Anglo American: community engagement in a high impact industry

July 01, 2005

Ensuring good relationships with the community in high impact industries can sometimes be fraught with difficulty. Oliver Wagg explores how the world’s second largest mining group is using an innovative ‘socio-economic toolbox’, to overcome the challenges.

Anglo American, the world’s second largest mining company, has a long tradition of corporate responsibility. As company founder Sir Ernest Oppenheimer said fifty years ago: “The aim of this group is, and will remain, to make profits for shareholders, but to do it in such a way as to make a real and lasting contribution to the communities in which we operate”.

This ethos lives on in the present day. “Our business success brings with it obligations of good stewardship and ethical behaviour,” Anglo’s chairman Sir Mark Moody-Stuart writes in the company’s statement of Good Citizenships Principles. “Our operations will perform better when the communities surrounding them are stable and prosperous.”

To increase the company’s understanding of the needs and priorities of local communities and to improve the developmental impact of its work, the company has developed its own Socio-Economic Assessment Toolbox (SEAT). Yet as we shall see, adding value in volatile and difficult regions such as those in southern and eastern Africa, is not without challenges.

COMPANY BACKGROUND

Anglo American was formed in May 1999 through the combination of Anglo American Corporation of South Africa and Luxembourg-based Minorco. Anglo American Corporation was founded in 1917 by Oppenheimer to exploit the gold mining potential of the East Rand.

Today, London-listed Anglo American has six directly managed divisions: Anglo Platinum, Anglo Base Metals, Anglo Coal, Anglo Ferrous Metals, Anglo Industrial Minerals that includes Tarmac, and Anglo Paper and Packaging, largely trading under the Mondi name. The company’s gold and diamond interests are represented by independently managed entities, the 51%-owned AngloGold Ashanti and the 45%-owned De Beers (which is managed by the Oppenheimer family).

Anglo’s units extend across 60 countries with a workforce numbering 209,000, excluding joint ventures.

MANAGING CR

Anglo American does not have a department entirely devoted to CSR; a structure that reflects the vast geographical and operational diversity of the company.

“We have lots of different geographies, lots of different sectors and lots of different models for looking at sustainable development and community investment activities,” Edward Bickham, head of external affairs and social and community development, tells Briefing in an interview.

Reflecting the diverse nature of the company, there is no single budget dedicated to CR activities, except what Bickham has at his disposal to develop such programmes as the company’s Good Citizenship Principles, the Socio-Economic Assessment Toolbox (SEAT) and other related programmes. Budgets are allocated to operations around the world for them to develop their own initiatives.

In addition to Anglo’s South African charitable Foundation, the Anglo American Chairman’s Fund, which is managed at arm’s length, the company has two people in the public affairs team who have a close involvement in CSR. In London, Anglo also has a manager who has direct responsibility for the UK donations programme.

At divisional level, corporate responsibility is resourced differently according to the specific geographical and policy priorities of each business unit. For example, Anglo Platinum has a specialist unit dedicated to social and economic development.

Bickham’s remit extends across stakeholder engagement, corporate reputation and ethics, social development, macroeconomic and development issues and community investment. He is chair of a cross-divisional steering group on social and community development issues, which brings together the relevant divisional managers with a social focus.

At site level, the delivery of business principles or social and community development programmes is generally carried out through either the human resources or safety, health and environment line management streams.

Bickham is personally accountable to the chairman and the chief executive for the implementation of the company’s business principles. In relation to his responsibility for communication strategy, stakeholder relations and public policy, Bickham reports to the finance director. Finally for Bickham’s responsibilities relating to the social and community agenda, he has a “dotted line” report, for co-ordination purposes, to the head of sustainable development.

GOOD CITIZENSHIP PRINCIPLES

Anglo American approaches CR through its Good Citizenship’ Principles, which set out the company’s view on the rights and responsibilities of international companies, covering issues of business integrity, obligations to stakeholders, human and labour rights and safety, health and environmental issues.

Since the company has operations in over 60 countries, it believes in applying universality while respecting the different priorities and levels of economic development in each country. The Good Citizenship Principles are a guide to Anglo’s employees and a benchmark for external stakeholders – mainly investors, governments, business partners and the communities that are associated with its operations.

SOCIO-ECONOMIC ASSESSMENT AND ENGAGEMENT

Each of the company’s significant managed operations (138) is required to have in place a three-year, annually reviewed community engagement programme. This should contain details of stakeholders and how they are to be engaged as well as objectives, management plans and success criteria.

Anglo believes that it is crucial to extend engagement beyond those stakeholders who are directly involved in its business. SEAT, developed, with consultancy support, through pilot studies and peer review in 2002-2003, enables managers to do this in a structured way.

“One of the main thrusts of what we are trying to do in SEAT is to ensure that our operations are not only relying on formal local government structures, or they’re not primarily relying on people who say things that are congenial,” Bickham explains.

In addition, Anglo has developed and implemented new tools that are about how to carry out structured engagement with people who may not be willing or able to push themselves forward.

