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Conflict translates environmental and social risk into business costs

Proceedings of the National Academy of Sciences - PNAS, 2014-05, Vol.111 (21), p.7576-7581 [Peer Reviewed Journal]

copyright © 1993–2008 National Academy of Sciences of the Uinted States of America ;Copyright National Academy of Sciences May 27, 2014 ;ISSN: 0027-8424 ;EISSN: 1091-6490 ;DOI: 10.1073/pnas.1405135111 ;PMID: 24821758

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Title:
Conflict translates environmental and social risk into business costs
Author: Franks, Daniel M. ; Davis, Rachel ; Bebbington, Anthony J. ; Ali, Saleem H. ; Kemp, Deanna ; Scurrah, Martin
Subjects: Business risks ; Business structures ; Communities ; Community-Institutional Relations - economics ; Conflict ; Conflict (Psychology) ; Conservation of Natural Resources - methods ; Corporate culture ; Decision making ; Ecological sustainability ; Environment ; Environmental impact ; Extraction and Processing Industry - economics ; Extraction and Processing Industry - methods ; Green businesses ; Humans ; Interviews as Topic ; Mining industries ; Mining industry ; Private sector ; Professional Corporations - statistics & numerical data ; Risk ; Social Sciences ; Sustainability science ; Sustainable communities ; Sustainable development
Is Part Of: Proceedings of the National Academy of Sciences - PNAS, 2014-05, Vol.111 (21), p.7576-7581
Description: Sustainability science has grown as a field of inquiry, but has said little about the role of large-scale private sector actors in socio-ecological systems change. However, the shaping of global trends and transitions depends greatly on the private sector and its development impact. Market-based and command-and-control policy instruments have, along with corporate citizenship, been the predominant means for bringing sustainable development priorities into private sector decision-making. This research identifies conflict as a further means through which environmental and social risks are translated into business costs and decision making. Through in-depth interviews with finance, legal, and sustainability professionals in the extractive industries, and empirical case analysis of 50 projects worldwide, this research reports on the financial value at stake when conflict erupts with local communities. Over the past decade, high commodity prices have fueled the expansion of mining and hydrocarbon extraction. These developments profoundly transform environments, communities, and economies, and frequently generate social conflict. Our analysis shows that mining and hydrocarbon companies fail to factor in the full scale of the costs of conflict. For example, as a result of conflict, a major, world-class mining project with capital expenditure of between US$3 and US$5 billion was reported to suffer roughly US$20 million per week of delayed production in net present value terms. Clear analysis of the costs of conflict provides sustainability professionals with a strengthened basis to influence corporate decision making, particularly when linked to corporate values. Perverse outcomes of overemphasizing a cost analysis are also discussed.
Publisher: United States: National Academy of Sciences
Language: English
Identifier: ISSN: 0027-8424
EISSN: 1091-6490
DOI: 10.1073/pnas.1405135111
PMID: 24821758
Source: Open Access: PubMed Central
GFMER Free Medical Journals
MEDLINE

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Conflict translates environmental and social risk into business costs

copyright © 1993–2008 National Academy of Sciences of the Uinted States of America ;Copyright National Academy of Sciences May 27, 2014 ;ISSN: 0027-8424 ;EISSN: 1091-6490 ;DOI: 10.1073/pnas.1405135111 ;PMID: 24821758

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