A new study by the professionals services company’s global mining institute on the value of social investment found that few of the mining companies spending money on social programs have reported making an impact on the people they intended to help.
KPMG reviewed corporate reports issued between 2012 and 2013 by the 10 largest global metals, mining and engineering companies, finding that only one of the 10 reported any quantified outcomes.
This suggested a lack of debate over the true impact of programs, both internally and with the communities they are serving.
The study also found that only four of the mining companies surveyed published a detailed social investment strategy.
With 52 different types of programs across the group surveyed, the report indicated that companies risked spreading their efforts too thinly, rather than focusing on a few priorities that can really make a difference.
More money and a higher number of beneficiaries were determined as not necessarily translating into greater impact.
“Mining companies are very aware of the impact their operations have upon local communities and recognise the need to earn a social license to operate – a kind of unwritten contract with workers, their families and other stakeholders,” KPMG Australia head of mining Carl Adams said.
“Mines are also incredibly complex operations spread across wide geographical areas, so vast sums are ploughed into social investment initiatives across broad categories like health and safety, education and training, infrastructure and recreation.
“But without a detailed business plan, this money is at risk of disappearing into a black hole marked ‘charitable donations’. High-profile events can score political points but may not necessarily generate the best long-term return on capital.”
KPMG said that program choices can be influenced by administrators eager to score political points with ribbon-cuttings at schools, hospitals or roads.
However, cheaper options like teacher training or safe-sex education could potentially have a far greater long-term positive effect for a smaller outlay.
One example in the KPMG report, suggested that investment in local farm sourcing could cut the cost of food, resulting in a healthier, more energetic workforce.
Meanwhile, more education and counselling on alcohol and drug abuse could reduce absenteeism.
Those responsible for allocating social investment budgets, therefore, were urged to exert a stronger influence over the organisations involved in prioritising programs.
“Companies are investing huge amounts into social programs, despite the wider corporate focus on cost, post-Global Financial Crisis,” KPMG Global Mining leader for climate change and sustainability Rohitesh Dhawan said.
“A clear strategy for social investment is crucial for success yet currently there appears to be a ‘scatter-gun’ approach, with companies typically investing in five different areas rather than focusing on priority areas where the business can make the most difference.
“This does not help target the investment efficiently or maximize the benefits from the money spent. Measuring the impact on the ground can be challenging but it is key to learning how the effect of these programs can be improved.”