See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/242025885 CSR and development: A mining company in Africa Article in Journal of Management Development · October 2011 DOI: 10.1108/02621711111182475 CITATIONS 3 READS 47 2 authors, including: Some of the authors of this publication are also working on these related projects: African Journal of Economic and Management Studies, Vol. 3 (1): 137-150 View project Josep F. Mària Universitat Ramon Llull 7 PUBLICATIONS 24 CITATIONS SEE PROFILE All content following this page was uploaded by Josep F. Mària on 18 December 2015. The user has requested enhancement of the downloaded file. All in-text references underlined in blue are added to the original document and are linked to publications on ResearchGate, letting you access and read them immediately.CSR and development: a mining company in Africa Josep F. Ma`ria SJ Institute for Social Innovation, ESADE BS, Barcelona, Spain, and Emmanuelle Devuyst Relational Peace Advocacy Network, Brussels, Belgium Abstract Purpose – This case study seeks to present the CSR activity of a mining company in the Democratic Republic of Congo, and the conflict between the company and its local stakeholders. The company promotes an enlightened CSR, focused on the promotion of individuals’ rights; but the local population has inherited a paternalistic mindset, which clashes with this enlightened approach. Design/methodology/approach – The conflict is presented and analyzed at three levels: company-government, company-local communities, and company-local employees. The cultural change necessary to address the conflict involves fundamental questions in SGM’s business model: strategy, structure and mainly purpose, processes and culture. Findings – The company needs to design individual and industry-wide strategies to tackle the problems with the Central Government; develop dialogues with key leaders of local communities in order to promote with them an enlightened culture of CSR and of development; and change the processes to diffuse and eventually modify the company values affecting local employees. Originality/value – Research on CSR in the Democratic Republic of Congo, specifically in the Katanga province, is very scarce, even if mining companies are starting to operate in that Province, raising important problems in terms of development and cultural change. In spite of several problems, SGM is a case of good practice that can inspire other mining companies or extractive industries in developing countries. Keywords Mining industry, DR Congo, Enlightened CSR, Purpose, Processes, Culture, Africa, Republic of the Congo, Conflict Paper type Case study 1. The case[1] Introduction This case presents the CSR activity of a mining company in the Democratic Republic of Congo, and the conflict between the company and its local stakeholders. The company promotes an enlightened CSR, focused on the promotion of individuals’ rights; but the local population has inherited a paternalistic mindset, which clashes with this enlightened approach. “One important contribution of Golden for Sustainability consists [. . .] in the opening of the current model of how organizations learn and evolve (and learn to evolve) to include the role of stakeholders as both potentially inhibiting as well as potentially enabling factors” (GOLDEN, 2011, p. 5). Accordingly, this case provides an understanding on how a company starts and develops its CSR policy, by promoting a modern mindset in an African context where stakeholders are potential inhibiting or/and enabling factors. On the evening of June 14 2010, Ron Ramsey, CSR Director of SGM, a US mining company, was coming back to the Base Camp of the company from his weekly bike The current issue and full text archive of this journal is available at www.emeraldinsight.com/0262-1711.htm CSR and development 955 Journal of Management Development Vol. 30 No. 10, 2011 pp. 955-967 q Emerald Group Publishing Limited 0262-1711 DOI 10.1108/02621711111182475ride. These rides used to help him clarify ideas. He had spent the day guiding three guests on a visit to SGM: a professor of CSR from a European Business School and two NGO activists. SGM owned a 600 sq. mile (approx. 1,600 sq. km) mining concession some 170 km north of Lubumbashi, the capital of Katanga Province, in the SE corner of the Democratic Republic of the Congo (DRC). The visit and talk with the guests had made Ron think. SGM had been in the region for five years and it had been two years since the company began copper and cobalt production. Ron asked himself whether the firm was consolidating its presence in the DRC. What, he wondered, were the main issues regarding the firm’s links with the Central Government, with local communities and with Congolese employees? What decisions had to be taken to address these relationships? Born in Likasi, a mining city 50 km west from the SGM site, Ron was the son of a couple of American Methodist Missionaries. He was educated in Kinshasa (the capital of the DRC), and later on in the US. After his PhD dissertation on “Doing Business in Africa”, he became professor at the University of San Francisco. However, he decided to go back to Africa and accepted a job with ALLIANCE, an NGO closely related to SGM. When SGM offered him the post of CSR director, Ron accepted because he wanted to work on long-term projects: the only ones, according to him, that can succeed in changing the mind-set of the population and promote sustainable development in Africa. And apparently Ron was helping the population around the concession, because the most scathing critics of SGM admitted that the region’s economy had improved shortly after Ron’s appointment with his CSR policy of local sub-contracting. 