting System

• The PDAC and GRI agreed that we would need to: – Create a model report for each exploration stage (early, intermediate,

and advanced exploration)– Ask exploration companies to apply some sections of the already

developed GRI system, such as the materiality test and some applicable indicators.

• The GRI-e3 Plus reporting system would also:– Be applicable if a certification system is set in place. – Create software that would put together a more practical, user-friendly

reporting system.– Be applicable to finance institutions– Create different platforms for explorers to indicate their level of

compliance within the reporting system. Thus, they would not limit themselves to filling out a form, but they would have the motivation to report more things if they want to.

Opportunities for Improvements

GOVERNMENT (mandatory)

Host country governance capacity-building

Access to capital – strengthening requirements in securities

regulations – materiality - disclosure

INDUSTRY (voluntary - mandatory)

Due diligence & risk assessment

Community engagement

GOVERNMENT – INDUSTRY (voluntary – mandatory)

1. Performance objectives

2. Reporting requirements

3. Ombudsman function

4. Verification

CSR – what next?

• From add-on to built-in CSR: Integrating social and environmental considerations into strategy and operations instead of developing CSR initiatives unrelated to the core business

• From value protection to value creation: Exploring CSR as a driver of innovation and competitive advantage instead of focusing only on risk and reputational management

• From reactive to proactive stakeholder engagement: Involving stakeholders throughout the process instead of reactively responding to stakeholder concerns.

Prospectors and Developers Association of Canada

Bernarda Elizalde, MSc.Program Director, Sustainable Development

416 362 1969 ext 289