Date: 2024-12-26 Page is: DBtxt003.php txt00003986
Extractive Industries
Indigenous Communities
Indigenous-communities-extractive-sector-briefing.pdf from The Ethical Corporation UK August 2012'
The discussion about indigenous communities and extractive industries is more appropriate today than it was in past decades, but it is still a discussion that has power on the side of industry and terrible weakness on the side of indigenous communities. In fact, I would go further, the business organization has power, the community has weakness.
The problem is very deep, not just the marginalization of indigenous people, but the marginalization of labor in general relative to the power of capital and the big money profit organization.
The way in which the laissez faire money profit capitalist market economy works is the fundamental problem. The idea of the 'invisible hand' described by Adam Smith in his epic work Wealth of Nations in 1776 is outdated. Adam Smith wrote about a global economy where productivity was low and shortage was endemic. Today productivity is amazingly high and there is a surplus capacity to produce, but increasingly a problem with the environment and natural resources needed to sustain economic activity. Money profit accounting is a good metric in the Adam Smith shortage environment, but something like TrueValueMetrics (TVM) is needed for the economy of the 21st century.
When TVM is applied to any economic activity in the extractive industry sector, there is both the performance for the organization and performance for the community. The same methodology is used for the metrics whether it is the organization or the community. In project analysis using money profit accounting there is profit for the project, and some bit of the revenue allocated to the community ... usually a bit that is tiny relative to the share that is allocated to the investors.
Part of the argument is that the investors are putting a huge investment at risk, and therefore deserve a reward. The fact that the community is putting its whole future at risk is totally discounted ... not only the risk of damage to the environment either temporary or permanent, but also the fact that the resource which now exists will not exist after the extraction is completed.
Bluntly put ... the state (balance sheet) of the community is permanently diminished while the balance sheet of investors is permanently improved.
The reward to investors is difficult to know with precision ... the industry is not known for its transparency ... but there are indications that everyone wins except the community and especially indigenous communities.
TVM can help ... but the investor community will not be happy.
Elina Yumasheva
Hello Peter
As promised, below is a PDF of Ethical Corporation's fascinating 9 page briefing on indigenous communities and the extractive sector.
If this is of interest, you should definitely check out the 2013 agenda for our CSR for extractives summit, which includes key discussions on human rights, how to achieve Free Prior & Informed Consent, and best practice on community engagement from some of the leaders in the field.
http://events.ethicalcorp.com/documents/Indigenous-communities-extractive-sector-briefing.pdf
Happy reading - and remember that if you book your ticket to our 2013 summit on CSR in extractives before January 18th, you get the cheapest possible price (£795 + VAT for corporate companies). Prices go up from January!
Let me know if you have any questions or if I can help with anything,
Elina
Elina Yumasheva
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