1. Extractive Industry and Community Development Kiku Loomis President and Co-founder World Monitors Inc. Strategies for Responsible Business Practices in the Global Economy

2. The Question  How can companies work more effectively with the affected communities and local governments in a participatory way to prioritize, sequence and implement their programs to meet current and legacy needs? "Many of the social, economic and environmental challenges we face are too complex, and the necessary skills and resources for tackling them too dispersed between different sectors, for any one sector to be able to solve these challenges alone." Jane Nelson, Senior Fellow and Director Corporate Social Responsibility Initiative, Harvard University

3. Private Sector and Community Development  The private sector, especially extractive industries have over the years increased their community development involvement  Early days, “Do no harm” philosophy: the motivation was minimizing the negative impacts of their operations and charitable contributions to infrastructure, health  Now focus on SLTO through community development with an eye toward in sustainable development

4. A Spectrum of Private Sector Approaches to CommDev LOW  Sustainability  HIGH LOW  Level of Community Participation  HIGH Philanthropy Consultation Management Planning Decision-making

5. Negative Impacts of Company- Driven CommDev  Lack of consultation/participation of community can lead to: Weakening of local community social capital and government capacity; creating dependent relationship  lack of trust leads to conflict between the company and community  Bilateral partnerships leaving out governments lead to same  Projects that do not consider legacy lead to dependent relationships between the private sector and communities and local government Despite best intentions, ill-designed community development projects can lead to conflict – projects tend to focus on short-term needs – i.e. local infrastructure, etc. but do not consider post-closure conditions

6. Reasons for Failures  Lack of community development expertise  Lack of political will to accommodate the pace of development of the community  Tendency to hold onto resources and decision-making power  Lack of social capital/capacity to fight the forces of the private sector  Lack of local and national government willingness or capacity to manage private sector – co-option

7. Tri-sectoral Participation Community Development Model Private Sector (Extractives) Community Organization Joint Governance Community Local Government Civil Society CBOs, NGOs Independent Trusted Facilitators NGO’s, Consultants INGOs Multilaterals Donor Organizations (WB) Networks SUPPORT International Networks (e.g. ICMM) Consultants Reg’l. & Nat’lGovt Multilaterals Donor Orgs SUPPORT

8. Trisectoral Model for Extractives Participation in CommDev Key Features  Participation by all parties Community, Government, Companies  Joint governance mechanism Control of Funds, Setting the Agenda, Project Oversight  Capacity building for weaker actors  Use of Facilitator(s)

9. Participant Roles  Community/CBOs Set the agenda, development needs; set ground rules for interaction and change; set pace of development Knowledge, staff, other funding  Government Create enabling environment, provide link to wider development goals and planning, management, staff, funding  Private Sector Funding, technical and managerial expertise, planning, finance, training, skills, access to markets, wider network  Facilitator create trust, build cultural bridges, provide capacity building, training and education, access to wider network

10. Key Success Factors  Matching Company Drivers with Development Objectives  Project Design Joint Governance Structure Level power asymmetries, jointly agreed goals and management methodology  Effective Community Participation  Formal agreements  Respect for development timeframes  Long-term planning (social closure planning) – focus on building capacity

11. Risks  The principal risk lies in the imbalance of power that exists between powerful, resource rich extractives and weak government and communities.  Dependency on private sector  Unsustainability  Weakening, not strengthening local governance, social capital  Conflict

12. Drivers Chart for Extractive Industry Industry DriversPotential Development Applications Mitigation of Negative Impacts Social License to Operate Creation of Positive Net-effects Enlightened Self-interest Supply Chain Labor source Infrastructure Agriculture Health Education Poverty alleviation Community Organization and Capacity Building Employment Small Business Generation Environment Employment

13. Recommendations  The CommDev community must inform the private sector on the best practices for fomenting sustainable development through CBO, CDOs  The CommDev community must understand the private sector The donor comm; increase the capacity of the community to organize and deal with the private sector  The private sector has to be forced to share control and resources equally with the community and governments  All actors must consider social issues earlier in the process with a view to sustainability, create social closure plans in a participatory process with all actors