creating societal value within your core business: aligning business and societal interests
TRANSCRIPT
Creating Societal Value within your Core Business
Aligning business and societal value
Dec 2, 2015CSR Saudi Arabia Summit
Jeddah HiltonJeddah, Saudi Arabia
Presented by
Wayne DunnProfessor of Practice in CSR (McGill University)
President & Founder, CSR Training [email protected]
Creating Societal Value within your core business
• Birth of an Industry
• Business issues / pain points
• Early challenges
• Using CSR to address business issues/pain points
• Results
Slides and information based on personal and professional involvement with start-up and development of the industry supplemented by interviews, discussions and research on more recent results
Aligning business and societal value
Overview
• Development of the Uranium industry in northern Saskatchewan, Canada
• 1980s to present
Northern Saskatchewan, Canada
Key Players
• Cameco (Start-up uranium mining company)
• Kitsaki Development Corp (start-up Indigenous Development Corp)
• Lac La Ronge Indian Band (Indigenous government)
• Governments of Saskatchewan & Canada (Regulators)
• Indigenous communities & peoples
• National and international anti-nuclear actors
The Situation
• 1980s in Canada
• World’s most valuable Uranium deposits
• Area 15% the size of Saudi Arabia
• Few roads (many communities air/bush trail access only)
• Few people – under 50,000
Northern Saskatchewan, Canada
The Situation• Indigenous Peoples in area
• Many only 1-2 generations removed from nomadic lifestyle
• Low levels of literacy
• Limited positive participation in regional economy
• Off the charts unemployment
• Very limited business experience
• Socio-economic challenges
• No history of industrial employment
• No industrial/business experience
• Strong local opposition to development of the industry
• Latent (but emerging) global opposition
• No collaborative models for industry to follow
Northern Saskatchewan, Canada
Business Issues / Pain points
• Operating costs• Limited local technical expertise
• Local labour force challenges
• Importing contractors
• Remote areas, limited infrastructure
• Social license• Limited natural allies
• Vocal domestic opponents
• Latent global opponents
• Regulatory• Emerging regulatory environment
• Provincial and federal governments somewhat ambivalent
Business Strategy Considerations
• Medium to long term time horizon
• Need to focus on building an industry, not just a mine
• Industry/social license will always be vulnerable if it cannot provide meaningful value to local peoples, especially to Indigenous Peoples
• Failure to develop local labour force, suppliers and contractors will increase operating costs over life of project
• Developing local labour force, suppliers and contractors will add short and medium term costs
Early failures / challenges
• Employee recruitment, retention & development• Difficulty recruiting and retaining workers• Existing training programs developed for clientele with different
background (literacy, exposure to industry, etc.)
• Contracting failures• Even with premium for local contractors businesses were failing• Management and capacity issues
• Infrastructure challenges• Education and skills training institutions and infrastructure not
equipped to bridge people into meaningful employment• Access to business mentoring
Resulted in growing opposition to the industry Local people felt it wasn’t working for themGrowing concerns about environmental issues and impactsRegulators developing concerns
Revised Tactics and Strategies
• Recruitment / labour force processes and strategies• Pre-employment training• Week in / week out
• Invest in educational institutions to develop situationally appropriate approaches and programs
• Facilitate Joint ventures between emerging indigenous contractors and strong, established contractors and suppliers
• Local environmental monitoring committees/engagement
• Invest in community development (education, sports, etc.)
Cameco Results
• Global leader in Uranium mining
• Evolved into gold mining
• Strong shareholder returns
• Partner of choice for Indigenous communities
• Regulatory & government relationships
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Shar
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Cameco Share Price
Kitsaki/La Ronge ResultsSome of the portfolio companies
• Northern Resource Trucking Limited Partnership (trucking and transportation)
• The La Ronge Motor Hotel Limited (Hospitality and accommodation)
• Kitsaki Meats Limited Partnership (specialty food products)
• La Ronge Industries Ltd. (agriculture production)
• First Nations Insurance Services Ltd. (insurance and financial services)
• Athabasca Catering Limited Partnership (catering and hospitality)
• Dakota Winds Kitsaki Mechanical Services Ltd.(plumbing, heating, refrigeration, and mechanical services)
• Wapawekka Lumber Limited Partnership (timber and forestry)
• Keewatin/Procon Joint Venture (contract mining, surface and underground)
Kitsaki/La Ronge Results
• ~$300 million portfolio revenue
• 100+ local sub-contractors
• Thousands of jobs
• Extensive CSR program to support their communities
• Role model for other Indigenous organizations
• Ongoing wealth producer for the Lac La Ronge Indigenous Government
Societal Results
• ~75% northern and Indigenous employment at all levels
• Up to $400 million/year in local procurement• Transportation• Catering• Underground mining• Camps• Supplies• Etc
• $200 million/year local employment• Ancillary and spin-off business,
employment and opportunities
Value Proposition• Society (business, income, employment, infrastructure, grants, etc.)• Company (social license, happy communities, local employment and
procurement reduces costs, relationship with regulator)
Business issues converted to business and societal value
Business issues• Developing an industry
• Operating costs
• Social license
• Regulatory
Value created• From start-up company
to global leader
• Developed an industry
• Platform for local socio-economic growth
• Transformed a region
• Personal, community and business opportunities
CSR, Value, Regulation & StrategySome quick conclusions
• Philanthropic approaches limit CSR budgets to profits/free cash flow
• Strategic integration creates societal value across capital and operating spending streams
• Societal and business ROI and sustainability is much higher from strategic integration
• Some societal issues cannot be addressed through strategic integration (and some can’t be addressed through philanthropic approaches)
• Regulatory approaches to CSR tend to focus on philanthropic and inhibit strategic integration
Contact Information
Wayne Dunn
Professor of Practice in CSR, McGill University
President & Founder, CSR Training Institute
www.csrtraininginstitute.com