Community Relations and creating shared value
SOCIAL LICENCE TO OPERATE
Recognising the importance of solid community relations to our social licence to operate, Gold Fields is committed to minimising, managing or avoiding, where possible, the negative impacts of its operations on communities, while also maximising the positive benefits. Through active stakeholder engagement and our Shared Value development approach, our focus goes beyond just spending to the positive social and business impacts that its social investments can deliver.
Gold Fields’ community relations approach is informed by an understanding of our operating contexts, garnered through ongoing risk assessments and stakeholder engagements. In 2016, plans to address material social risks were developed and implemented in each region. These risks were often linked to the local and national elections, which were held in all our operating regions. Our operations were sensitised to this challenge through their community relations risk assessments undertaken between 2015 and 2017.
Gold Fields actively identifies and regularly engages with the representatives of the following groups in a formal and informal manner:
- Central, regional and local government and their agencies
- Community-based organisations
- Traditional authorities
- Civil society
- Organised labour
In 2016, all operations prepared community relations and stakeholder engagement (SE) strategies and three-year plans focused on maintaining the social licence to operate. These were informed by the Gold Fields community relations and SE guidelines, which together with our community policy and charter can be found at www.goldfields.com>sustainability.
All operations have established mechanisms through which communities can share their grievances about Gold Fields, its actions or the behaviour of its employees on social, environmental and human rights issues. Operations in Peru, South Africa and West Africa also regularly publish and distribute communication materials to stakeholders, keeping them informed about our community relations activities and initiatives.
As not all of the value created through royalties and taxes at national level benefits host communities, Gold Fields focuses on socio-economic development (SED) initiatives and Shared Value projects to create and share value at community levels. These sustainable development projects create positive socio-economic impacts for host communities by targeting their priority needs of employment, skills and enterprise development, environmental rehabilitation and access to water. Programmes and projects are delivered directly or through our trusts and foundations, often in partnership with government, NGOs and, in South Africa, through an alliance with our peer, Sibanye Gold.
Gold Fields spending on SED and Shared Value programmes – US$26m in 2018 (2017: US$17m) – reflects the Group’s direct social investment spend in host communities. The investments are made in the following areas:
- Conservation and environment
- Education and training
- Health and wellbeing
- Economic diversification
A significant proportion of the salaries and wages paid to employees also find their way back into our host communities.
For details of our regional community investment programmes, go to IAR online.
Shared Value Programmes
Shared Value is created when companies take a proactive role in simultaneously addressing business and social needs. Shared Value goes beyond mitigating the potential harm in a company’s value chain – it is about identifying new opportunities for economic success by incorporating social priorities into business strategy and working collaboratively with multiple stakeholders to find solutions to various socio-economic and environmental issues. A key component of this approach is to ensure that the value created is shared by the business and the community.
Our Shared Value approach is based on four key pillars:
- Strategic interventions, to proactively address socio-economic challenges that can drive community tensions, NGOs activism or more restrictive regulations
- Integration to proactively address socio-economic challenges
- Participation in collaborative action with other stakeholders
- Transparency regarding Gold Fields’ economic contributions to its host societies in line with World Gold Council guidelines
Gold Fields’ regions currently have six Shared Value projects either already running or at implementation stage.
Host Community Employment
We consistently strive to maximise local opportunities and employ host community members at our operations. We build a skills base in our communities through investments in education and skills development. We make our community a priority when employment opportunities arise and encourage our contractors and suppliers to also employ from the community. Job creation is further promoted through our SED initiatives.
A multi-disciplinary team at Cerro Corona works to increase host community employment by using host community employees for seasonal labour requirements.
Australia has a strategy to increase employment of Indigenous Peoples through growing a pipeline of work-ready persons, developing a culturally-inclusive workplace and creating broader opportunities for service provisions to the mines.
