ARTICLE IN PRESS

Resources Policy 33 (2008) 39–47

www.elsevier.com/locate/resourpol

Mining and social development: Refocusing community investment

using multi-criteria decision analysis$
A.M. Esteves
Faculty of Economics and Commerce, University of Melbourne, Parkville, VIC, 3010, Australia
Received 17 September 2007; received in revised form 13 December 2007; accepted 3 January 2008

Abstract

This paper addresses the question: How can mining companies assess social investment projects so that projects create value for the company
and communities in which they operate? Mining companies are still wrestling with the limits of their responsibility in relation to social
development even though they accept the business case for community investment at a general level. Fully aware of the practical hazards
involved in taking an active role in facilitating local development, companies increasingly avoid methods that are overly paternalistic or
assume the functions of the national or local governments. Gaining senior management’s commitment to long-term social projects, which
are characterised by uncertainty and complexity, is made easier if projects are shown to benefit the site’s strategic goals. Case study research
on large global mining companies, including interviews with social investment decision makers, has assisted in developing a Social
Investment Decision Analysis Tool (SIDAT), a decision model for evaluating social projects. Multi-criteria decision analysis techniques
integrating business planning processes with social impact assessment have proved useful in assisting mining companies think beyond
seeking reputational benefits, to how they can meet their business goals and contribute to sustainable development.
r 2008 Elsevier Ltd. All rights reserved.

JEL classification: M14; O13; Q39

Keywords: Social impact assessment; Social development; Mining; Sustainability; Sustainable development; Decision analysis; Corporate social
responsibility

Introduction discard. They are also unsustainable in the event of

One of the fundamentals of long-term success for global
mining companies is their ability to align their interests
with the values of society, and in particular with the
communities in which they wish to operate. While
executives from most mining companies understand this,
they are also aware of the practical hazards that it entails.
An active role in facilitating local development, done in a
way that is overly paternalistic or assumes the functions of
the national or local governments, results in companies
carrying social costs and obligations that are difficult to
economic downturns or mine decommissioning.
This paper argues that mining companies should seek to
undertake ‘strategic social investments’ that focus on
adding value to the business unit, and contributing to local
sustainability (Esteves, 2007a). This paper describes
methods to assess when and how mining companies should
invest in the social development of their host communities.
Identifying these conditions involves looking at situations
where ‘good for business’ coincides with ‘good for local
community’, and making resource allocation decisions that
reconcile respective interests.

$
Positioning within the corporate-community investment
This paper is based on a Ph.D. research project and unpublished literature
thesis undertaken through the University of Melbourne.
Corresponding author at: 13/47-51 Domain Street, South Yarra, VIC
3141. Tel.: +61 408 506 607. The momentum for voluntary social investments by the
E-mail address: amesteves@communityinsights.com.au mining industry has increased dramatically over recent

