July | Leadership Development | Read time: calculating...
Why effective leadership is key to managing community relationships
A resources company with strong community relationships and a thoughtfully considered ESG policy will more readily be considered an employer of choice by also being a neighbour of choice.
The resources sector sits at a unique intersection of society. No other industry has such an ability to impact communities, the environment, policy, and small and large scale economies — especially as more resource companies position themselves within the tech space. Organisations create a superhuman ability to enact change, but in the words of Stan Lee, “With great power comes great responsibility.”
Mining operations can be a point of contention; any community member would find it difficult not to have an opinion on the opening, expansion or closing of a mine. In the past two decades, we’ve seen increasing interest in the environmental, economic, political, and development impacts of mineral extraction; factors that can’t simply be put to bed through ‘clever comms’ to protect the reputation of a business.
Brand reputation isn’t something the business owns — it lives in the minds of the public. The only long-term protection is through actions aligned with civic values. Customers are no longer content with Corporate Social Responsibility (CSR) standards as self-regulation of accountability is all too often flouted. Leading companies now focus on Environmental, Social, Governance (ESG) criteria to make business efforts measurable and public.
One standout company which has earned masses of social capital (and a valuation of $1 billion+) is apparel giant Patagonia. They began with the belief that “you can’t make good products in a bad factory.” Over the years they have put in place systems to address sustainability, ethical and corporate governance issues – including addressing modern slavery in tiers of its supply chain and publicly acknowledging it. I predict you’ll see someone proudly wearing one of their items at some point today.
Pursuing ESG criteria has the potential to create better places to live, where benefits are more fairly distributed, and people are better able to flourish. Implementing a strategy that listens and responds to the needs of the community also has many benefits to a business, such as limiting risk, reducing the chances of missteps, and more easily remedying the backlash if mistakes are made.
A resources company with strong community relationships and a thoughtfully considered ESG strategy will more readily be considered an employer of choice by also being a neighbour of choice. The business is living up to its ideal corporate identity — how we think, act and speak — ideally guided by shared values and decisive leadership.
Keogh works with boards and executive teams to get clear on their purpose and develop bold, yet achievable ESG criteria, as well as developing culture and leaders to deliver on these targets.
We view leadership as a sacred responsibility, not solely to meet the metrics that matter to shareholders or your team, but live and work in a way that is honest and authentic to yourself. It’s also important to acknowledge that your responsibilities don’t end at the chainlink fence of the project; the onus is on leadership to consider the environment, native title groups and broader community when making decisions.
Leadershipis the art of motivating a group of people to act toward achieving a common goal — so how might those goals differ when looked at through the lens of ESG?
The benefits of CSR and community relationships for mining companies 1. Access to exceptional talent who show up with their whole selves.
Australia’s mining sector is screaming about labour shortages off the back of COVID-19, meaning employees are more choosy when it comes to employers. So ask yourself, what makes your company so great; what’s your organisational superpower? Does the wider community view your company as a superhero or a supervillain?
Let’s be honest, no one will be ‘totally buzzed’ to work with a company that carelessly spills toxic tailings into groundwater, allows workers to be injured and killed, destroys heritage sites, impacts the health of indigenous peoples, or syphons profits away from where the work is being done — but some mining organisations have done one or all of the above.
How people behave in your organisation can and does impact the communities in which you operate. Careless, incompetent leadership and attitudes pass through the ranks in a kind of osmosis, meaning bad decisions will be made at the coalface. How you behave as a leader at work and in the community, even in the smallest way has implications beyond KPIs and profit centres.
2. A greater likelihood of project approval and success
On a governance level, the idea that your venture will bring employment to a region is no longer enough of a benefit for a project to get the tick of approval from all stakeholders, especially when many of those ‘new jobs’ will be automated over time. It’s essential to identify the tangible and intangible benefits attainable through your ESG strategy to get buy-in from as many people as possible… not just ‘the decision makers’.
A side note here: the phrase ‘giving back’ is often used by resource companies — after all, the nature of extraction means that something is taken — though it may be more powerful to frame this as ‘sharing the benefits than a resources project can bring.