1.1 The sociopolitical context The Democratic Republic of the Congo (DRC) is a vast country covering 2,345,000km2 (over four times France) with 70 million inhabitants. It is very poor (it ranked 167 out of 178 nations on the 2007 Human Development Index) and is located at the heart of Central Africa. With extraordinary forest and mineral riches, it has not only attracted the attention of foreign mining companies but also of local and neighboring armed groups, which have recently battled in some provinces in order to control the gold, diamond, cassiterite and coltan, copper and cobalt mines. While peace reigned in the Kasais and in Katanga during 2010, there was continuing strife in certain areas of the Ituri, the Kivus and Maniema provinces. A former Belgian colony, the DRC (independent since 1960) was ruled with a rod of iron by the dictator Joseph Mobutu between 1965 and 1997. In 1997, a rebel leader, Laurent Kabila, won a short war against Mobutu and became president with the support of the Ugandan and Rwandan armies. But one year later, these armies waged war on Kabila because he refused to bend to their interests. Over 3 million died between 1998 and 2003 as a result. Laurent Kabila himself was killed in February 2001 in murky circumstances and was replaced by his son Joseph Kabila, who signed a peace agreement in 2003. The subsequent transition to democratic rule lasted until 2006, when a new Constitution was approved. In the following presidential election, Joseph Kabila was elected the first democratic president of the Third Republic. SGM is based in the SE Province of Katanga: a Province in peace since 2003. It was in Katanga that the all-powerful Belgian mining company UMHK (Union Minie`re du Haut Katanga) held sway in colonial times (1909-1960). Apart from producing industrially copper and cobalt, it was in charge of building and managing schools and JMD 30,10 956hospitals; and it provided electricity, communications, roads, and food to its workers and – to a lesser extent – to the rest of Katanga. In 1967, the UMHK was replaced by the state-owned company Ge´camines. Face to the local population, it assumed the same role as UMHK. In fact, the population of Katanga used to say in Swahili: “Ge´camines njo baba, Ge´camines njo mama”, this is “Ge´camines is my mother, Ge´camines is my father”. In reality, the capacity of social protection of Ge´camines was limited; but the “myth” of the paternity of this company was still present in the Province in 2010. Nevertheless, Ge´camines went bankrupt in the 1990s. After the two wars, it was penniless, had been plundered, and had abandoned its production, its workers and its paternalistic policies. In 2002, with the new Congolese Mining Code, the exploitation of mines was privatized, and foreign companies like SGM started to come to Katanga. However, the population mindset – that mindset which Ron Ramsey wished to change progressively – was still shaped by the paternalistic behavior of Ge´camines, and many people expected from the newcomers to afford the same welfare that had been provided so far. These expectations are a huge challenge for private foreign companies and especially for their CSR policies: the success of such policies depends importantly on the population’s expectations. 1.2 Arriving in the DRC In June 2010, SGM was a copper and cobalt company owned by RNF, an American group with mines in the US, in South America and in Asia. In 2005, RNF had taken a 57.75 per cent stake in SGM, leaving 24.75 per cent to CSF, a Canadian-Scandinavian firm (which had owned 55 per cent of shares until the arrival of SGM) and 17.5 per cent to Ge´camines (the state-owned mining company, which owned 45 per cent of the shares up until 2005). In 2007, a Congolese Senate Commission reviewed the main mining contracts signed by foreign companies under the Congolese Mining Code of 2002. The commission concluded that the contracts signed between 2002 and 2006 breached part of the mining code. Most foreign companies agreed to renegotiate their contracts but two of the biggest ones refused: First Quantum and RNF. The Congolese Government cancelled the concession of First Quantum, and reissued rights to the company’s tailings project at Kolwezi. RNF finally started an under the table process of negotiation, which finished on October 22 2010 with an agreement that raised Ge´camines’ ownership and set additional payments to the Congolese Government for royalties, surface area fees and other concepts. Since October 2010, RNF owns 56 per cent of SGM, CSF 24 per