0301-4207/$ - see front matter r 2008 Elsevier Ltd. All rights reserved.
doi:10.1016/j.resourpol.2008.01.002
 ARTICLE IN PRESS
40 A.M. Esteves / Resources Policy 33 (2008) 39–47
years. Literature on corporate sustainability, the role of
business in sustainable development, and in the area of
corporate social responsibility (CSR) has proliferated.
There has been a gradual shift from justifying the business
case for social investment to acceptance of the business
case and appeal for guidance on implementation and now
to the criticism of the limits of a purely instrumental
approach (Esteves, 2007b).
It is these voluntary programs directed at affected
communities, and the management decisions in relation
to these programs at mine site level, that represent the
domain of this paper. Affected, or ‘local’, communities
may not necessarily be located in the immediate vicinity of
the mine. Vanclay (2003a) uses the figurative terms
‘upstream’ and ‘downstream’ impacts associated with
project development to assist in defining the boundaries
of an affected community. Upstream refers to anywhere
that contributes inputs to the project (including where
workers reside), while downstream refers to the pathway of
outputs (products and discharges). Impacts can be direct or
indirect.
Mine site managers face a number of challenges within
this domain. Often, mining operations are located in
regions characterised by weak local government, a lack of
strategic social and economic planning, and local commu-
nities increasingly aware of the weak alignment between
the conventional footprint of the business on society (in the
form of tax redistribution, long-term employment and
related benefits, local small to medium enterprise develop-
ment and local infrastructure) and their own livelihood
priorities. In some developing countries, considerations of
sustainable development bring obligations to consider a
much wider range of social commitments. These may cover
education and health, promoting local economic activities,
support for indigenous peoples, and institution building
(Humphreys, 2001). In developed countries these costs can
be shared by other contributors. However, reliance on
corporate investment as a method of development is
limited due to the difficulties inherent in ‘marrying
quantifiable economic objectives with equitable social and
human development’ (Fisher and Urich, 2001, p. 17).
Companies are also uncertain how much they should
invest without absorbing responsibilities which are tradi-
tionally within the realm of the State (Russell and
Lawrence, 2007).
The newness of corporate-community investment as a
research domain means that contributions are rare. One of
the difficulties in analysis relates to the availability of small
area data, notably absent in the developing world. Mining
industry managers have therefore had to justify ongoing
investments by trusting their intuition, often leading to
cessation of useful programs because it is not seen how they
contribute to the bottom line, promotion of ‘pet projects’
by management that have little real value and loss of
company credibility within the community who see or have
to live with the results of ineffective investments (URS,
2002).
Current management theories provide limited guidance
on addressing issues of corporate investment in social
development. One of the problems in the CSR literature is
the excessive appeal to values and ethics. There are limited
prospects for firms operating on the basis of moral
considerations only (Luhmann, 1995). A major reason
for this is that the entire incentive structure for manage-
ment is based upon increasing returns to shareholders. To
the extent that taking moral considerations into account
involves costs, then it goes against the interests of both
management and shareholders, and those managers that
operate on this basis tend to be eliminated. Another
objection against ethics-based strategies is that business is
ill equipped to solve social problems. Burke and Logsdon
(1996) argue that a firm is more likely to create value from
social projects that are highly central to its mission and
objectives because it is more likely to have the knowledge
necessary to solve a particular problem.
The research in this paper shows how, in mining industry
practice, there has been an over-emphasis on the reputa-
tional benefits from social initiatives. Verhezen (2007) has
recently argued that a pure instrumental approach of
reputation may paradoxically undermine its own objec-
tives. Stakeholders may perceive it as purely utilitarian or
instrumental in a firm maximising its profits, rather than it
being sincere and accurate about intentions to build long-
term value by developing capital and the environment in
which it operates. Merely acting on the basis of gaining
approval and ‘seducing’ others into thinking that a
company is socially responsible will always cause a
manager difficulty in balancing short-term costs against
long-term objectives. A short-term approach will almost
always win and lead to little strategic benefit for the
company and limited value to communities.
Recognising the limitations within CSR literature, the
approach in this paper is to avoid a normative analysis of
the role of business in society. Sustainability has different
implications ‘depending on which side of the bulldozer you
are on’ (Whitmore, 2006). As such, it is a societal construct,
where multiple paradigms exist. Methods are needed that
reconcile these paradigms and bring the various actors to
consensus. Rather than viewing social development purely
through the lens of business viability, or through that of
the community, it was deemed important that methods are
integrative in design.
Importantly, the argument in this paper assumes that a
company has the dominant utility function when it
allocates resources to the areas of social development that
meet the needs of both business and community. This
assertion supports one of the emerging appeals in the CSR
literature—if corporate interventions to address social
problems are to be substantial and sustainable, they must
also be profitable. The mining industry recognises the
