Community Development and CSR: Managing Expectations & Balancing Interests

The 8th Risk Mitigation and CSR Seminar Canada-South Africa Chamber of Business Tuesday, October 16, 2012

Introduction

OBJECTIVE: Establish and maintain a strong social license to operate in

compliance with law and best practices SPECIFIC CHALLENGE: To mitigate corruption risks attendant to community

development projects and avoid allegations that social support for project was obtained through improper means (i.e. bribery)

Outline

MEETING THE CHALLENGE: 1.  What is Bribery? 2.  Adopt a Strategic Approach

•  Business Objectives •  Local Environment •  Set Parameters

3.  Establish, Maintain and Communicate anti-corruption program

•  Corruption risks in the delivery of Community Investment programs

What is Bribery?

• To authorize, offer, promise or give anything of value,

whether directly or indirectly, to a government official to influence official action or to anyone to induce them to perform their work duties improperly.

What is Bribery?

Foreign Bribery

•  Corruption of Foreign Public Officials Act (CFPOA) •  Foreign Corrupt Practices Act (FCPA) •  UK Bribery Act 2010 •  EU (Criminal Law Convention of Corruption) •  Division 70 of the Criminal Code Act 1995 (Australia)

Domestic Bribery •  Local laws

•  Laws ‘on-the books’ in most jurisdictions (whether enforced or not)

•  Criminal Code (Canada)

What is Bribery?

•  Key Issues

•  Broad definition of ‘public official’ (foreign and domestic) Tribal leaders may be considered public officials

•  Aboriginal leaders included within definition of “official” under Criminal Code (Canada)

•  Individuals working for state-owned enterprises (FCPA) •  Perception of corruption

•  Failure to achieve ‘buy-in’ from communities and other stakeholders

•  Failure to manage stakeholder expectations

Community Investment

•  Part of a broader exercise of managing company-community relationships

•  Builds upon and is informed by the following:

•  Risk Management (direct and indirect project impacts) •  Impact Assessments (environmental, social, human rights,

conflict)

•  Stakeholder Engagement (ongoing engagement in the broader project) •  Identification of stakeholders

•  Local Community Content •  employment, procurement of goods and services, and

assisting local vendors to become suppliers.

Community Investment – Strategic Approach

•  Take a strategic approach to community investment •  NOT ad hoc

•  Develop a strategy (stated objectives, criteria, guiding principles) •  Determine business case; leverage core competencies •  Determine stakeholder priorities •  Align business goals with development priorities of stakeholders

•  “Shared Value” •  Monitor, disclose, communicate on a continual basis

•  Establish and maintain an effective anti-corruption compliance program

Strategic Approach – Business Objectives

•  Link company’s community investment objectives and its business objectives.

•  More relevant, sustainable, effective where alignment between business operations and community investment programs

•  Better outcomes for company and local communities

•  Deeper buy-in from company and local communities = less risk from a corruption perspective

Strategic Approach – Local Environment

•  Understand the local environment and implications for community investment.

•  Build on:

•  Impact assessments (environmental, social, human rights, conflict);

•  Initial stakeholder identification; •  Stakeholder engagement on overall operations.

•  Time your community investments •  Once major issues resolved and relations established:

•  Corruption: community investment perceived as a “pay-off”

Strategic Approach – Stakeholder process

•  Establish a stakeholder process that engages and represents different groups and sub-groups of •  Affected Communities (Indigenous Peoples; Local Communities) •  Other relevant stakeholders (with an interest in project + potential

partners) •  National and local authorities •  Neighbouring projects •  Nongovernmental organizations

Strategic Approach – Stakeholder process

“How” a company engages mitigates risk of corruption • Manage engagement and consultation processes carefully

•  Avoid consolidating decision-making power •  Avoid ‘elites’ capturing funds and resources

•  Undermines representation, participation and fairness •  Corruption issues – where ‘elites’ are ‘public officials’

•  Ensure views of chosen representatives validated by wider community •  Verify the views of stakeholders’ representatives with the

broader community to ensure accountability

Strategic Approach – Stakeholder process

•  Be transparent, inclusive and open •  Involve government, nongovernmental organizations, other key

stakeholders •  Multi-stakeholder partnerships

•  Shared ownership and responsibility

•  Establish grievance process to receive complaints

Strategic Approach – Set Parameters

•  Set and document the specific parameters for community investment:

•  Types of projects that will be supported •  How programs will be designed and implemented

•  Discuss and validate parameters with all stakeholders •  Manage expectations of stakeholders •  Accountability

•  Disclose and communicate effectively on a regular basis outcomes

Anti- Corruption Compliance Program

• Establish, maintain and communicate an effective anti-corruption compliance program

•  base on international conventions and guidelines (e.g.

Convention on Combating Bribery of Foreign Public Officials in International Business Transactions); guidance from regulatory and enforcement officials in United States (FCPA); Canada (CFPOA); United Kingdom (Bribery Act 2010).

•  Include specific policies and procedures governing donations,

sponsorships, gifts, hospitality, entertainment and expenses, political contributions, customer travel.

Anti- Corruption Compliance Program

•  Ensure that employees, directors, agents and business partners receive appropriate training and guidance on the organization’s policies and procedures.

•  Monitor and review anti-corruption compliance standards and

procedures on a continual basis; update and adapt them as appropriate, taking into account relevant developments in the field and evolving international and industry standards, to ensure their continued effectiveness.

Anti- Corruption Compliance Program

•  Communicate organization’s anti-corruption compliance program including Code of Conduct and policies on community spending:

•  To the public – communities, stakeholders, governments •  Employees •  Agents •  Intermediaries

•  Document and Communicate mitigations and improvements.

Delivery of Community Investment Programs

•  How will the program be funded? •  Is the organization the only contributor?

•  Multi-stakeholder partnership

•  Is the program sustainable?

•  How will funding contributions be made? •  Cash/stock; in-kind

Delivery of Community Investment Programs

• Who will receive the funds? •  Due diligence

•  Any involvement of government officials? •  Suppliers, Vendors

•  History of recipient organization

•  How is accountability and oversight being maintained? •  Written agreement

•  Audit Rights •  Termination Rights

Summary

1.  Time community projects appropriately 2.  Be strategic (NOT Ad Hoc)

•  Align business objectives with community needs

3.  Be transparent and systematic •  Establish a transparent system for community spending •  Disclose systematic information on criteria for projects •  Measure and communicate outcomes

4.  Establish, maintain and communicate an effective anti-corruption program

•  Maintain accountability and oversight over community investment programs

5.  Make use of resources