cent and Ge´camines 20 per cent. SGM’s mining concession covers 600 sq. miles (around 1.600km2), and includes 43 villages plus two cities: Sonke and Gankurume. The average copper concentration in the concession is 4 per cent, exceptionally high for this metal. While the average life of a copper mine is 40 years, on the SGM concession there is copper for up to 100 years. In 2005, SGM invested US$2,000 m in the processing plant, which was built in Kwatabale (a small part of the whole SGM concession) by 9,200 workers in 18 months. In March 30, 2009 the first copper sheet was produced. In June 2010, the production was 10,000 tons of copper/month and 1,150 tons of cobalt/month. The mine, and plant in Kwatabale work 24 hours a day, seven days a week. SGM directly employs 2,500 workers and a further 1,500 indirectly (through sub-contractors), costing the firm US$30 million a year. The exploitation costs (investment and taxes) are very high by world standards; therefore operating costs must be reduced in order to be competitive: CSR and development 957the company uses the cutting-edge technology. The method of processing is SX/EW (Solvent Extraction and Electro-Winning): the ore is sent on a belt to a mill with steel balls in order to be crushed; then the copper is separated from the scoria through a chemical solution, and finally it is electrically attracted by a 125,000 amp anode to make copper sheets. In the first months, 25 per cent of the copper sheets were exported by train, but lately, the efficiency of road transport, increased with the use of trucks. They drive to the ports of Dar-es-Salaam (Tanzania) or Durban (South Africa) to export the metals. Appendix 1 (see Tables AI-AIII) provides additional Financial Information about SGM. 1.3 Environmental challenges SGM has signed the principles of sustainable mining launched by the International Council of Minerals and Mining (ICMM) and those of the UN Global Compact. Mining waste is treated under the concept of “zero discharge”. A polyethylene basin (probably the first one of its kind in the whole of Africa) has been built to store the acids and solid wastes used in the SX/EW. The idea is stop pollution of local aquifers. However, some of the natives steal bits of polyethylene at night to roof their huts, unaware of the damage they are causing. Airborne dust is carefully measured in all the villages near the mine and the plant itself. Trucks regularly water roads with a sugar cane solution to keep the dust down. In June 2010, SGM had a problem with recycling used motor oil. There were no Congolese companies to recycle such oil, and the export to Zambia was forbidden. The oil was stored in tanks pending a solution. In order to avoid environmental damage, SGM bought recently three surface miners in 2010: these bulldozers crush the soil and spare the use of dynamite. 1.4 Two cultures clashing? At SGM, 97 per cent of workers are Congolese. However, there are no Congolese in senior management positions. Other foreign mining companies have hired former engineers of Ge´camines, who usually direct the HR and CSR departments, but this is not the case in SGM. Nevertheless, the company is training young Congolese engineers in other countries (the US, Latin America, Asia) to groom them for senior management: they will probably occupy senior posts within two or three years. Managers live in the Base Camp, a fenced area in the town of Gankurume. Foreign managers receive special training on the economic, social, and political context of the DRC. However, according to Ron Ramsey, this is not sufficient to manage the complexity of the situation. It is impossible to employ enough foreign managers who understand the Congolese culture and society. The majority of SGM Congolese middle managers are separated from their families during the week. But, housing their families would be very expensive. SGM’s Congolese middle managers are divided on the efficacy of the company’s CSR efforts. Some believe that efforts to improve the living standards of local communities are all very well but that employees should be better treated. A significant group of Congolese SGM employees believe that foreign managers are too rigid in the norms of behavior imposed on workers (for instance, zero tolerance to alcohol at work), and believe that JMD 30,10 958such norms are a top-down imposition, very different from the norms operating in the local Congolese culture. Some also believe that the workload is excessive. Appendix 2 gives the views of a group of workers who took part in a group exercise on June 14, 2010. 1.5 First of all, safety! Security and accident prevention are major management concerns. This is reflected in very low accident rates and zero work-related illnesses. Helmets and fluorescent jackets are used everywhere in the mine and in the processing plant. The sheer size of the mining concession makes total control impossible. There are, in fact, problems with certain groups living in the concession’s villages. This is the case of 120 families of de-militarized soldiers from the war of 1998-2003. They do not belong to the “the local population” and sometimes traffic with drugs or dig minerals illegally. The illegal trade of minerals or armed assaults on trucks transporting copper and cobalt is also a problem. The violence used against thieves has to be agreed between SGM and the political authorities. Ron Ramsey would like to beef up the local police in order to address such delicate issues. 