business case in general terms. The practical challenge lies
in determining which social investments will most power-
fully reinforce the business case. The first step in
demonstrating where a viable business case exists involves
 ARTICLE IN PRESS
A.M. Esteves / Resources Policy 33 (2008) 39–47
recognising all factors: revenue growth and access to
markets, cost savings and productivity, access to capital,
risk management, human capital, and brand value and
reputation (adapted from SustainAbility and IFC, 2001).
The concept of social license is linked to reputation and has
been commonly adopted in the mining industry, defined as
‘an intangible, non-permanent measure (implying stan-
dards and renewal) of ongoing acceptance of a company’s
activities by communities’ (Nelsen, 2005). This paper
argues that a company should then identify the particular
set of societal problems that it is best equipped to help
resolve and from which it can gain the greatest competitive
benefit. A focus on value creation for both business and
society ensures solutions are self-sustaining.
The research in this paper suggests methods for decision
makers to evaluate social investments at the level of a mine
site’s local community. The fields of multi-criteria decision
analysis (MCDA) and social impact assessment (SIA) were
drawn on to provide such methods. Decision analysis deals
with the concept of ‘utility’, which is part of the subject
matter of economic theory. The research has assumed that
community and business have different utility functions,
and has sought to develop a process that looks at where the
combination of these utility functions yields maximum
‘value’ for both. SIA was drawn on to identify the utility
function of the community. Vanclay (2003b, p. 6) defines
SIA as ‘the processes of analysing, monitoring and
managing the intended and unintended social conse-
quences, both positive and negative, of planned interven-
tions (policies, programs, plans, projects) and any social
change processes invoked by those interventions. Its
primary purpose is to bring about a more sustainable
and equitable biophysical and human environment’.
The Social Investment Decision Analysis Tool (SIDAT)
method developed and tested in this research draws the
lines between investment decisions and the ‘levers’ or
‘drivers’ of business success (accepting current incentive
structures within which companies operate) (Esteves,
2007a). While the literature talks about a business case at
a broad level, this paper presents possible pathways for
undertaking social investment, in the form of major
objectives, sub-objectives and measures that are opera-
tional from a business perspective. For a genuine assess-
ment of social investment programs, companies must
develop systems that trace the impact of an input on the
society it was intended to benefit, and the return provided
to the company from its investment.
Mining and social development
The mining sector is often associated with issues relating
to aggregate social costs and benefits, and the distribution
of these among different stakeholder groups. Mining
presents dichotomies, at one extreme, opportunities for
the production of substantial wealth, and on the other,
threatening destruction of those lands and associated
community life. In most cases a local community considers
41
mining to be acceptable when any negative effects are
immediately remediated and its socioeconomic benefits
contribute to the community’s sustainability for the local
community (Gibson, 2000; Labonne, 1999). Common
arguments favouring mine developments are that the
economic benefits can maintain or enhance the well being
of those of the community in which it operates, by
providing employment to residents, making use of local
services, expanding the markets for both labour and goods,
and by contributing funds to regional developmental
projects (Eggert, 2000; Dorian and Humphreys, 1994).
An alternative perspective on socioeconomic benefits to
small rural communities is that these benefits also usually
result in significant demographic changes, due to a large
influx of labourers from elsewhere seeking employment
(Hilson, 2002). This causes major negative impacts such as
disruption of the social balance in the community, the
introduction of diseases, increased demand and prices for
local resources, increased cost of living, stress on the local
water supply, disturbance to traditional hunting and
fishing, and increases in socially undesirable activities such
as prostitution (see also Vanclay, 2002). Poorly managed
mines may even worsen existing levels of poverty (Pegg,
2006). Furthermore, the extent of positive impacts arising
from employment tends to diminish over time as mining
becomes more technical and automated. This can reduce
support for mining activity amongst local stakeholders
(Warhurst and Mitchell, 2000).
Most of the analysis of mining-led development has
focused on the macro-level, and led to some debate (Sachs
and Warner, 1995; for example, see Pegg, 2006; Ross, 2001;
Friends of the Earth, 2000; Auty, 1994). At a regional level,
Cademartori (2002) discusses the social performance of the
Antofagasta region in Chile since the start up of the
Escondida Mine in 1990 and the assessment of the region
in human development and quality of life indices. Certain
human development indicators showed very low values,
inconsistent with the economic growth in the region. Davis
and Tilton (2005) argue that mining can promote economic
development and address poverty, and has done so in some
countries. This paper supports their view that the debate
should not be a generalised one about whether mining
should or should not be encouraged within a country, as
this presumes that the correct policy choice is the same
under all conditions and for all developing countries.
At the local level, primarily what is at issue is whether
local communities receive an appropriate balance of
benefits and costs associated with the negative impacts on
livelihoods and socio-cultural and political problems.
While the local community bears most of the environ-
mental and other social costs of mining, most of the profits
or rents realised flow elsewhere. This has led to growing
