The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

3 ways OceanaGold’s suit against El Salvador calls corporate social responsibility ‘good faith’ into question

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Residents of San Isidro (Cabañas, El Salvador) look out over a valley where Pacific Rim/OceanaGold hopes to begin mining gold and silver. Photo: Jeff Deutsch / Oxfam America

The case brought against the Salvadoran government in the World Bank demonstrates a gap between what the company says and what it does.

Uwe Gneiting is the Research and Evaluation Advisor in Oxfam America’s Private Sector Department.

‘In good faith’: The sincerehonest intention or belief, regardless of the outcome of an action

The idea that mining companies can voluntarily contribute to sustainable development has become somewhat of a mantra within the global mining industry during the past decade. The accompanying mining industry buzzword, corporate social responsibility (CSR), has prompted commitments by individual mining companies, industry-wide CSR initiatives, and sustainability panels at trade meetings in the mining sector.

Unfortunately, the realities on the ground present a stark contrast with the companies’ public commitments, as communities’ opposition to mining projects continues to increase around the world. In Latin America alone, 206 mining conflicts are currently being recorded.

How can we explain these contrasting trends and what do they mean for the potential of mining companies to credibly regulate their practices and impacts? The case of multinational gold producer OceanaGold, which is suing the government of El Salvador at the World Bank’s International Center for Settlement of Investment Disputes (ICSID), shows the ongoing discrepancy between mining companies’ global CSR commitments and their actual practices. Like many of its peers, OceanaGold has jumped on the CSR bandwagon by adopting a range of policies to show the company’s commitment to principles of sustainability, human rights, health and safety, transparency, the environment, and local communities (including the right to free, prior and informed consent).

In the absence of effective monitoring and/or sanctioning of their actions, we have to rely on the ‘good faith’ of these initiatives for them to actually work. So what can we make of the company’s intentions given the evidence provided by the case?

1) A shaky commitment to human rights?

Is OceanaGold’s push into El Salvador to pursue resource deposits regardless of local opposition and its potential human rights impact just “business as usual”? The company acquired Canadian mining company Pacific Rim well-aware of the fact that previous attempts to build a mine had inflicted significant conflict and violence on the affected communities in El Salvador. This is not exactly the behavior of a good corporate citizen as outlined in OceanaGold’s human rights policy.

OceanaGold’s ICSID case and the evidence presented in it also reveal mining companies’ selective eagerness to recognize the authority of global institutions that can enforce human rights. Appeals to investment and trade dispute mechanisms stands in stark contrast to human rights commitments, as trade and investment rules can undermine the authority of other global regulatory frameworks, such as the Guiding Principles on Business and Human Rights.

2) Insincere respect for national laws?

The company’s push into El Salvador—despite the government’s refusal to grant an exploitation license to Pacific Rim based on its non-fulfillment of its regulatory requirements—highlights OceanaGold’s conditional support of resource-rich countries’ sovereignty and democratic governance. Only as long as rules and regulations favor the company and its ability to gain low-cost access to resources, will it respect national laws?

Similarly, OceanaGold’s commitment to contribute to local development clearly contradicts its demand for more than $300 million from the El Salvadorian government, an amount which represents half of the country’s entire public education budget.

3) Free, prior and informed consent – only if in favor of companies?

Lastly, the ICSID suit highlights the failure of OceanaGold’s commitment to local communities, particularly around the principle of free, prior and informed consent, especially considering the local history of conflict and the environmental vulnerability of affected communities.

Companies’ commitments to principles of human rights and environmental protection can be welcomed first steps in building a more sustainable and just mining industry. However, for any of these commitments to earn our support would require companies to narrow the gap between what they say and what they do.

OceanaGold’s ‘good faith’ would be better demonstrated by respecting the sovereignty of El Salvador and the rights of the affected communities by abandoning its pursuit of mining in El Salvador.

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