1.6 Social challenges SGM invests 0,3 per cent of its revenues in community development, education and health care. Of this, 30 per cent is used in the legal part of CSR: a part, which is linked to the undertakings made by SGM in its contract with the Congolese State under the Mining Code. The other 70 per cent will be devoted to social investments beyond the scope of the code. In total, SGM has doubled the amount that provincial and local authorities should legally receive from the Central Government as part of the taxes paid by SGM. In fact, the Mining Code establishes the retrocession of 40 per cent of the taxes collected by the Central Government from mining companies: to the Provincial Government (25 per cent) and to the Local Governments (15 per cent). However, the Central Government keeps all the money in Kinshasa. Thus, the taxes paid by SGM do not provide money to fund social investments in Katanga or in the local communities in the concession. In June 2010, SGM launched a foundation to manage the “legal CSR” (30 per cent of the total CSR investment) and was debating the composition of the Foundation’s Board. Probably SGM would have four seats, the Administration two, and an NGO one. Board members would not have access to the money, their role being limited to appraising projects presented to the Board by local NGOs, churches, and other civil society organizations. In the Asian plant of RNF Group, local NGOs have majority representation on the board in a similar foundation but there corruption is rife. The Foundation model is not the only one to institutionalize CSR policies. In a South African mining company operating also in the Katanga Province, the CSR director is member of local forums presided by mayors and with the participation of NGOs, in order to decide collectively the destiny of the money that the mining company devotes to CSR. Certain local employees are aware of SGM’s effort in social investment, but they complain that the company pays little attention to employees’ real needs (Appendix 1). Ron comments “We have not had the energy to promote the welfare of our employees because the pressure of external stakeholders has been very strong”. CSR and development 959The three main strands in social investment are: relocation and community development; education; and health services. 1.6.1 The challenge of community development. There are 43 villages and two cities (Sonke and Gankurume) in the SGM concession. Before the beginning of SGM operations, a socio economic report was produced by international consultants in order to determine the living standards of the populations and to compensate them after SGM’s arrival. Three villages had to be relocated because of the construction of the plant and the mine in Kwatabale. This decision was taken after consultation with the village people, where all players realized that this was the best solution to protect them from the economic, social and environmental impact of the mine. The relocation is both geographic and economic. Both processes were performed according to World Bank standards. The displacement must ensure the community is kept intact as far as possible. A satisfactory economic relocation means that living standards after the economic relocation must be the same or better than before. Temporary financial aid is provided to displaced households to this end. The processes have involved consultation at various stages and have covered official and traditional authorities and all the affected families. One Primary School and one Health Center have been built in each new village. There is a community development service with five agents who deal with the complaints between communities and SGM. This service had dealt with around one thousand complaints by June 2010. The average time to solve the complaint was two weeks. If the diverse mediation mechanisms fail, there is always the possibility of recourse to the Civil Courts. Only three complaints remained open in June 2010. Fostering local employment is one of the CSR hallmarks of a mining company operating in a developing country like the DRC. Here the problem for SGM has been to define who belongs to the local population, given that SGM acted as magnet for migrants. A census was necessary, and it registered 14,000 local candidates for employment: they got priority in training courses and in obtaining micro credits for setting up an SME. A US$5 million fund guarantees loans up to $ 50,000 for the economic promotion of local communities. This fund has created 1,500 indirect jobs. Full of joy, Ron invites his guests to visit a shop in Gankurume where six women have a dressmaking business, which supplies SGM with special bags and garments for miners. This initiative was undertaken by SGM in partnership with the NGO ALLIANCE. SGM has fired or sued those workers who have been involved in fraudulent labor practices. 