demands that a sufficient portion of the rents should flow
to local communities to ensure they are adequately
compensated. Labonne (1999) argues for an equitable rent
distribution system as a means of ensuring that mining
becomes an agent for sustainable livelihoods. This system
 ARTICLE IN PRESS
42 A.M. Esteves / Resources Policy 33 (2008) 39–47
should take the form of services and infrastructure and
direct contributions, considering the temporary nature
of mining; participatory capacity-building activities to
enable the community to make informed choices and to
learn to take control of their development needs, and
balancing short-term job opportunities and dependency on
mining activity with long-term objectives of protecting
the natural resource base and sustaining post-mining
development.
In prescribing success in dealing with affected commu-
nities, Labonne (1999) has suggested that the mining
company should view the local community as a source of
valuable human, natural and physical assets that can be
utilised when developing the mine, and that the community
must be able to articulate its own development aspirations.
In reality, local communities have increasingly demon-
strated an ability to stop mine development, and as a result,
many mining companies are no longer prepared to proceed
with new projects without the support of the local
community (Danielson, 2006). Community relations has
therefore emerged as an increasingly important strategic
consideration for mining companies (Rolfe et al., 2006;
Kemp, 2005; Humphreys, 2001, 2000). The mining
industry’s ‘good neighbour’ policies have also extended to
economic development, including employing local residents
in projects, using local suppliers, support for the develop-
ment of new entrepreneurs, provision of infrastructure, etc.
Van der Veen and McMahon (2007) have observed that
momentum in the area of mining company-community
investment has grown so rapidly in recent years that the
approach has changed from benefits to local communities
to long-term sustainable development of local commu-
nities. The shift has progressed even further into seeking
understanding as to how mining can act as an engine of
community and regional development.
The research supporting this paper identifies a number of
industry trends have influenced recent changes in mining
company-community investment practice. These include:
 Global initiatives promoting sustainable development,
human development, CSR and corporate-community
investment including some directed specifically at the
mining industry, have encouraged an increase in the
level of spending on social initiatives (for example,
Johannesburg Declaration agreed by heads of state at
the 2002 World Summit on Sustainable Development
(WSSD), mining minerals and sustainable development
(MMSD) report launched by the World Business
Council for Sustainable Development (WBCSD) three
years after the Global Compact (IIED, 2002) and
International Council on Mining and Metals’ Sustain-
able Development Framework (ICMM, 2003).
 Changes to common law and statutory recognition of
aboriginal land rights and native title have prompted
companies to develop agreements directly with Indigen-
ous communities that address community development
priorities (Harvey and Nish, 2005).
 Mining companies increasing their predictive capacity of
their social impacts, with a view to increasing their
capacity to maximise the benefits to the local community
and minimise their disruptive impact on the social
environment (Esteves, 2007b). SIA is a tool commonly
used to fulfil these objectives.
 The greater focus on community engagement has raised
awareness that by promoting local people to find their
own solutions to their own problems, mining companies
can avoid the consequences of paternalism and depen-
dency and encourage sustainable development.
 Multiple-stakeholder partnerships have become a
sought-after approach aimed at addressing social needs
and improving governance structures.
The mining industry started efforts on sustainability
issues in local communities in the early 1980s, in response
to growing public concern about environmental impacts.
Initially they paid more attention to environmental impacts
rather than economic and social issues. This is also
reflected in the literature in the field. There are further
difficulties in the analysis—purely economic arguments
showing that mining plays a vital role in a particular
country can be disputed from a socio-economic perspective
based on the negative impacts of mining on the ecosystem
Labonne (1999). These are impacts that are still difficult to
assess in traditional economic terms. Labonne Labonne
(1999) argues that there is truth in both perspectives, that
‘there should be comprehensive efforts to reduce poverty
beyond the usual short-medium term focus of fiscal benefits
and job creation’, stressing the ‘need to transfer part of the
mining rent to well identified and monitored poverty
reduction programmes’.
The literature has also failed to outline precisely how a
mine, in operation only as long as it is economically viable,
can contribute to social development at the local level.
Hilson and Murck (2000) offer some guidance to those
interested in improving the sustainability of their opera-
tions, including formation of partnerships, and improved
training. On the whole, however, there is minimal practical
advice for companies.
In addressing social impacts, authors such as Vanclay
(2004) and De Graaf et al. (1996) have considered the
nature of a mine operation’s positive and negative social
impacts in developmental terms. This perspective assumes
that a mining company’s contribution to development is
something more than improving the local and national
economy. It calls for distinctions between solely economic
development and development which stems from all the
recipients and is therefore sensitive to cultural and political
elements. Good economic growth promotes human devel-
opment in all its dimensions: generates full employment
and security of livelihoods, fosters people’s freedom and
empowerment, distributes benefits equally, promotes social
