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Tydskrif vir Geesteswetenskappe

Print version ISSN 0041-4751

Abstract

VIVIERS, S  and  BOUDLER, J-M. Sustainability reporting in the mining sector: identifying critical issues. Tydskr. geesteswet. [online]. 2010, vol.50, n.1, pp. 66-86. ISSN 0041-4751.

This study investigates trends with regard to sustainability reporting by five prominent mining companies listed on the JSE. The 2005 to 2008 annual and sustainability reports of these companies were analysed by means of content analysis. Keywords relating to economic empowerment, HIV/AIDS, other health and safety issues, environmental impact as well as training and education were counted. These issues were also categorised in terms of Carroll's (1979; 1991) corporate social responsibility (CSR) pyramid, which consists of economic, legal, ethical and philanthropic responsibilities. Although the total number of pages dedicated to CSR issues increased in four of the sample companies over the period 2005 to 2008, the keywords-per-page-ratio has decreased or remained constant for all of them. In 2008 Anglo Platinum had the highest keywords-per-page-ratio (1.03) followed by AngloGold Ashanti (1.01), Harmony Gold Mining Company (0.88), Gold Fields (0.86) and DRDGold (0.53). DRDGold's low keywords-per-page-ratio could be a result of its comparatively smaller size and its non-compliance with the GRI's Sustainability Reporting Guidelines. The most important CSR issues reported on by mining companies in all four years were that of HIV/AIDS as well as other health and safety issues. The fact that these CSR issues ranked first and second respectively can be attributed to the direct costs they inflict on the mining companies' profi ts. This finding makes intuitive sense as companies need to take care of those CSR issues that impact on their bottom line before they can redistribute earnings to meet other ethical and philanthropic responsibilities. Given the adverse impact that mining companies have on the natural environment it is not surprising to note the relatively low importance given to these issues in the companies' annual and sustainability reports. And it certainly is not a case of "no news is good news". It is also worrying that CSR issues relating to training and education have such a low overall priority as one would expect that trained employees would be more productive and hence have a positive impact on profitability. It is, however, encouraging that CSR issues relating to training and education have received more attention in the companies' annual and sustainability reports in the course of the evaluation period. The increased reporting on economic empowerment issues could be indicative of the fact that mining companies are starting to go beyond the letter of the law by better communicating their efforts in this regard to their stakeholders. DRDGold had the highest percentage of CSR keywords reported on in four of the six CSR categories in 2005 and in two of six categories in 2006, 2007 and 2008. Closer inspection, however, reveals that its CSR reporting is not balanced as close to 80 percent of its CSR reporting focuses on HIV/AIDS and other health and safety issues. DRDGold is the smallest mining company in the sample and does not subscribe to the GRI Sustainability Reporting Guidelines. It does not publish a separate sustainability report and had the lowest overall CSR keyword-per-page ratio. This finding points to the fact that stakeholders need to look beyond the glossy pages of companies' sustainability reports when evaluating CSR performance. It also confirms that sustainability reports are often written to portray companies in the best possible light, especially when it comes to promoting their CSR initiatives. In this case "more information" does not necessarily translate into "better information". The local mining sector cannot ignore the importance of CSR issues as doing so might risk them becoming ostracised by stakeholders. In recent years institutional investors across the globe and in South Africa have become more critical in terms of their portfolio selection criteria and ownership policies. More investors are considering environmental, social and corporate governance issues as they are recognising the adverse impact that these risk factors can have on the future profitability if left unmanaged by investee companies. Four out of the fi ve mining companies evaluated in this study were constituents of the FTSE/JSE Socially Responsible Investment (SRI) index in 2008. DRDGold was the only company not to feature in the index. Although participation in the index is voluntary, it does, however, show that a company is committed to improving its CSR standing. Participation in the index is thus strongly recommended. As in the case of investors, consumers and consumer groups across the globe are also becoming more concerned about CSR issues. By including local communities into mining activities, mining companies can contribute towards the well-being of the communities by means of training, education and employment. Due to their size, mining companies are increasingly expected to make positive contributions to society. From the results of this study, it seems as if CSR issues that impact on the economic performance of a company (the foundation of Carroll's CSR pyramid) are given top priority with those that have a lesser economic impact following thereafter. This results in CSR issues such as HIV/AIDS as well as other health and safety issues being the main focus, whereas issues relating to economic empowerment hardly feature in the reports. Despite being emphasised (to the extent of ranking second in issues attended to) in annual and sustainability reports, health issues other than HIV/AIDS (such as silicosis, tuberculosis and noise-induced hearing loss) and safety issues (such as work-related fatalities) are sorely in need of proper attention. This should not be done merely to reach the deadlines set at the Mine Health and Safety Council Summit, but should also feature as an expression of these companies' commitment to good corporate citizenship. So far not enough has been achieved to reach these deadlines as many rock falls continue to be regularly reported by the media. It is recommended that mining companies take a more balanced view of the various CSR categories regardless of the specific category's impact on profitability. Mining companies should specifically increase their efforts (and focus of reporting) on broad based black economic empowerment (BBBEE), training and education and work-related fatalities. This might prove costly at first, but might prove profitable once considerable investments have been made in these areas. It will also improve their standing with internal and external stakeholders who value companies meeting their ethical and philanthropic responsibilities.

Keywords : Corporate social responsibility; Content analysis; Economic empowerment; Economic responsibilities; Education and training; Environmental impact; Ethical responsibilities; Health and safety; HIV/AIDS; Legal responsibilities; Mining sector; Philanthropic responsibilities; Sustainability reporting.

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