Foreign direct investment in the mining sector and the legal implications for corporate social responsibility : South African/Ghanaian case study

Abstract

Mining activities in most third world countries include foreign direct investment (FDI) by large-scale foreign mining companies. Most third world countries welcome this as it contributes greatly to their developing economies. While these FDIs hold many benefits for the host country, it is argued that the negative social impacts of mining activities are great and felt most at local level. Local communities in mining towns are at risk of having their economic-, environmental and food security compromised in the mining process. The expectation of the international community of mining companies to practise corporate social responsibility (CSR) has grown significantly over the last decade. Subsequently mining companies have increasingly started developing CSR programmes that focus on contributing to the development of directly affected communities. The primary aim of this research is to determine the most recent contributions to the international framework for CSR and its implications for South African FDI in the mining sector of developing countries. In attempting to reach this objective, relevant sections of the Guiding Principles on Business and Human rights, ISO 26000, KING III and the GRI:G4 are examined. In addition, a case study is included to serve as an example of the practical implications for mining entities of international provisions applicable to FDI and CSR. Some of the most noteworthy contributions by the above four instruments include the human rights due diligence process, requiring of companies to assess their possible human rights impacts prior to starting their operations; and the integrated reporting system, requiring of companies to include both financial and non-financial matters in their annual reports, amongst others. It is argued that CSR and the subsequent reporting thereof are moving in a positive direction – towards realising sustainable development. The force behind external assurance of sustainability matters, however, leaves much to be desired.