Monday, February 22, 2010

Impact and Benefit Agreements workshop in Vancouver

by Christie Stephenson

Northwest & Ethical Investments (NEI) recently hosted a workshop “Impact and Benefit Agreements in Canada's mining sector: An overview of their emergence, performance, and implications for SRI.” The presentation was given by Dr. Ben Bradshaw, an Associate Professor of Geography at the University of Guelph, and originator of the Impact and Benefit Research Network.

Dr. Bradshaw opened the session calling the question of environmental governance “the question of our generation.” He framed the challenge of mining development as determining “by whom, and how, should activities like these be regulated?”, and explored the role IBAs could play in the negotiations between mining companies and impacted communities.

Generic IBA provisions benefiting communities include financial provisions, employment and training, economic development, and environmental and cultural protections. Benefits for mining companies typically involve improved certainty, timely development of projects, a better investment climate, and an enhanced corporate image.

Dr. Bradshaw discussed the emergence of agreements in the context of flaws in the design and practice of the environmental assessment process; increased recognition of aboriginal rights, expectations and needs; and mining firms’ needs and interests. He suggested IBAs could address the limitations of environmental assessment (EA) such as inadequate follow-up on projects post-approval and the failure of EA, by design, to deliver specific benefits to those parties most impacted by a project. He also stressed that IBAs reflect the assertion of Aboriginal rights and title, and the increasing recognition of the concept of traditional territory. Mining companies may benefit from IBAs as they address multiple concerns such as the need to secure a social licence to operate, risk avoidance, reputational benefits, and pressure from shareholders, including socially responsible investors.

Additionally, Dr. Bradshaw reviewed the field of academic research related to IBAs, and presented his own work underway on assessing the impact of IBAs on signatory communities. He found that IBAs are largely meeting their explicit objectives, although this varies from community to community. He also found there is considerable disillusionment with IBAs in many communities, which reflects problems with IBA implementation and/or the existence of too many additional implicit expectations by members of signatory communities.

Dr. Bradshaw concluded with an overview of the implications of IBAs for SRI, noting the challenges associated with using the existence of these agreements as a useful tool for socially responsible investing analysts in screening companies for portfolio eligibility.

NEI’s senior analyst Chris Ballance, who covers the mining industry, remarked that “IBAs may be a sign of good relations between a company and the communities in which it operates. However, as Ben Bradshaw pointed out, the agreements are usually confidential and in some cases may not include or achieve benefits that are not already required through regulatory means. As analysts, we need to consider what is included in, and achieved by, an IBA rather than just look for its existence”.

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