1.6.2 The challenge of education. The three schools built in the relocated villages receive students from the whole area. They are managed by the NGO SUNRISE but they are agreed with the administration. Illiteracy is high and a major goal is for students to successfully complete their primary education. However, with the arrival of migrant population to the concession, schooling (currently 7 per cent) may decrease. A total of 12 rooms for secondary school, were being built in June 2010 in Gankurume. In 2011, a secondary school was planned to start in Sonke. SGM has provided a school bus for certain students in the concession, in order to avoid accidents of children walking to school with trucks circulating in the concession. In many cases, parents do not wish to contribute to school fees (Congolese Francs ¼ CFR 2,500/month, that is, US$ 3/month) and insist that SGM must pay such fees. However, although a common practice in Congolese schools in poor areas is the JMD 30,10 960expulsion of student whose parents fail to pay the fees, in the three schools of SGM professors keep students’ grade cards in an attempt to force parents to cough up, but students can continue at school. For the moment, SGM has a development fund of 0,03 per cent of profits for schooling; but the problem will appear when SGM starts to disengage from education investments: parents and the administration will need to take over education responsibilities. 1.6.3 The challenge of health care. In May 2009, the administration and SGM signed an agreement to fight HIV and malaria; and to foster mother-child health, safe drinking water, and health infrastructure. In the 43 villages, wells have been dug, and a committee for water management has been created for their maintenance. Cholera was eradicated in 2010 after a pilot project to build latrines and a campaign to promote hand washing. In order to combat malaria, all infrastructures were sprayed with insecticide, and 45,000 mosquito nets handed out in a door-to-door campaign. A mobile clinic visits all villages for vaccination campaigns, midwife services, and emergencies. The van and its driver are paid by SGM, the other costs are paid by the Administration. SGM has partially funded the building of health centers in villages and of hospitals in Sonke and Gankurume. Unfortunately, like in the case of education, many individuals in the concession believe that SGM must pay for everything. In order to correct such perceptions, meetings with local committees are held and medical visits must be paid for CFR 3000 (US$4). Ron and his collaborators identify psychological dependence on SGM as a serious brake to sustainable development. Beneficiaries of a public service must contribute to its funding. Otherwise, the historically rooted dependence on paternalistic mining companies will be perpetuated. 1.7 “With SGM’s support” SGM holds a clear position in its relationships with the authorities. “We do not want to replace the State, we want to support it. Our formulation when we sponsor a public service is with SGM’s support”, states Ron. However, some individuals still expect the company to solve all the problems in the concession. In Ron’s opinion, SGM attracts “rip-off (“tracasseurs”) merchants in droves”, especially those in Congolese Public Administrations: “They are constantly trying to tax or to fine SGM for whatever reason”. SGM has lately beefed up its legal services with lawyers and experts in operations in Africa. One of the problems with corruption is that many officials do not receive their wages but instead rake off 40 per cent of fines. A serious incident with the Central Government was the arrest of a group of SGM’s foreign managers, who were imprisoned in Kinshasa for supposed visa infractions. SGM had to pay a US$ 16 million fine to solve the problem. Ron interprets this harassment as pressure exerted on SGM in order to force the company to renegotiate the contract with the Government. Sometimes SGM Congolese employees send information to public officials to create tax liabilities or attract fines. Even if this is a usual behavior in other mining companies in Katanga, (some managers refer to such workers as “spies”), Ron is wounded by such attitudes: they are a sign that certain employees do not believe SGM plans to stay on in the DRC. “But we shall stay”, states Ron with conviction and a mix of deep feelings. “And we shall solve the problems, proving that doing business in the DRC is possible”. CSR and development 961At 7 p.m. of June 14, 2010, Ron Ramsey parked his bike in the garage of his apartment inside the SGM Base Camp. After a refreshing shower, while cooking the dinner, he realized that he needed to take crucial decisions over the next few days. Five years after the arrival of SGM, Ron wanted to assess whether his CSR policies were effectively starting to promote a new culture of citizenship against the paternalistic tradition inherited from UMHK and Ge´camines. The tensions associated to this cultural change he wished to foster were high. What decisions, and in which areas, should be taken in order to reduce such tensions and continue with this process, essential for a modern and sustainable development of the Katanga? One bottle of cold Simba, a tasty local beer, would maybe inspire Ron’s reflections. Notes 1. A broader version of this section is accessible in Ma`ria and Devuyst (2010). Several names (companies, places, individuals) in this section are disguised. 