1. Bayanihan Center, Pasig City
Social Development and Management Program (SDMP) and Corporate Social Responsibility (CSR)
Bantay Kita
National CSO Conference on Transparency and Accountability Initiatives in the Extractive Industry
4-5 February 2015
Bayanihan Center, Pasig City

2. CSR
As part of good corporate governance, mining, oil, and gas companies also have corporate social responsibility or CSR activities that go beyond compliance with the law. Rooted in philanthropy, and earlier perceived as a peripheral, an add-on or an almost apologetic activity or tactical response to potential crises, CSR is now adopted as a “best practice” absorbed into the core functions and value of systems of businesses.

3. CSR
In its CSR Guidebook, the Chamber of Mines spells out a clear definition of CSR that is acceptable to all mining stakeholders, as:
“commitment of business to contribute to sustainable economic development, working with employees, their families, local community and society at large to improve the quality of life, in ways that are both good for business and good for development.”

4. CSR 6 themes of CSR activities of mining companies:
environmental management,
Community engagement and development,
safety and health,
security , human rights, labor, and
management and governance

5. SDMP
The primary objective of the SDMP is to help create responsible and self-reliant communities capable of developing, implementing and managing:
community development programs,
projects and activities in a manner consistent with the principles of sustainable development.

6. SDMP
To this end, mining companies are required to allot 1.5% of their operating cost to assist government, particularly the LGUs in the development of the host and neighboring communities to promote the general welfare of the inhabitants living therein.

7. SDMP- DAO , Sec. 134
Operating cost- specific costs of producing a saleable product on a commercial scale incurred in the calculation of the net income before tax. This includes all costs and expenditures related to mining/extraction and treatment/processing (inclusive of depreciation, depletion and amortization), exploration activities during operation stage, power, maintenance, administration, excise tax, royalties, transport and marketing, and annual progressive/environmental management.

8. SDMP
In the case of an operating mine, the permit holder is required to submit to the MGB Regional Office a sworn statement of its previous year’s operating costs within 60 days after the end of each calendar year as basis for the SDMP.
In the case of new mining operations, the basis for the initial SDMP implementation shall be the operating costs estimates contained in the approved Mining Project Feasibility Study.

9. SDMP- Credited activities for Social Expenditures
Credited activities for the development of host and neighboring communities:
Human resource devt. and institutional building;
Enterprise devt. and networking;
Assistance to infrastructure devt. and support services;
Access to education and educt’l support programs.
Access to health services, facilities and health professionals;
Protection and respect of socio-cultural values, use of facilities and services within the mine camp or plant site

10. SDMP- Credited activities for Social Expenditures
Credited activities for development of mining technology and geosciences
Basic and applied research on mining technology, geosciences, and advanced studies related to mining, to be conducted by qualified researchers
Expenditures for scholars, fellows and trainees, including grants for dissertations, on mining technology and geoscience and related subjects;
Expenditures on equipment and capital outlay as assistance for research and educational institutions.

11. SDMP- Credited activities for Social Expenditures
Credited activities for the promotion of public
awareness and education on mining technology and geosciences
Establishment, enhancement, and maintenance of information and publicity centers where stakeholders can access information on the performance of a mining project;
Publication of information, educ, and communication (IEC) materials on social, envt’l, and other issues relative to mineral resources devt and responsible mining operations;
Expenditures for continuing public awareness and education campaigns;
Expenditures on equipment and capital outlay as assistance to the institutionalizing public awareness and education on mining technology and geosciences.

12. [CDP, if at exploration stage] [10% of EWP Budget, for CDP]
SDMP
SDMP
[CDP, if at exploration stage]
ALLOCATION OUT OF
TOTAL SDMP COST
(1.5% of Operating Costs)
[10% of EWP Budget, for CDP]
Development of Host and Neighboring Community
75%
Development of Mining Technology and Geosciences
10%
Information, Education and Communication Program
15%

13. SDMP
In computing the SDMP cost, the expenditures for the mining companies’ employees and their
families are not included.281 Neither are these social expenditures creditable as royalty payment
for IPs or ICCs. 282 For holders of exploration permits, mineral agreement and Financial and
Technical Assistance Agreements (FTAA) at the exploration stage, the CDP must be supported by
a fund equivalent to a minimum of 10% of the budget of the approved two-year Exploration Work
Program.283

14. SDMP Expenditures NOT allowed in the SDMP:
For the mining companies’ employees and their families
For holders of permits at the exploration stage (MPSA, FTAA)
Instead the CDP must be supported by a fund equivalent to a minimum of 10% of the budget of the approved two-year Exploration Work Program.
Unspent amount of SDMP for any given year, will be added to the succeeding year & may be re-programmed after consultations
Neither are these social expenditures creditable as royalty payment for IPs or ICCs