3.More meaningful and engaging work for employees
A common issue in larger organisations is personal-company misalignment. The company may very well have a vision statement on the wall, values up in the lunchroom, but the actions and decisions of company leadership sometimes undermine those principles. When such decisions are made on a management level, it’s hardly surprising that employees will also try to ‘get away’ with things when no one is watching.
By creating a transparent ESG strategy that addresses genuine issues being faced by employees in their community and environment, work can carry more meaning, and a job title is worn as a badge of pride.
4.Community relationships: An early-warning system to prevent missteps
Know your neighbours and walk among them, because those in an ivory tower are less likely to hear the foment of dissent.
Nurturing community relationships means listening to what people actually want for their town, community, and kids’ futures. Through open dialogues across many channels (formal meetings, social media, town halls, by the barbecue at the footy club), it’s easier to get insights into issues in the community, what is sacrosanct and who needs help.
Many mining companies are more than happy to put their ASX performance on the homepage of their website, but make it dastardly hard to contact anyone who might be willing to discuss concerns and ideas around the project or practices. If there’s fear in doing so, it may be a sign that what’s being done isn’t quite right.
5. Signalling to the market and investors
The next generation of employees, customers and investors will be giving more than a fleeting look at your ESG strategies. Mega funds, including the trillion-dollar Norges Bank Investment Management, considers governance and sustainability issues that could impact the fund’s performance. Tools such as IBX incorporate ESG ratings and empirical financial data reflective of market perception. They claim that the top 10 IBX companies outperformed the S&P/ASX 200 by 132%
Your corporate customers also have their own promises to keep around sustainability goals. Businesses need assurance that the commodities in their supply chain are not contributing to modern slavery, human rights abuses or environmental degradation.
What makes for effective leadership in community relationships?
Trust cannot be purchased, only earned. So make it your responsibility to make things happen that were promised, be consistent in your message and actions, and make clear your intentions, including the benefits they hold for everyone.
Trust in others breeds trust in you. Hire well, do your due diligence, sure. Then rely on the people you’ve chosen to do what’s right. Be transparent with your rationale around actions, and loop people in on decisions that may affect them. Ask for feedback regularly… but if you must promise anonymity to get feedback from employees and the community, it may be a sign there are trust issues in and with your organisation.
A leader needs to understand the needs within their work and their community, to recognise the impact decisions have — or could have. Seeing the world from many perspectives and arguing the other side’s case is key to healthy negotiations. The compassion to offer support to others and an honest desire to do the right thing earns a leader social capital, essential for managing community relationships.
Leaders need to be able to clearly state where they want to take people and why. A visionary leader communicates this path to people in a manner that is inclusive, motivating and inspiring. Eloquence is not a requirement to be a leader, but the capacity to convey intent with passion is.
Being an effective communicator means knowing when to talk and when to listen. It’s not about being a gun at press releases or delivering a rockstar presentation performance. Instead, effective communication is built on dialogue — which requires psychological safety to allow ideas to flow from all levels (and working on one’s approachability).
Commitment and Accountability
I’ll quote author Stephen Richards here: “Promises are only as strong as the person who gives them …” Effective leaders take responsibility for their own mistakes and remain accountable for their decisions. Of course, owning the outcome is a scary and lonely responsibility for leaders, but it’s vital to the success of a project to be upfront about your ESG goals and fully commit to them.
The importance of ESG community relationships
Mining can impact local communities both positively and negatively. While positive impacts such as community development projects and employment are important, they do not necessarily offset the potential negatives.
A majority of resource exploration and mining activities occur in rural and remote communities, often in places where the inhabitants have low economic well being. Often governments don’t have policies or regulations that favour local interests — but that doesn’t mean that you can’t. Local communities are becoming increasingly influential as governments are decentralising decision making in critical areas such as the environment and development. In addition, competitive business and social pressures are forcing a redefinition of the relationship between the company and the community.
Creating your ESG criteria (or strategically transitioning from CSR) is only the first step in strengthening community relationships. Leaders must take their social responsibility seriously; increase community and stakeholder engagement, sustainable practices and effective philanthropy are now expected to complement profit and corporate success as critical pillars of successful business management. By acting with honesty, empathy and vision, among other traits, leaders are central to engaging stakeholders, gaining trust, and managing community relationships effectively.