2. One outstanding case was BHP Billiton’s withdrawal from the Indonesian island of Gag after an investment of millions of dollars in prospecting and exploration (Renewable Resources Coalition, 2009). References Eden, L., Lenway, S. and Schuler, D. (2004), “From the obsolescing bargain to the political bargain model”, Bush School, Bryan-College Station, TX, Bush School working paper no. 403. GOLDEN (2011), GOLDEN for Sustainability. A Research Program, U.C. Luigi Bocconi, Wirtschaft Universita¨t Wien, EABIS, 22 March. Maak, T. and Pless, N. (2006), “Responsible leadership in a stakeholder society – a relational perspective”, Journal of Business Ethics, Vol. 66, pp. 99-115. Ma`ria, J.F. and Devuyst, E. (2010), SGM: A Mining Company in Africa. The Role of Companies in Society, ESADE, Barcelona, Case 0280-CA-1-1. OSISA, Third World Network Africa, Tax Justice Network Africa, Action Aid International, Christian Aid (2009), Breaking the Curse: How Transparent Taxation and Fair Taxes Can Turn Africa’s Mineral Wealth into Development, Johannesburg, Accra, Nairobi, London, March. Rajak, D. (2006), “The gift of CSR. Power and the pursuit of responsibility in the mining industry”, in Visser et al. (Eds), Corporate Citizenship in Africa, Greenleaf, Sheffield, pp. 190-200. Renewable Resources Coalition (2009), Renewable Resources Coalition, available at: www. renewableresourcescoalition.org/index.htm (accessed January 26, 2009). RNF (2009), Proven Performance, Shining Future, Annual Report (accessed January 26, 2010). RNF (2010), Connecting the World, Annual Report (accessed May 27, 2010). Appendix 1. SGM financial information a) Reserves (RNF, 2010) Reserves of copper and cobalt at 12/31/2010 Cu: 8.1 billion lbs. Co: 0.8 billion lbs. JMD 30,10 962b) Production and sales (RNF, 2009; RNF, 2010) (see Table AI). The copper reserves of SGM represented 8 per cent of the total reserves of this mineral for RNF in 2009 (RNF, 2009, p. 10) (see Table AII). c) Unit production costs (RNF, 2010, p. 14) (see Table AIII) d) Competitive drivers The exploitation costs are very high by world standards. Therefore, in order to be competitive, operating costs must be reduced. That’s why the company uses the cutting-edge technology of SX/EW: solvent extraction/electro winning. Appendix 2. The views of SGM employees On June 14, 2010, Ron Ramsey invited the three guests (the professor and the NGO activists) to a meeting with 12 Congolese employees in order to allow an open exchange on how these workers perceived their relationships with SGM. Ron left the room to foster freedom of expression. Here are the main verbatim comments made by the participants. Unit production costs per lb of copper in 2010 Cash unit costs ($) Site production and delivery 1.40 By-product credits (0.58) Royalties 0.08 Unit net cash costs 0.90 Table AIII. 2010 Copper (recoverable) Production (millions of tons) 265 Sales (millions of tons) 262 Average realized price per pound ($) 3.45 Average copper ore grade (per cent) 3.51 Cobalt (recoverable) Production (millions of tons) 20 Sales (millions of tons) 20 Average realized price per pound ($) 10.95 Average cobalt ore grade (per cent) 0.40 Ore milled (metric tons per day) (Cu and Co) 10.300 Copper recovery rate (per cent) 91.4 Table AII. 2009 Copper (recoverable) Production (millions of tons) 154 Sales (millions of tons) 130 Average realized price per pound ($) 2.85 Ore milled (metric tons per day) 7.300 Average copper ore grade (per cent) 3.69 Copper recovery rate (per cent) 92.1 Table AI. CSR and development 963Many things have come as a surprise for the workers and the population at large. It is the first confrontation with a mining company, with another culture. It is a tough learning process because we realize the world is moving in this direction and we need to know how to adapt to this. It takes time for local population’s workers to get this into their heads. Many information and education meetings are needed to grasp the difference between a private company and a State-owned company. Today everyone understands that we need educated children. Many debates, meetings, explanations, exchanges are needed so that they understand what is happening and what the new terms are. There is a certain tendency to compare SGM with Ge´camines but this is wrong because UMHK and Ge´camines were there for 80 years and SGM only for four – it’s not a fair comparison. The company culture is one part of habits, norms and attitudes, and everybody must adapt to them in order to progress, convince himself that it is a different plan. We ask ourselves whether the company has understood this. Norms are just imposed; they just appear out of the blue. One needs to start from the bottom and to understand our