Mining and energy projects are vital for the development of many countries and regions. They provide essential resources, create jobs, and generate revenues. However, these projects also pose significant environmental, social, and governance challenges. How can we ensure that these projects are conducted in a responsible and sustainable manner? How can we prevent corruption, mismanagement, and human rights violations? How can we foster trust and collaboration among stakeholders? These are some of the questions that require transparency and accountability in mining and energy projects.
What is transparency and accountability?
Transparency and accountability are key principles that guide the conduct of mining and energy projects. Transparency refers to the availability and accessibility of information about the activities, impacts, and outcomes of these projects. Accountability refers to the responsibility and responsiveness of the actors involved in these projects, such as governments, companies, communities, and civil society. Transparency and accountability are important for several reasons.
The benefits of transparency and accountability
Transparency and accountability can enhance the efficiency and effectiveness of mining and energy projects. By providing clear and accurate information about the project objectives, plans, progress, and performance, transparency and accountability can help to monitor and evaluate the project results, identify and address problems, and improve decision-making and learning. Transparency and accountability can also help to reduce costs, risks, and uncertainties associated with these projects.
For example, the Extractive Industries Transparency Initiative (EITI) is a global standard that promotes transparency and accountability in the oil, gas, and mining sectors. The EITI requires participating countries to disclose information on their extractive revenues, contracts, licenses, production, expenditures, ownership, and social and environmental impacts. The EITI also requires companies to report on their payments to governments, such as taxes, royalties, fees, bonuses, dividends, etc. The EITI aims to improve governance, reduce corruption, enhance public trust, and foster economic development in resource-rich countries (EITI 2021).
Transparency and accountability can also improve the social and environmental impacts of mining and energy projects. By disclosing the potential impacts of these projects on the environment, human rights, health, safety, culture, and livelihoods of affected communities, transparency and accountability can help to prevent or mitigate negative impacts, ensure compliance with standards and regulations, and promote best practices.
Transparency and accountability can also help to enhance the benefits of these projects for local development, such as by ensuring fair distribution of revenues, creating opportunities for local employment and procurement, and supporting social investment programs.
For example, the International Council on Mining and Metals (ICMM) is a global industry association that represents leading mining and metals companies. The ICMM has developed a set of principles and performance expectations that guide its members to operate in a transparent and accountable manner.
The ICMM principles and performance expectations cover topics such as governance, stakeholder engagement, environmental stewardship, climate change, human rights, health and safety, social performance, and local content. The organisation thereby aims to improve the social and environmental performance of the mining and metals industry, as well as its contribution to sustainable development.
Another example is the Newmont Ahafo Development Foundation (NADeF) which is a community development initiative established by Newmont Ghana Gold Limited and the Ahafo mine communities in 2008. The NADeF is funded by a 1% net profit after tax contribution from Newmont and a $1 per ounce of gold sold contribution from the mine. It operates in a transparent and accountable manner, with a board of trustees that includes representatives from Newmont, the mine communities, the local government, and civil society. The NADeF supports projects in areas such as education, health, infrastructure, economic empowerment, and natural resource management. It has invested over $28 million in more than 120 projects that have benefited over 800,000 people in 10 communities (NADeF 2020).
The risks of a lack of transparency and accountability
Despite the importance of transparency and accountability in mining and energy projects, there are many challenges that hinder their implementation. Some of these challenges include:
- Lack of legal frameworks or enforcement mechanisms that require or support transparency and accountability in mining and energy projects.
- Lack of capacity or resources among governments, companies, communities, or civil society to access or provide information or to monitor or hold accountable the actors involved in mining and energy projects.
- Lack of awareness or interest among stakeholders about the importance or benefits of transparency and accountability in mining and energy projects.
- Lack of trust or collaboration among stakeholders due to power imbalances, conflicting interests, or historical grievances.
- Lack of incentives or sanctions for actors to comply with transparency and accountability standards or commitments.
These challenges can have serious consequences for the sustainability and success of mining and energy projects. Some of these include:
- Poor project performance or outcomes due to inefficiencies, errors, delays, or failures.
- Negative social or environmental impacts due to violations of rights, standards, or regulations.
- Loss of legitimacy or credibility due to allegations or evidence of corruption, mismanagement, or abuse.
- Escalation of conflicts or violence due to dissatisfaction, resentment, or resistance among affected stakeholders.
In summary
Transparency and accountability are essential for the responsible and sustainable conduct of mining and energy projects. They can enhance the efficiency, effectiveness, social, and environmental impacts of these projects, as well as their legitimacy and credibility.
However, there are many challenges that hamper their implementation, which can result in poor project performance or outcomes, negative social or environmental impacts, loss of legitimacy or credibility, and escalation of conflicts or violence. Companies should aim to promote greater transparency and accountability in mining and energy projects, by involving all stakeholders in a transparent and accountable manner.