Developing a conflict-sensitive business approach Audience A: Awareness-raising session for senior staff

Aims and objectives of this session In this session we’ll explore: What is the issue and why is it relevant to our business? What are the risks? What do we need to do in practice? What is required of management? Aim of this slide: To introduce the objectives and scope of this awareness raising session. Key points: The objective of this session is to provide a high level overview of the nature of conflict, its impact on business, and the key steps required to develop a conflict-sensitive approach to business. The following questions will be answered: What is the issue and why is it relevant to our business? What are the risks? What do we need to do in practice? What is required of management?

Incidents of conflict over time – 2015 Aim of this slide: To present findings which illustrate incidents of conflict over time Key points: In recent years, mining related company–community conflicts have received a great deal of attention by advocacy organizations and traditional and social media, creating the perception that such conflicts are on the increase. In support of this perception, ICMM’s research findings show a progressive increase in the number of reported incidents between 2002 and 2012, and then a small decrease in 2013. Followed by a period of increase in 2014 & 2015. One needs to note that this increase occurred over a period of significant investment in the mining and metals sector, and the research does not reflect whether the reported incidents represent an increase or decrease relative to the numbers of projects and operations. The global financial crisis, and the associated rise in poverty and stakeholder expectations during this period, also comes into play. However irrespective of whether the reported incidents truly reflect an increase in relative or absolute terms, they certainly explain the perception that mining related company-community conflicts are on the increase. Reference for material used: ICMM internal presentation

Causes of conflict - 2015 Aim of this slide: To link the previous slide on “conflict flashpoints” with data gathered on the key causes of conflict Key points: As illustrated in this slide, environmental issues, water and use of force, are amongst the main causes of conflict incidents between companies and communities Interesting to note from a community relations perspective, is that these environmental and water issues were previously separated out from “community relations”, as they were seen as being solely the remit of environmental departments. This graph highlights well the interconnectedness of issues (e.g. how environmental issues impact on company-community relations), and how “community relations” is touched by all aspects of an operation, its context and associated issues. What this means is that the scope of issues ‘held’ by community relations personnel is becoming increasingly complex and challenging. To additional points to note: Regarding environmental issues: Water is the single most dominant contributor to operation–community conflict in the world. Note: This graphic is taken from an internal ICMM report

The direct costs of conflict to business Example Security Higher payments to state/private security firms; staff time spent on security management. Risk management Insurance, loss of coverage, specialist training for staff, reduced mobility and higher transport costs. Material Destruction of property or infrastructure. Opportunity Disruption of production, delays on imports; aborted greenfield investments or expansions. Time Senior management involvement, additional staff time, legal advice. Capital Increased cost of raising capital. Personnel Kidnapping, killing and injury; stress; recruitment difficulties; higher wages to offset risk; cost of management time spent protecting staff. Reputation Consumer campaigns, risk-rating, share price, competitive loss. Litigation Expensive and damaging law suits. Aim of this slide: to provide some specific examples of the cost of conflict on business. Key points: The range of costs imposed by conflict on companies are direct and indirect. Direct costs most obviously relate to the increased cost of protecting staff and property. Indirect costs are those that impact the operating environment, only to rebound as costs on the company. Direct and indirect costs imposed by conflict on companies are listed in the above slide (Box 1). A ‘conflict-sensitive’ approach to doing business – one that seeks to avoid these costs by developing informed conflict-management strategies, and working towards healthy company-community relations – is therefore a strategic choice for company managers. Reference for material used: International Alert: Conflict-Sensitive Business Practice: Guidance for Extractive Industries (2005), Box 1, Page 2.

The indirect costs of conflict to business Example Human Loss of life, health, intellectual and physical capacity. Social Weakening of social capital. Economic Damage to financial and physical infrastructure, loss of markets. Environment Pollution, degradation, resource depletion. Political Weakening of institutions, rule of law, governance. Aim of this slide: to provide some specific examples of the indirect costs of conflict on business. Reference for material used: International Alert: Conflict-Sensitive Business Practice: Guidance for Extractive Industries (2005), Box 1, Page 2; Scoping paper: Mining and Conflict. Prepared for ICMM (2013), and ICMM In-Brief: Research on Company-community Conflict (2015).