culture. The company has begun discussing safety issues through weekly meetings and has given us time to adapt to norms. The problem is that it is hard for us to adapt. There are documents on CSR and ethics in SGM but they have not been explained: they are in English and have not been translated into French or Swahili. The problems of local workers have not been included in such questions. The language is one of the communication problems but the biggest hurdle is the lack of frankness between workers and employers: workers suffer from decisions that come out of the blue. SGM is still afloat but Ge´camines sank because the old paternalism made it go bankrupt. SGM must support the population inside and outside the concession, included the government. But SGM is heavily laden with all these commitments and risks sinking, like Ge´camines. The old firm used to give everything to employees, as well as their salaries. The population wants SGM to do the same thing as Ge´camines, but I do not agree with this idea: we need to help the population to be self-sufficient and not to rely on SGM. SGM is a giant next to a very small individual. The giant has blown in the face of the individual and now he tries to comfort him with a small biscuit. I work at my computer at SGM, but my family is very far away, I spend very little time with them. The children ask “Where is dad?”. SGM breaks up families. You get money but you cannot be sure you can bring up well-educated children. We are not making SGM our own company. What is done tries to ensure a certain social calm so that SGM can exploit the site. They are buying the peace. SGM develops projects for the welfare of the community and fulfills its obligations towards the Congolese Government but at the staff level, there is a lot still to do, especially regarding job stability. There is a cultural misunderstanding, we do not understand each other. There are two cultures. JMD 30,10 964What SGM is doing with local communities, no other company has ever done it in the DRC; but with its employees, the question is different. When we criticize Ge´camines in its social action, we forget that the growth of the UMHK started when it developed the health, education, and leisure of its employees. Providing good conditions for employees should not be criticized: it helps them to produce. SGM should take care of employees so that they can give the best of themselves. Paternalism is not all bad. 2. Teaching orientations GOLDEN for Sustainability’s research question is: “How do firms learn to integrate and manage sustainability in their business model” (GOLDEN, 2011, p. 4). The case we have presented develops some of these elements in an African context that can be defined as critical: effectively, SGM can undergo the same fate as certain extractive companies in developing countries that have been forced to abandon profitable projects owing to pressure from local communities or environmentalists[2]. In order to stay in the concession, the company needs – from a strategic point of view – to “elicit cooperation from its stakeholders [. . .] to support the implementation of its competitive, cooperative, innovation and growth strategies” (GOLDEN, 2011, p. 7). In a global market, the innovation strategy (the implementation of the SX/EW technology) requires the cooperation of local stakeholders, who are powerful enough to boycott the production or export of copper and cobalt. The – real and potential – boycott actions are manifestations of a clash between the company’s purpose (the promotion of an enlightened CSR approach) and the local culture (historically enforced paternalistic CSR) (GOLDEN, 2011, p. 6). In an enlightened CSR approach, individuals are considered citizens, i.e. subjects of rights and dignity. Development consists of the enforcement of individuals’ rights and the promotion of personal potentials at the highest level. These purposes are pursued in processes where all the relevant company’s stakeholders are involved “as equals” (Maak and Pless, 2006). Alternatively, in a paternalistic CSR the company’s social investments are understood as gifts “from father to children” which implicitly demand the counter-gift in terms of a-critical submission of local stakeholders to the company (Rajak, 2006). The challenge to “elicit cooperation from stakeholders” (GOLDEN, 2011, p. 7) by promoting a cultural change towards an enlightened CSR and an enlightened development will be analyzed at three levels: company-government; company-local community; and company-local employees. Each level is headed with questions for the case’s debate in class: questions related to the different elements of SGM’s business model. 