Sustainable Ethics in the Context of Local Community Development
Team Members: Debbie Asirvatham, Cecile Dupin de Saint Cyr, Tiffany Uman
In today’s globalized world, there is a trend for corporations to focus on a triple
bottom-line that encompasses economic, environmental and social responsibilities, as
opposed to using profitability as the sole indicator of success. These considerations are
further magnified in industries where multiple stakeholders are involved and where
ethical complexities are predominantly found. The mining industry is one that typifies
this situation, and local community development is one major ethical concern that
companies operating in this line of business must consider.
When engaging in mining activities around the world, what is a company’s
obligation, if any, towards the development of the local community? Rio Tinto Alcan
(RTA), a global leader in the mining industry, recognizes that they are obligated to act as
an agent of local development in the countries in which they operate. In addition, they
acknowledge that they are not the only party involved in this development process and, as
such, must determine the extent of their ethical responsibilities with respect to other
stakeholders. This is further supported by the company’s shift in strategic framework to
one that is now focused on being a co-facilitator, co-initiator and supporter of
sustainability. Therefore, the question then becomes, how should RTA develop
boundaries to ensure the sustainability of their ethical obligations?
Current Situation
In order to effectively address this question, we have narrowed our focus to
RTA’s Ghanaian operations. This represents a key pilot location on which to test
sustainable practices that would likely be conducive to other regions. Having operated in
Ghana for over sixty years, RTA has established strong relationships with local
stakeholders as well as a better understanding of their needs and environment.
In response to its recognition of giving back to local communities, RTA set up a
medical centre open to the entire local community, contributed annually US $500,000
towards the maintenance of the hospital and pledged $300,000 over three years towards
the achievement of the Millennium Development Goals set out by the United Nations.
However, they have not established a means to track the allocation and usage of these
funds, and hence are not able to measure the sufficiency nor the sustainability of these
actions for all stakeholders involved.
Stakeholder Analysis
While all stakeholders (i.e. RTA, District Assembly, NGOs, local community and
employees) share a common objective towards achieving local community development,
they must balance these desires with other respective interests. For instance, RTA must
satisfy their fiduciary responsibility to generate profit for shareholders, while the District
Assembly must minimize dependence on a foreign corporation. NGOs, communities and
employees would surely benefit from the improvement in any local development plan put
in place. In order to assure sufficiency and sustainability in RTA’s ethical obligations in
Ghana, it is essential to outline boundaries surrounding their efforts.
Defining Boundaries
We have developed three boundaries from which mutual benefits can be realized,
namely local development, financial feasibility and value optimization. With respect to
local development, the ethical contributions must be relevant to RTA’s core business and
competencies. With respect to financial feasibility, clear objectives and evaluation
measures must be laid out for the allocation and usage of funds. With respect to value
optimization, RTA must leverage its modified strategic framework in order to outline the
roles and goals of all stakeholders involved, while minimizing dependency.
Despite incurring successive losses in Ghana, RTA continues to conduct mining
operations there as they believe other benefits can be accrued. Moreover, their actions
stem from a genuine desire to better the local community as opposed to boosting their
image back home. Though sincere, the sustainability of such actions is questionable.
Therefore, we have created a customized development plan for the Awaso operations
which are in fact sustainable when benchmarked against the boundaries outlined and also
take into account the major local community priorities.
Our plan encompasses these very priorities as well as represents the shift in
strategic framework that the company has undergone. In doing so, our proposed model
addresses benefits of Support, Health, Infrastructure, Financing and Training (S.H.I.F.T.).
S.H.I.F.T. is comprised of three components, namely, the building of a local community
centre, improved educational programs and micro-credit financing.
The first initiative entails the construction of a community centre in order to
address lacking infrastructure and provide a resource for multi-purpose activities. Next,
the educational programs would be a three-fold approach. First, given that the RTA
hospital is the only one to have an ultrasound machine, further development of a
maternity specialization would help combat the high mortality rate among new mothers
and children. Second, an alliance with the Ghana Health and Education Institute would
improve the quality of programs targeting HIV/Aids, vocational training and literacy.
Third, employee-specific certifications would build stronger affiliations with RTA, raise
overall morale and create a sense of continual achievement. Finally, upon the expiration
of current RTA donation plans, offering micro-credit would stimulate entrepreneurship
and help lift the local economy out of the poverty cycle.
The ethicality of this solution lies in the fact that it satisfies the three boundaries
outlined earlier. With respect to local development, all initiatives are based on the local
community priorities. Moreover, the recommendation is financially feasible and
sustainable given that all costs are allocated wisely while encouraging continual flows
into the RTA funding pool. Lastly, value is optimized as not only do these initiatives
benefit all stakeholders, but they also delegate responsibilities among the parties, thus,
minimizing dependence. In creating a model that respects the stated boundaries, we have
constructed a framework that addresses the needs of the local community in Ghana, but
one that RTA can also extrapolate to other operational regions that require complex
development plans.
Essentially, the concept of sustainable ethics lies on one fundamental principle:
without ensuring that ethical practices are sustainable, at some point in time ethical
behaviour will undoubtedly be compromised. Applying our model to their operations
worldwide will enable RTA to continue in their pursuit for sustainability, while staying
true to their recognition of their ethical obligations towards local community