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Challenges and Issues of CSR in extractive Industry

Multinational companies usually face many challenges in proper implementation of CSR due to which CSR still has weak approach in implementing it and resultant in failure. In other manufactured companies may have option to locate or set up their operation, accordingly but in order to set up operation by extractive industries they have no option where gas, gold, coal or mining production can be found and located. These are distinctive challenges faced by member from extractive industry or developing countries[1].

For most of the times these assets found in disputed, difficult or conflicted areas and states which are failure. Conflicted areas i.e., where weak governance has taken place. Less rules or law which are Non-audited and corruption which is not checked and also non-strategic states.

Sometimes even resources are situate at immaculate rainforest and these areas usually inhabited by aboriginal peoples which creates issues in addressing any type of social issues by company and creates responsibility. This panel has also addressed that members of extractive industries are seeking to conduct business properly whereas to benefit nation but on other hand some Government of those state seeks to attain profit from their own resources[2]

Part-II

Issues in Mining Industry

In extractive industry mining industry is one major concern. For conducting any CSR activity one has to take permission and approval with environment authorities like project approval requirement, permissions, political settlements or resettlements and removing or displacements of population of particular area or zone to use that land and resources and development projects take rearrangement of population for conducting it which is a major and primary issue because it takes tons of difficulties in remanaging it[3] In extractive industry the authors have also addressed the issue related to CSR in working with conflicted challenging countries To support this argument.

Repressive governments, civil wars, insurgencies, corruption, and interethnic violence impact business operations and create human rights responsibilities and liabilities for multinationals. Accordingly, whether to enter a country and conduct business with a particular government is a baseline question for members of the extractive industry. Should multinationals operate in countries with repressive regimes? Is it reasonable to draw a distinction between working with governments with merely "problematic" human rights records and those that the
international community has deemed pariah states?[4]

with addressing these issues extractive industries members has more complexity and serious issues arising out of it and crisis which occur at the time of establishing operations which is takes more effort for maintaining flow in working culture. On other hand managing the human rights and security has direct link to CSR in extractive industry. Other issues which also arise when company do not maintain transparency like tax, exact plans and profits

Mining issues and concern of Africa

As we all know mining industries of Africa is one important area in mining sector. To look over it's advantage and advantages here is the data which has found As it contributes significantly toward local employment, foreign exchange earnings and national Gross Domestic Product (GDP).

Africa hosts 30% of the earth's mineral reserves, including 40% of gold, 60% of cobalt, and 70% of platinum deposits, and produce about 30% of the world's gold, 70% of the world's platinum, 28% of the world's palladium, and 16% of the world's bauxite. Africa also produces (yearly, in thousand metric tons) 205,056 of hard coal, 67,308 of nickel-bearing ores, and 29,174 of irons bearing ores, as well as 595,507 kg of gold-bearing ores.[5]

On other hand it has human rights and security issues which is one the most demanding concern of this sector. To ensure that operational activities are actively taking place and work is going smooth, it is important to have and follow security arrangements but most of the time the multinational companies stay unchecked with the fact of having security (where it is required) despite having good auditing. Mining has a direct impact on employment as with mining projects a ton of opportunities comes for Job which is for the welfare of people residing at particular region or state.

Part-III
Case Study

Black diamond Case:

The Black Diamond Issue was majorly came into light and awareness after the Hollywood movies was released in 2006 named Black Diamonds where countries like Sierra Leone has been into state of great confusion and disturbance before this movie addressed this issue and it was all mainly due to Diamonds Long back in 1990s the diamond mining was considered major source for trade and income and Diamonds have always been treated or considered as most valuable gemstones in all over the world. But for acquiring gemstone these African countries have gone through beyond terrifying humanity and serious crime[6].

As found these diamonds were sold and traded to purchase, finance arms or sold to rebel armies basically funded for wars against countries. Internationally recognized Government was under trap by these rebel armies and has committed mass murders and amputation over people and have used teenage soldiers to regulate their system and power. In 1990s it became severe when rebel armies begin to slice off in order to gain power and prohibit voting or election and even amputate civilian's limbs.

Therefore, with major force and ruling system rebel armies started using people for dig up more and more diamonds to trade and business through which weapon market increased and people become slave which restructured severe violence, murder and honor killings were taking place every day more and more and, in this fear, almost whole country turned into slave.

Thus, Blood Diamond was born[7] CSR is about how company lawfully process to create positive impact on society after this awareness and conflict of blood diamond the corporations and consumers are under severe eye of Government for implementation of law, trade and labor regulation and CSR has played major role in implementing positive impact of any business on society and to ensure business is not attempting false activities Later on the Kimberly process was adopted as tool to treat this issue[8] where civil society association has formed to access and audit this issue specially the diamond development issue[9].

This case was a proper example misuse of economy which has lacked proper governance and weak Governance and is an answer to the question which it seeks which is why these occur and to treat them Government needs to take more preventive actions.[10] Good governance.

Awareness, addressing of issues and proper auditing can provide better solutions to these conflicts and can minimize the cases like this which also requires not only Government preventive measures but also the support of community and citizens.

There is direct connection between natural resource-governance and issues which may need to take process properly so that it won't fall under ambit of any major concerns and false activities.[11] The effectiveness of CSR may surely result in controlling these false issues as CSR has management practices and effective auditing and it is a foundation for better society.

End-Notes:

  1. Patrick SM, Why Natural Resources Are a Curse on Developing Countries and How to Fix It' (The Atlantic, 30 April 2012
  2. OFaircheallaigh, C. and Ali, S Introduction: Corporate Social Responsibility, Extractive Industries and the Environment: Regulation, Reporting and Performance. Greener Management International, 2006(53)
  3. Abuya WO, Mining Conflicts and Corporate Social Responsibility in Kenya's Nascent Mining Industry: A Call for Legislation [2018] Social Responsibility.
  4. OFaircheallaigh, C. and Ali, S Introduction: Corporate Social Responsibility, Extractive Industries and the Environment: Regulation, Reporting and Performance. Greener Management International, 2006(53)
  5. Abuya WO, Mining Conflicts and Corporate Social Responsibility in Kenya's Nascent Mining Industry: A Call for Legislation' [2018] Social Responsibility
  6. Blood Diamond | A Hollywood Flick Inspiring Business Ethics? |Corporate Social Responsibility Case Studies | Social Responsibilities Cases'
  7. Conflict Diamonds & the Awareness of Corporate Social Responsibility' (Conflict Diamonds & the Awareness of Corporate Social Responsibility)
  8. Observers | KimberleyProcess
  9. Diamond Development Initiative | KimberleyProcess
  10. Yale Human Rights & Development Law Journal - Yale Law School
  11. Effectiveness of the Kimberley Process and Corporate Social Responsibility by Robert Previti

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