May 29, 2024

Investors encouraged to promote responsible investment

Extractive industries are an important wealth creating instrument for developing countries. The critical role of mining and economic growth in Zimbabwe is well documented and amplified with the sector having been contributing an average of 9% to the Gross Domestic Product (GDP) between 2014 and 2020.  The highest contribution of 13% to GDP was recorded in 2019. Prospects to maintain the average contribution to the GDP have, however, been enhanced, due to firming international prices of minerals.  Despite the steadily increasing ‘sector economic impact,’ the investors’ contribution to community development remains a huge debate.  The common adage in the mineral resources governance sector has been that communities pay the cost of mining but do not have a share of the benefits.

Conflicts[1] between some investors and local communities range from the negative impacts of their mining activities, some of which violate fundamental human rights, for example the right to safety and security, food, health, a clean and safe environment as enshrined in the Constitution. In its mission to promote equitable, just, and sustainable environmental and natural resources management and protection of marginalized communities and citizens, ZELA and other development actors have been the key voices in the extractive sector challenging the injustice and calling for transparency, accountability, upholding of human rights and community benefits within mining communities.

Of late, President Emmerson Mnangagwa has been constantly beseeching mining[2] companies to prioritize value addition, beneficiation, including investing in Environment, Social and Governance (ESG) for the country to benefit significantly. Speaking at the groundbreaking ceremony of the Bikita Minerals Spodumene project, he challenged companies to address the concerns of host communities.

Companies are challenged to listen to their host communities and address their concerns. Communities must equally appreciate that investors are indispensable partners to the realization of sustainable development and a higher quality of life for all.

“Mining companies must be good and corporate responsible citizens, with Corporate Social, Environmental Social, and Governance aspects being critical components of their entities. Tangible socio-economic advantages and benefits should accrue to the societies in which they operate. In undertaking their ventures, companies are challenged to listen to their host communities and address their concerns. Communities must, on the other hand, equally appreciate that investors are indispensable partners in the realization of sustainable development and a higher quality of life. (“Mnangagwa urges Bikita Minerals to Prioritise ESG, Value addition”) 

“For greater harmony and unity of purpose, mechanisms should be developed to improve transparency and accountability so that aspects of the project are understood, while grievances are heard and addressed. “The safety and treatment of employees is also a key component. (“Lithium mining is booming — here’s how to manage its impact”) “Mining companies must strive to be model employers by treating and remunerating their workers appropriately,” Mnangagwa said.” (“Mnangagwa urges Bikita Minerals to Prioritise ESG, Value addition”)

We reiterate his Excellency’s calls, the message which, 20 years later, continues to define our work.  Responsible investment should be a characteristic of all investors including those in the extractive sector. This ranges from legal compliance to corporate social responsibility. Companies should not only be responsible but must be accountable. This calls for transparency in their business processes. There is a need to come up with local initiatives for transparency and accountability to ensure benefits and mineral revenue are shared fairly with local communities. Section 13 of the Constitution provides that the State and all institutions and agencies of Government at every level must endeavor to facilitate rapid and equitable development. In terms of this same section, the State must ensure that local communities benefit from the resources in their areas.

World trends have shifted from corporate social responsibility to corporate accountability, where the company must ensure that those affected by the company’s mining activities do not just benefit but can compel the company to refrain from violating community rights and where there are violations, take concrete steps to remedy same. Companies should be equally accountable to their shareholders just as they should be to the local communities. The communities also require accountability on issues such as social responsibility, sustainability, and environmental performance, including financial performance.

Local communities and indigenous people have a fundamental right to self-determination. The freedom to choose one’s own path for social, economic, and cultural development and destiny is a component of this fundamental right. Mining-affected local communities must have access to their lands, territories, and natural resources as well as the freedom to preserve and advance their culture. This indicates that prior to the authorization or start of any mining project that has an impact on communities and territories, their free and informed consent should be sought and acquired. These self-determination rights directly result in this fundamental right. Free prior and informed consent (FPIC) must be obtained in a way that is in accordance with the indigenous peoples’ customary laws and practices.

Business does not operate in a vacuum. As organs of society, businesses are sanctioned and promoted by society. Without society, business would not make profits. It is the society that gives businesses a “social license” to operate. In return for this “social license”, society expects businesses to be good corporate citizens by carrying out their activities in a manner that does not adversely impact on human rights and when they do, there should be access to effective remedies. Furthermore, under the social contract, while the economic rationale is important to business, social and environmental dimensions should not be treated as opportunity costs. Social and environmental considerations tied with economic benefits known as the triple bottom line are key pillars of sustainable businesses.

The mining host communities have spoken, organisations such as ZELA have underscored, and the President has concurred that it is high time for investors to reflect on their actions and respond to the needs of the locals including ensuring that they contribute meaningfully to community development. This cannot be postponed any longer.



Source: ZELA