15. SDMP Process

16. SDMP- Penalties & Sanctions
A mining company’s failure to implement its approved SDMP and Programs on Mining Technology and IEC, is penalized by a fine:
Not exceeding PhP5, at the first offense.
A succeeding offense is a ground to suspend its mining or milling operations in the mining areas, in addition to a fine not exceeding PhP5,

17. SDMP- significant payments by mining companies

18. SDMP

19. SDMP

20. MSG Recommendations (Government)
SDMP Monitoring needs improvement
Capacitate MGB regional offices and
Multipartite monitoring teams
Include EITI related information in the
monitoring checklist that the MGB is
currently doing
A standardized SDMP
Monitoring checklist that
includes EITI-related
information
MGB should implement a web-based submission of documents from regional to central office;
MGB should develop a program /IT system to compile SDMP for analysis
-MGB should require companies to submit SDMP electronically
A centralized
database for
all EITI related
from MGB
that may be
accessed
Electronically

21. MSG Recommendations (Civil Society)
Lack of monitoring of
SDMP and other funds
created by law
The government should have a clear mechanism on monitoring social expenditures and the
different funds created under the Mining Act.
Process of monitoring
Social expenditure and funds

22. MSG Recommendations (Mining Industry) Findings Recommendations
The IA Reconciliation Report also indicates that the monitoring and reporting of social and environmental funds are inconsistent and incomplete. (Some companies report contributing
to some SDMP and CLRF funds but not in others.)
Standardize the entries for SDMP vs. SDMP
components (Some companies report only lump-sum SDMP expenditure; others break down their SDMP expenditure into host & neighboring communities, IEC, and mining technologies)
Environmental funds should be discussed separately from SDMP.
Separate reporting of all SDMP funds
Companies and MGB should reconcile figures
SDMP funds as budgeted by the companies through a Social Development Management Plan reviewed and approved by the Director of Mines can be monitored in terms of project expenditures and programs managed at the site by the community relations officers and COMREL departments

23. MSG Recommendations (Mining Industry)
IA must highlight the fact that the SDMP is a community-based process that has a 5-year plan. The community is asked to identify development projects that they deem
necessary in their community (aligned with their local development plans, where available), and these are built and funded through a 5-year management plan. The EITI Report for any given year is thus a snapshot of
the five-year plan and may be larger (or smaller) than previous years, depending on where the stakeholders are in the plan. There may also be a need for a separate
reconciliation once the 5-year plan is completed to validate the total expenditure and assess the accomplishments of the plan.

24. TVIRD’s SDMP

26. Coverage of Impact Areas
The mine impact communities is defined as those areas directly or indirectly affected by mining operations in terms of social, economic, political and environmental aspects.
There are three levels of TVIRD’s impact communities defined as follows:
Primary Impact Communities – are the eighteen (18) sitios included in the CADT. The CADT hosts the mine site.
Secondary Impact Communities – are sitios in barangays that are along the route of transport of TVIRDs product from Canatuan site to Sta. Maria Port.
Other Impact Areas – are sitios that are considered by TVI as communities crucial to maintaining TVIRD’s activities unhampered. These are areas which do not necessarily benefit from major SDMP activities but may access community assistance component of the SDMP.

27. TVIRD’s Goal:
For TVIRD partner communities to enjoy sustainable community development.
Objectives
Secure and sustain social license (both conceptual and legal) for TVIRD activities;
Enhance existing and develop knowledge, values, and skills in support of sustainable community devt
Build infrastructures relevant to community needs in partnership with the community;
Increase awareness of human rights in TVIRD business practice for social acceptance; and
Stimulate entrepreneurial culture in TVIRD communities.

28. Phase 1: Basic IEC activities among stakeholders
The Process and Phases
Phase 1: Basic IEC activities among stakeholders
Phase 2: Integrated IEC-SDMP activities
Basically, it was conducted to:
Provide the stakeholders with information about the project;
Present and discuss the benefits and impacts of the project;
Gather responses, issues, and concerns from the communities vis-à-vis the Project implementation;
Orient the stakeholders about the SDMP;
Plan and prioritize development projects for the 5-Year SDMP;
Administer the Perception Survey among the CADT beneficiaries; and
Orient the CADT beneficiaries about the Final Mine and Rehabilitation Plan

30. TVIRD’s framework of development

39. The Multi-Party Implementing and Monitoring Team (also known as Technical Working Group) is a mechanism to ensure that the SDMP programs are implemented and monitored with adequate participation of the stakeholders. This is to ensure that the responsibility is shared.

54. Data source of this presentation: PH-EITI First country report
Maraming Salamat!