e3 Plus: A Framework for Responsible Exploration CSR, Mineral Exploration and the Challenge of Accountability Bernarda Elizalde, Program Director Sustainable Development Prospectors and Developers Association of Canada ● October 27, 2010 ● 4 th Annual Risk Mitigation and CSR in Africa and Emerging Markets ● Toronto

Number of companies in the global mining industry JuniorInterm.SeniorGovt.Other TOTAL Canada Australia U.S.A Europe Africa Latin America Rest of World Source: Metals Economics Group, 2007

Projects financed in Canada Of the 9987 mineral projects held by TSX and TSX-V companies, 49% are outside of Canada Source: InfoMine, Compiled by TSX, January 2008

CSR performance of industry sectors Source: Globescan 2009

CSR performance of industry sectors over time Source: Globescan 2009

CSR context and realities  Evolving Expectations  On the ground: Dependent on local circumstances – Context specific  Confusion between Philanthropy and CSR  Pressure from Civil society, media, and other stakeholders  No common definition for CSR  SME’s “hand made” CSR strategies EnvironmentalSocial Human Rights and ethical practice

CSR Research by PDAC 1.Mining Exploration, Corporate Social Responsibility and Human Rights: Untangling the Facts, Seeking Solutions ( Odell Research and Consulting 2006) 2.Corporate Social Responsibility: Movements and Footprints of Canadian Mining and Exploration Firms in the Developing World (Canadian Centre for the Study of Resource Conflict, 2009) 3.IFC Compliance Advisory Ombudsman ( Annual Report)

Corporate Social Responsibility The Business Case CSR study: Movements and Footprints of Canadian Mining and Exploration Firms in the Developing World - (Oct 2009) 171 alleged violations by mining companies around the world since % involved Canadian companies 56 alleged violations ⁄10 years = 6 per year complaints processed by IFC/CAO since complaints involved 4 mining companies, including 1 Canadian and 1 partly Canadian-owned company

What kind of alleged incidents are these?

A Framework for Responsible Exploration INFORMATION ACCOUNTABILITY

e3 Plus Reporting System The PDAC and GRI agreed that we would need to: –Create a model report for each exploration stage (early, intermediate, and advanced exploration) –Ask exploration companies to apply some sections of the already developed GRI system, such as the materiality test and some applicable indicators. The GRI-e3 Plus reporting system would also: –Be applicable if a certification system is set in place. –Create software that would put together a more practical, user-friendly reporting system. –Be applicable to finance institutions –Create different platforms for explorers to indicate their level of compliance within the reporting system. Thus, they would not limit themselves to filling out a form, but they would have the motivation to report more things if they want to.

Opportunities for Improvements GOVERNMENT (mandatory) Host country governance capacity-building Access to capital – strengthening requirements in securities regulations – materiality - disclosure INDUSTRY (voluntary - mandatory) Due diligence & risk assessment Community engagement GOVERNMENT – INDUSTRY (voluntary – mandatory) 1.Performance objectives 2.Reporting requirements 3.Ombudsman function 4.Verification

CSR – what next? From add-on to built-in CSR: Integrating social and environmental considerations into strategy and operations instead of developing CSR initiatives unrelated to the core business From value protection to value creation: Exploring CSR as a driver of innovation and competitive advantage instead of focusing only on risk and reputational management From reactive to proactive stakeholder engagement: Involving stakeholders throughout the process instead of reactively responding to stakeholder concerns.

Prospectors and Developers Association of Canada Bernarda Elizalde, MSc. Program Director, Sustainable Development ext 289