For instance, the company needs to take two approaches to listening to employees, since they are often members of the community where Anglo’s plant or mine is operating: “Employees are likely to take a position that is sympathetic to the operation. What about the other people out there? There maybe those that shout loud and protest, they may or may not be representative of wider opinion. So how do you understand the hinterland beyond those in the front row to ensure you understand all the perspectives?” Bickham asks. “Moreover, in developing countries the starting point for making a contribution to sustainable development is a real understanding of the needs, priorities and concerns of local people.”

Supported by an international training effort, SEAT is sent out to managers in the form of a 136-page manual detailing four stages and eight associated steps towards conducting an assessment. Managers can also access the support of academics or local consultants within the prescribed framework.

Use of the SEAT by operating units is not mandated by central management, but has been used by some business units as key performance indicators of their sustainable development programmes. So far, 20 assessments have been completed around in 10 countries.

ENGAGING WITH NGOS

Anglo American encourages managers to “actively” engage with NGOs, pressure groups and campaigners, Bickham says. Indeed, a partnership approach is essential when addressing issues such as HIV/AIDS, although Bickham is quick to acknowledge the danger of placing a sole reliance on what he describes as “first world” NGO engagement. “I think there’s a danger that as a country with its headquarters in a developed country – where the international NGO’s are headquartered – that we allow the agenda to be driven by a ‘first world’ perspective. Sometimes, of course, they do have real grassroots input to offer… but there can be danger that grassroots start being driven by the international NGO, rather than the other way around,” he says.

On the other hand, we have some very constructive relationships with some NGOs,” he says, pointing to the international Extractive Industries Transparency Initiative and some of the pioneering work Anglo is doing, especially in southern Africa, on HIV and AIDS.

TACKLING HIV/AIDS

Anglo American has recently won international praise for its approach to HIV/AIDS, an epidemic that has massive implications for both its workforce and the communities where the company does business in southern and eastern Africa. In its Report to Society 2004, Anglo demonstrates its programmes have clear benefits to both the economy and society.

According to the a three-year study by one of its subsidiaries Arum Health Research, Anglo saw falls of 25-40% in absenteeism among its workers on its antiretroviral therapy (ART) programme. Furthermore, the cost of providing treatment fell to 1,365 rand (£117) per patient per month in 2004, largely due to falling ART costs and economies of scale.

But Bickham concedes there is still a lot of work to be done, with over 25% of Anglo’s workforce in southern Africa still infected with HIV.

DEALING WITH CONFLICT

The nature of the sector Anglo American operates in means it is often working in extremely volatile territory, as a recent report from New York-based Human Rights Watch (http://www.hrw.org) demonstrated.

HRW’s The Curse of Gold, released at the beginning of June, alleged that AngloGold Ashanti became, in the absence of an effective central government presence, sucked into a relationship with the Nationalist Integrationist Front – an embargoed militia known as the FNI – in the Democratic Republic of Congo. Although AngloGold said it does not yield to militia extortion and said this was against its principles, the company acknowledged that two sets of unauthorised payments (amounting to $9,000) were made to the FNI.

“Ultimately one has to take judgments with which people may not always agree. In DRC they had to take a judgment whether or not they could operate as an exploration team ethically in line with the AngloGold business principles. The Congolese government wanted them there because if transition is going to work people they need development and investment,” Bickham says.

Bickham admits there is no simple solution. “Once you’re there and embedded in society, things become more complicated,” he says, giving the example of Zimbabwe where there are clear human rights concerns. “Withdrawal from Zimbabwe wouldn’t have helped the communities where we have been working for seventy odd years. It wouldn’t have made our 7,000 employees’ lives one iota better,” Bickham says.

THE CHALLENGES AHEAD

“There’s a lot more to do, if we’re going to make a decent contribution to sustainable development in the areas where we work ” Bickham remarks.

While the industry’s agenda on social and environmental impacts has progressed in leaps and bounds since the early 1990s, particularly through international initiatives such as the International Council on Mining and Metals, Anglo’s head of external affairs sees a number of challenges ahead.

Bickham complains of a growing tendency to blame multinational companies for a gamut of socio-economic problems. “The rest of society has to understand that we can’t be held responsible for everything that goes wrong in the countries we operate in. Too often there’s a neglect in this debate about the role of government.”

However Bickham dismisses the argument, recently voiced by The Economist in its recent CSR Survey, that ‘the business of business is business’.

“There are some places where, yes, that’s a good argument to make. But there are lots of places where resources companies operate – and we have to be long-tem investors – that don’t have a fully functioning society,” he argues.” There may be problems with capacity, there may be problem with corruption, and there may just be problems with grinding poverty. And if you want to be acceptable in those countries we need think about what is the extent and appropriateness of our role there. That’s not a simple question.”

Corporate Citizenship Briefing, issue no: 82 – July, 2005

Edward Bickham joined Anglo American as Executive Vice President, External Affairs, in April 2000. He has responsibility for stakeholder relations, the social and ethical dimension of sustainable development, political risk, public policy issues, development of a Group Information Portal and overall communications strategy. Prior to joining Anglo he was Deputy Chairman and Director of Strategy (Dec 1998-April 2000) and Managing Director, Corporate and Public Affairs (1993-2000) at Hill and Knowlton.