Many, if not most, extractive and industrial companies own portions of undisturbed or less disturbed landscapes which are not actively utilized for the company’s core business. By consolidating such areas, establishing their potential ecological contribution, initiating projects to improve the present ecological state and managing these lands as a protected area, such lands can contribute significantly to the sustainability profile of a company. Reporting on such efforts in the annual sustainability report of the company can influence stock exchange ratings, increase shareholdings and share prices, and ultimately provide a beneficial business situation to the company.
At Exxaro Resources’ Manketti Game Reserve, the 16,000 ha coal reserve of Grootegeluk Mine is managed as a protected area. Projects that are currently running on this reserve includes: re-introducing animals species; conducting research on the impacts and mitigations of mining to the ecosystem; and acting as a source population for re-introducing species to other protected areas. Because other industrial companies own land adjacent to the reserve, Exxaro is currently exploring the possibility of establishing a combined protected area that will be more representative of the ecosystem. The aim is to provide an opportunity for all of the involved companies to report on a shared protected area of significant size and ecological representation. This concept will go beyond legal compliance and will benefit the core business of the company, which is supported by sustainability.
As public opinion regarding extractive industries comes under more scrutiny, particularly with regards to responsibility to the environment and ecosystems, the historic off-setting models are becoming obsolete. It is more evident that many large industrial companies practice environmental management only to a point of legal compliance because it is seen as an expense with little or no benefit to the business goals of the company, apart from maintaining its permission to conduct its business. However, if environmental management is approached in the correct manner, this practice can provide substantial returns through the annual sustainability report. This is suggested in the 2013 Global Reporting InitiativeG4 guidelines. Extractive and industrial companies are often inclined to view conservation as opposing to their core business; however, it can in support business by providing improved sustainability. The key is to present this benefit to a company’s top executives in a way that they will agree to, as there are some costs.
The solution suggests an approach of benefiting an extractive or industrial company’s business by improving its sustainability profile. It aims at changing “green-screening” offsets into sustainability assets through conservation-linked projects and protected area management. With suitable reporting, this will create non-monetary profit for the company.
- Start with one or two small projects / protected areas with relatively small budgets in order to prove the point.
- Ensure that the company’s top management is aware of and endorses the project.
- Try to involve as many company managers, employees and local communities in the project as possible.
- Ensure publicity of the project.
- Prepare for public criticism of a new approach.
- Ensure the project and its results are included in the annual sustainability report.
- Progress to bigger projects / projected areas as executives realize the potential.
- Increased interest in the protected area by company executives, managers, and employees.
- Improved public-social responsibility profile in the community and industry.
- Easier to motivate new conservation projects that increase the protected area size.
- Interest by neighboring land-owners to be incorporated in the protected area.
- The cost of projects is out-weighed by the benefits.
- Improvement on sustainability ratings at the stock exchange.
- Potentially more lucrative option for investors concerned about environmental sustainability.