Conflict between private-sector mining, oil, and gas companies and local communities poses a substantial financial risk to businesses, yet businesses rarely consider the full cost of this conflict, a study finds. Communities often respond strongly to proposed developments by industries such as oil and gas or mining, which generate social and environmental risks for local populations. To quantify the costs of company-community conflict and understand how companies interpret such costs, Daniel Franks, Anthony Bebbington, and colleagues interviewed 45 professionals in industries involved in natural resource extraction, examined 50 case studies of extraction projects worldwide involving prolonged conflict, and conducted 136 interviews for in-depth research in Peru. Case research revealed that the most common issues in dispute were environmental, such as water contamination or competition for natural resources. Interviewees cited project delays as the most frequent cost, noting that delays can cost roughly $20 million per week for mining projects valued between $3-5 billion. The highest costs were due to the value lost when projects could not be pursued. The results suggest that financial risks associated with conflict provide an incentive for companies to minimize environmental and social risk to local populations. Understanding the relationships between environmental, social, and business risk might help shape better outcomes for communities and companies, according to the authors.
Article #14-05135: "Conflict translates environmental and social risk into business costs," by Daniel Franks et al.
MEDIA CONTACTS: Daniel Franks, Centre for Social Responsibility in Mining, The University of Queensland, Brisbane, Queensland, AUSTRALIA; tel: +61 401 451 454; e-mail: <firstname.lastname@example.org>; Rachel Davis, Corporate Social Responsibility Initiative, Harvard Kennedy School, Harvard University, Cambridge, MA; tel: 212-653-0695 (primary); 617-909-0125 (secondary); email: <email@example.com>; Anthony Bebbington, Graduate School of Geography, Clark University, Worcester, MA; tel: 508-793-7370 (primary); 774-232-9711 (secondary); e-mail: <firstname.lastname@example.org>