2.1 Level 1. Company-government 1. How can SGM manage its relationships with the Central Government in order to reduce conflict, both in Kinshasa and in the concession? This question relates to the need for SGM to trigger cultural and systemic change in relation to “government interaction(s), public policy and regulation, and collective action processes” (GOLDEN, 2011, p. 7). In fact, a fair participation in shares and a fair amount of taxes paid by a mining company in Africa is crucial contributions to the development of a country (OSISA et al., 2009). The initial rejection of contract renegotiation by SGM relates to the dynamics of negotiations in foreign investment processes in developing countries: according to Eden et al. (2004), when a foreign company starts a negotiation with the host government, the latter is weak. But once the company has built the plant (as it is SGM’s case), the company’s assets are locked or “hostage”, and therefore the government has incentives to start new negotiations. However, endless renegotiations are a bad strategy for the Congolese government in order to attract more foreign investment. CSR and development 965An opportunity for SGM to show a positive involvement in the development of the population in the concessions would be to join other firms and the Provincial Administration in Katanga in order to force the retrocession of taxes to the provincial and local levels. 2.2 Level 2. Company-local communities 1. Is the extraordinary financial power of SGM at the local level an insurmountable barrier to the promotion of an enlightened CSR, this is, to the promotion of individual responsibilities of local individuals? At this level, the case helps to reflect on governance and structure, particularly on “the degree to which the firm has put in place and developed structures and processes connected specifically to the management of social and environmental sustainability within its operations” (GOLDEN, 2011, p.7). In the relationships company-local communities, SGM tries to promote an enlightened CSR. But difficulties and incoherence are evident. First, because SGM’s power and money in the concession offers an image of the company as a mighty father. Second, because the model of CSR governance is not clearly enlightened. In fact, the Foundation to develop CSR policies covers only 30 per cent of the total social investment; and the power in the Foundation is strictly controlled by SGM. The question arises: How will the local community help deliberate on the other 70 per cent? Can we really say that social investment in the community is performed With SGM support? Nevertheless, cultural changes are slow, and SGM is in the concession only since 2005. 2.3 Level 3. Company-employees 1. What kind of initiatives can be implemented in order to address the cultural conflict between US managers and Congolese employees? Is the solution of “waiting for future Congolese engineers promotion” too long term to solve the burning present conflict? The relationships between foreign top managers and local employees reflect the tensions and problems presented in the other two levels of analysis. For instance, certain Congolese employees believe that SGM should pay more taxes, and this perception affects SGM’s legitimacy at the local level and somehow promotes boycotts. In relation with the cultural conflict, two sorts of problems arise: (1) Norms imposed by the company, and not accepted by Congolese employees: lack of dialogue, lack of transparency, lack of tolerance [. . .] and finally existence of “two cultures” (Appendix 2) inside the company. (2) Living conditions of Congolese employees (especially middle managers), often far away from their families. In order to address these questions, a fundamental change in the relationship between company and stakeholders is needed: stakeholders must be considered “as primary (potential) facilitators of internal change processes aimed at sustainability, rather than solely as counterparts of externally oriented social development initiatives” (GOLDEN, 2011, p.5). This shift involves the dialogue of top managers and local employees: a dialogue with a potential to “enlighten” the mindset of local employees. But this dialogue would also modify “the collective identity, shared values and emotional dimensions that characterize the senior management of the firm” (GOLDEN, 2011, p. 6): it would change the motivation values of the members of the organization (GOLDEN, 2011, p. 10). Specific actions to implement this dialogue would be: . The translation and diffusion in a participative style of documents that define the identity of SGM/RNF. . The promotion to top management of Congolese employees (or of former Ge´camines Engineers), especially in the areas of CSR and Human Resources. . The revision of intercultural relationships in the Base Camp. JMD 30,10 966About the authors Josep F. Ma`ria SJ is a Researcher at the Institute for Social Innovation and Associate Professor at ESADE Business School (URL). He teaches CSR and has been Visiting Professor and Researcher in Nicaragua and the Democratic Republic of the Congo. Josep F. Ma`ria SJ is the corresponding author and can be contacted at: [email protected] Emmanuelle Devuyst is a Lawyer in charge of an advocacy project on CSR at European level in the Jesuit European Office in Brussels. She has several times visited the Democratic Republic of the Congo in the last few years. CSR and development 967 To purchase reprints of this article please e-mail: [email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints View publication stats