The nature of conflict and the practical steps required Conflict is a consequence of perceived or actual incompatibility Conflict is inevitable, and can be a force for positive change It should therefore not be avoided at all costs However, conflict has negative consequences for both business and associated communities A conflict-sensitive approach is thus essential This understanding forms the basis of your interventions. At the heart of this approach is meaningful stakeholder engagement, and developing an understanding of the conflict - the context, issues, stakeholders, and company’s role in the conflict. Aim of this slide: to provide an understanding of conflict,. Key points: Conflict is a consequence of perceived or actual incompatibility of values, principles and goals. Conflict is an inherent and inevitable part of human relationships, and is largely inevitable in day to day life. Some conflict can be a force for positive change. This happens when it creates awareness, corrects injustices, finds new and better ways of doing things. Sometimes, the escalation of conflict helps to resolve inequality, and create positive change. Conflict therefore should not be avoided at all costs. That said, conflict can have negative consequences for both companies and associated communities (as per previous slides). So, while conflict can bring attention to issues that need further attention, and thus support positive change, it remains important that we adopt a conflict-sensitive approach to business, such that the negative consequences of conflict are avoided and/or kept to a minimum. A conflict-sensitive approach to business refers to the actions that companies can take to ensure that investments and operations do not provoke or intensify conflict. At the heart of a conflict sensitive approach is meaningful stakeholder engagement, and alongside this, “conflict analysis” – essentially, understanding the context, issues and stakeholders that shape an existing or potential conflict, and the two-way dimension of conflict (i.e. company impacts which cause conflict, and conflict which impacts on the company). It is on the basis of this understanding, that appropriate measures can be developed to avoid or manage potential or existing conflict. Reference for material used: International Alert: Conflict-Sensitive Business Practice: Guidance for Extractive Industries (2005)

Reflection: Our operation and conflict Place-holder slide for you to put your operation’s own reflections on conflict. Aim of this slide: to provide a reflection on occurrences of conflict at your particular operation. Instructions to facilitator: In advance of delivering this session, prepare a slide which outlines the following: A brief overview of current (or past) conflict associated with your operation; The causes and drivers of this conflict, including the main stakeholders involved in the conflict/s; The costs of this conflict to the business and other parties involved. Although the intention is that the presenter will have prepared this slide in advance, an alternative would be to facilitate a discussion on the topic.

Senior management’s role in contributing to a conflict-sensitive approach Keeping personnel safe, and creating a supportive environment Allocation of resources for conflict analysis Integration of “conflict lens” into due diligence processes Assessment of internal causes of conflict Prioritization of engagement and relationship building Upskilling of staff Tracking and quantification of conflict costs. Aim of this slide: to outline the role that senior management can play in contributing to a conflict-sensitive approach. Key points: A conflict-sensitive approach to business refers to the actions that companies can take to ensure that investments and operations do not provoke or intensify conflict. At the heart of a conflict sensitive approach is meaningful stakeholder engagement, and alongside this, “conflict analysis” – essentially, understanding the context, issues and stakeholders that shape an existing or potential conflict, and the role of the company in the conflict – and on the basis of this understanding, developing measures to avoid or manage potential or existing conflict. When it comes to contributing to a conflict-sensitive approach to business, senior management has the following role to play: Keeping personnel safe in times of conflict and tension, as well as creating a supportive environment for personnel experiencing the stress of operating in or moving into a conflict area; Support allocation of resources for conflict analysis; Support integration of a “conflict lens” into due diligence processes, including ESIAs and day-to-day risk management; Support internal assessment of operational activities that could be creating or exacerbating conflict in the areas of operation; Support the prioritisation of proactive engagement and relationship building as a key conflict avoidance strategy – it is particularly important that this comes from senior management level – both in terms of the messaging, the resources allocated, and their own participation in engagement and relationship building; Support the upskilling of staff to better handle high tension situations (e.g. mediation training, facilitation and engagement training); Support the tracking and quantification of costs of conflict to the operation, such that wise decisions can be made on where/how resources are spent.

In conclusion: The benefits of this approach Improved company- community relations More informed management responses and risk management Tracking of risks across the project life cycle Warning system for weaknesses in existing risk management Improved security of personnel, facilities and communities. Aim of this slide: By way of conclusion, to outline the overall business benefits of a conflict-sensitive approach. Key points: A conflict-sensitive approach to business: Lays the foundation for improved company-community relations, and associated social licence to operate benefits; Allows for a level of analysis that separates out cause, from driver, from trigger, from manifestation – this allows for more informed management responses and improved risk management; The guidance provided by International Alert provides tools that are customised for particular phases in the life-cycle of the operation, from pre-investment screening to operational phase, and into closure; Conflict, although inherent to human relationships, provides a useful indicator of how well (or not) a company is managing its impacts on communities and other affected stakeholders (including the environment). A “conflict risk lens” therefore serves as “warning system” for improved risk management across the operation. Conflict management has the distinct benefit of improved security of personnel, facilities and communities, and is thus critical to operational sustainability and viability.

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