Social Performance Of De Beers Diamond Company Management Essay
Business institutions are an integral part of a social system in a market economy, where business is the collection of private and commercially oriented organization that deals with the problem of scarcity and with the prime objective of profit making. Competition and profit motive are the two key drivers of business behaviour and produce important benefits to society in the form of improve lifestyle and efficiency. Since 1990, businesses have taken ample responsibility of society and its people. With the increase in the strong relationship between business and society, businesses have also shown greater interest in the communication with society through ethical consideration and corporate social responsibility.
CSR is a concept of corporate behavior that require business to be responsible for the economic, environmental and social consequences for their actions and having duty to take care of all their stakeholders which includes, employees, customers, local communities, and shareholders.Â (Oppapers, 2007). There is an increasing trend in the practices of Corporate Social Responsibility Practices in businesses. CSR not only deals with community, ethics and environment but also focus on many other aspects of society like, employee rights, consumer rights, codes of conduct, and corporate philanthropy.Â Therefore, same as the company of diamonds or can say whole industry of diamonds ‘De Beers’ is taking care of its responsibility against society.
Since 1888, De Beers is the world’s leading rough diamond company with the expertise in exploring, mining and marketing of diamonds. De beers is operating in more than 20 countries across the globe and producing largest diamond with mining operations in Canada, Botswana, Namibia and South Africa. These mining operations are more profitable business so according to company’s philosophy, this family is committed by contributing to the communities in which they work and live.
The start of any new project in De Beers not only benefit family of De Beers but also provide numerous economic benefits to stakeholders and partners by creating job opportunities which in turn generate income, infrastructure development, direct procurement spending and development of local businesses. Diamonds are usually discovered in remote and unapproachable areas away from city life where there is a huge requirement of new infrastructure. Therefore, provision of such facilities can benefit the host country with other facilities like basic utilities, healthy environment, health care and education (building skills).
As a leading diamond mining company, De Beers are committed to the development of the host country by minimizing the impact of mining on natural landscape and ensure safe and healthy environment for our employees and communities where we do operations. In the year of 2001, all the Canadian exploration operation achieved ISO14001 certification, which is a milestone for De Beers. (Global info mine) The main focus of EMS is to provide useful and non-risky environment after operation. As there is no as such any chemicals use in process on diamond mining but still the EMS helps to prevent from air, land and water pollution during mining. The country where the operation is taking place not just get the benefits of diamonds and revenues from it but there is a large amount of development in infrastructure take place in that country as well. As in the operation of Canada, ice runways and seasonal roads provide many opportunities for constructing permanent facilities.
During 2009, the environmental consequences were positive as the company finalized Environmental Standards that includes lifecycle planning, biodiversity, water, climate change, pollution prevention and waste management. In the year of 2009, the use of reused and recycled water was increased from 45% to 57% from the past year. The energy consumption was also dropped from 14.58 million GJ to 7.8 million GJ in the year of 2009 and this was mainly because of lower production. Same with the carbon emission it fell from 2.11 million tons to 1.16 million tons (De Beers). Company cannot neglect the negative consequences of mining on environment but De Beers is so committed to its policy that they involve all its stakeholders and partners in the planning process so that major social and environmental issues should be identified in the initial steps. According to Tracey Lloyd (2009) in her article CSR in South African Diamond Mining, Benchmark Foundation found a 100% implementation of environmental management programs with the standard criteria of ISO 14001. In 2007, the company was also awarded with WWF-Lonmin Award for their environmental conservation. According to Mark Read, the Chairman of WWF, “This Award is a fitting acknowledgement of the outstanding contribution De Beers and the Oppenheimer family have made to environmental conservation in our beautiful country.”
As discussed above that, De Beers do consult their stakeholders and community collaborators before any action because they believe in long-term relationships with these communities where they operate. The company does not discriminate among communities and respect cultural and regional diversity. Moreover, De Beers believe in sustainable development so rather than providing them a fish daily to eat they focus on teaching them how to catch a fish. Their idea is to build capacity instead of dependency in the communities. These efforts of social investment date back in 1970s and now with the same energy and enterprise it contributes CAD $4.4 million every year for the social, environmental and educational initiatives.