Both Tarkwa and Damang have community employment committees in place, comprising representatives from the community, to increase host community workforce employment – with a specific focus on youth employment. At Tarkwa, the community employment committee co-ordinated job vacancies with the mine contractors, who then recruited 130 youth from our host communities in 2018.
At South Deep, employment declined due to the restructuring process at the mine. Local economic development projects enabled 258 jobs.
In the table below we set out the number of host community members – including both employees and contractors – working at each of Gold Fields’ regions in relation to our total workforce.
HOST COMMUNITY WORKFORCE1 EMPLOYED FROM TOTAL WORKFORCE
In 2018, our operations set targets to increase their host community workforce employment. At the end of 2018, 56% of our workforce, or 9,259 people, were employed from our host communities. The sharp increase reflects the prioritisation of host community employment by our Ghanaian operations and the expansion of our South Deep host community to reflect the 2016 municipal boundary change. It now includes all individuals who reside in the Rand West City Local Municipality. The previous definition required individuals to own property in or have been born in the area. We seek to maintain the current levels of host community employment during 2019. Our management teams at the mines are incentivised to achieve long-term host community job creation targets.
Host Community Procurement
We focus on host community procurement to create sustainable community jobs and supply opportunities. We achieve this by supporting areas where community suppliers can participate, identify community suppliers with the ability to supply the mine and providing skills development to close capability gaps. It is key that we procure goods and services from the countries and host communities, where feasible, given the remote locations of several of our mines.
The Group has made good progress on preferential host community procurement with all regions exceeding their 2018 targets. We spent a total of US$441m on host community procurement, which was 27% of our total spend.
Of our total procurement spend of US$1.81bn for 2018, 85%, or US$1.54bn, was spent by our mines on businesses based in countries where Gold Fields has operations (2017: US$1.62bn/88%). US$441m, or 27%, was spent on suppliers and contractors from the mines’ host communities (2017: US$774m/45%). In 2019 we seek to sustain 2018 host community procurement spending levels.
LOCAL AND HOST COMMUNITY PROCUREMENT
In the regions
Both Tarkwa and Damang significantly exceeded their host community procurement targets of 15% by achieving 40% and 27% of total procurement spend respectively in line with the redefinition of host community procurement. The two mines spend a combined US$229m on procuring from host community suppliers. Following the transition to contractor mining at Tarkwa, the two mining contractors committed to the established procurement model, including procuring from established host community suppliers.
In Peru, host community procurement spend for 2018 was US$24m, 16% of total procurement spend, against a target of 9%. A steering committee was established to align host community procurement with Group guidance, deliver on spend targets and identify work opportunities to shift purchasing from non-host community companies to those enterprises within our host community, and to focus on host community employment by non-host community businesses.
In 2018, Australia invested a total of US$147m in host community procurement, 24% of total procurement spend, against a target of 18%, for the year. This region is implementing seven strategic initiatives for procurement processes to enable host community and Indigenous People participation in the value chain. We initiated a process of implementing the Host Community Vendor Programme, which is based on a three-phase approach aimed at identifying, engaging and mobilising local vendors.
The definition of host community has been reworked in 2018 to include the Rand West City Local Municipality and all those that reside in it, and the 2018 host community procurement spend has been restated in line with the revised definition. South Deep’s host community procurement spend for 2018 was R518m (US$39m), 29% of total spend and ahead of its 20% target for the year. In 2017 the spend was R448m (US$34m), 18% of total spend.
Gold Fields has also instituted socio-economic impact assessments and piloted a social return on investment study of South Deep’s community investment projects. These assessments focused on:
- The South Deep host community socio-economic baseline study, using available secondary economic and social data to measure quality of life and contribution indicators for South Deep host communities in 2011 and 2016
- A social impact measurement and valuation study that provides measurable indicators of the effectiveness, impact of and Social Return On Investment (SROI) of South Deep’s 15 most critical community investment projects. The assessment showed that 10 projects had a SROI greater than the money spent
We plan to roll out similar studies at our other operations.