According to Ernest Oppenheimer, the financial entrepreneur of De Beers and founder of Anglo-American Corporation of South Africa asserts in 1954 that De Beers aim is to make profit but in a way that left positive lasting effects on the operating communities. The company is highly committed to sustainable development, as it is an integral part of the business. They address sustainable issues for enhancing their relationship with host and partner governments. The value of this community development approach can be seen in 2009 when De Beers continued with their community-based programmes when they fire many staffs, reduce production and social investment because of economic turmoil. In the report to society of 2009, in their approach to communities, the family of companies had invested US$29.3 million in community investment. According to Nicky Oppenheimer, the Chairman of De Beers, “Skills development plays a vital role in our business, which is why we feel so strongly about investing in and nurturing what NIMT is doing. Skills development, among its citizens, is critical for Namibia’s future, and is an important part of achieving Namibia’s Vision 2030 goals.” (De Beers)
According to Tracey Lloyd (2009), Benchmark Foundation’s researcher reviewed the performance of De Beers, Alexkor and Transhex and found very little community support to CSR practices with an average score of 2 out of 5 but conclusion cannot be drawn because individual scores were not disclosed yet.
In addition to their relationship with communities, it also provide a variety of job opportunities to people without any discrimination of ethnic, gender and religious diversity. They not only hire people from these communities but also build the skills that are required to do the available jobs. De Beers in Canada also cheer the participation of local businesses and back their struggle to meet the required standards (global info mine).
The global recession of 2007 has affected the company’s production and employees. The company reduced more than 23% of workforce in the year of 2009. However, the company did not stop to provide Anti-Retroviral Treatment to a total of 1,820 employees and their family members in South Africa and Botswana. The upcoming projects in Canada and Botswana are going to provide a plenty of jobs and career opportunities to thousands of people.
In addition to the employment opportunities, De Beers is having partnerships with government, local entrepreneur and communities. This approach is the key role in reminding them their sense of responsibility towards operating communities. All these mining companies in Africa are partially owned either by the government of that country or by the empowered communities. Ponahalo Holdings is a trust that is a broad-based Black Economic Empowerment (BEE) company that helps the underprivileged women, disable people and communities around mines. The overall 27% of the participants are women.
With the 49% reduction in the production during 2009, the company was able to pay to their stakeholders around the world in which, partners, joint ventures, suppliers, employees and shareholders. Tracey Lloyd (2009) discussed the benchmark foundation findings of De Beers on social impacts of communities. In this topic, the researcher discovered De Beers’s relation with their stakeholders, workplace equity, ethical considerations, labour rights and safety measures. They found strong commitment with stakeholders’ consultation and building skills of mining communities. On the contrary, the community perceptions were low for the performance of miners but they scored De Beers HIV /AIDS practices higher at 2.25.
Furthermore, Benchmark Foundation reported De Beers report to society as an A+ standard report which not only disclose the core indictors of the CSR but additional indicators are also included in their report.
As De Beers is a profitable organization with the aim of improving the living standard of communities where they operate so there improving project also focus on health living environment with the provision of human and labour rights. In 2009, De Beers’ family took part in new innovative programme for HIV and AIDS management in the form of case study. The whole project was about abolishing stigma and elevating participation in counseling and testing of HIV and AIDS. Furthermore, make available of Anti-Retroviral Treatment to employees and their family members and providing physical and emotional care to the employee (De Beers).
The provision of medical services is severely lacking around the communities where they operates so De Beers locate, equip and train local medical practitioner to provide medical facilities to their employees which also have long term benefits for the local communities. (Watson, 58-59).
All those commitment that De Beers were somewhat fulfilled but as we know that such large reputed company is not always as white as it seems to be. In the end of 1998, De Beers faced a great business challenge when they met with double threat of human rights accusation of purchasing illegitimate diamonds from African Rebellions and ruler’s contribution to the wars. At that time their share were shrinking and at the same time, it was difficult for them to even pay for the sopping up of gems itself. Nevertheless, after this controversial event of the company, De Beers draw a clear line between legitimate trades, which we can see in company’s ethical principal as conflict-free diamonds.
In conclusion, the role and challenges of business have changed over time. The social environment also evolved and offers major opportunities, threats and challenges to business
De Beers as an extracting diamond industry has a huge impact on social, environmental, and economic life of the country where it operates like, Canada, South Africa, Russia and more. The corporate social responsibility play a significant role for not only economic development of the operating communities but also have positive consequences of mines like building capacity, training, employment, infrastructure development, health care facilitates, water provision, and so on. As mentioned above that De Beers is fulfilling all their committed roles so very few negative consequences can be highlighted like carbon emission, waste, land use etc.