cohesion and co-operation and it protects future human
development (Gray, 1986).
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A.M. Esteves / Resources Policy 33 (2008) 39–47
The research in this paper examines the role of mine sites
in contributing to social development in particular, within
a sustainable development framework. Social development
is defined in this paper as the processes of fulfilling the
basic needs of people, achieving a fair distribution of
wealth gained as a result of economic growth, building
human and social capital, expanding the scope of
opportunities of individuals and communities, promoting
social justice and equal opportunities, and eradicating
poverty and illiteracy.
Methodology
Using a case study method of inquiry, the research built
a MCDA model in order to prescribe decision processes
that assist mining companies in determining the types of
projects in which the company should be investing. The
SIDAT was built using case studies amongst eight of the
largest global resources companies, across 22 sites, 19 in
Australia and three in Southern Africa. Mining operations
made up a majority of the cases, with three smelter
operations and one quarry. Anonymity of participant
companies was protected to allow for an open discussion of
issues related to commercial-in-confidence development
plans. Site participants were nominated by corporate
decision makers, and selected on the basis that they would
be located across peri-urban, rural, remote areas across
Australia, and include Southern Africa; and that the
participant mine sites would be at varying stages of mine
development. The research followed five phases: (1)
exploratory research to understand current industry
practice and frame the research problem, (2) preliminary
analysis of business drivers, (3) the building of an
evaluation model using MCDA techniques, (4) testing the
model and revision and (5) recommendations about a
process to support managers making decisions regarding
allocation of funds to social projects.
The research took the application of MCDA value
measurement models into a new domain, that of mining
and social development. The approach builds on the
alternative MCDA paradigm proposed by Belton and
Stewart (2002) (which in turn built on Keeney’s 1992 value-
focused thinking) and contributes to the emergence of
hybrid techniques in the field of MCDA, referred to by
Mingers (2002) as multi-paradigm multi-methodology. The
proposed project evaluation model integrates SIA methods
with strategic planning at mine site level in order to assist
managers allocate limited resources to social projects
(Esteves, 2007c).
The alternative MCDA paradigm was selected due to the
reduced emphasis it gives on generating solutions, and
primacy to defining the most relevant factors, perspectives
and issues that have to be taken into account, and in
designing strategies upon which the problem can be better
understood and the decision process better guided. The
literature refers to these as ‘integrated’, ‘soft systems’ or
‘soft-operations research’ (Soft-OR) methods.
43
The alternative paradigm is clearly more adequate for
addressing complex problems dominated by issues relevant
to, and influenced by, human concerns. In so doing, there is
recognition of the intrinsically complex nature of social
systems and avoidance of prematurely imposing notions of
objectivity, rationality, mechanistic and predictable caus-
ality on the problem (Mendoza and Prabhu, 2002). Other
features of MCDA methods that add to their strength in
this research domain, include their ability to handle
decision-making situations with single and multiple deci-
sion makers, decision makers from multiple disciplines and
participatory planning.
An integrated multi-criteria decision framework was
selected for this research over a purely participatory
approach to decision-making, for the reason that it offers
a more thorough means of understanding and addressing
the problem (Mendoza and Martins, 2006). The integrated
decision framework also introduced a series of iterative
stages with stakeholder involvement prior to project
selection. In so doing, the framework would go beyond
traditional participatory methods where stakeholders are
involved mainly as sources of information during the
problem structuring phase. Once the company has
articulated, modelled, evaluated and screened its prefer-
ences, some stakeholders continue to be involved through-
out the project development process. The result is a social
investment plan that is more transparent, relevant and
owned by decision makers and stakeholders.
Decision model construction
In addition to gaining insights into the challenges faced
by decision makers and context in which investments are
undertaken, a major objective of the case studies was to
identify the relevant business drivers at a site level. This
was elicited using the question ‘What does Company X
seek to achieve from its community investments in order to
create business value over the next three years?’
Table 1 presents a comprehensive list of drivers
generated as part of the case study research. The objectives
have been structured in a meaningful way to serve as inputs
into decision model construction, discussed in the follow-
ing section. The concepts of specification and means-ends
discussed by Manheim and Hall (1968) have been adopted.
Specification means subdividing objectives into lower-level
objectives of more detail, thus clarifying the intended
meaning of the more general objective. These lower level
objectives can be thought of as the means to the end, the
end being the higher level objective.
Two key outcomes of the approach are a clear vision for
the company’s social spending and well-defined areas of
focus, and performance measures that show a pathway
between the selected project and its business impact and
social impact.
Fig. 1 illustrates the various phases in the decision-
making process. As shown, the phases involve integrating
an understanding of the critical issues facing the business
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44 A.M. Esteves / Resources Policy 33 (2008) 39–47

Table 1 Table 1 (continued )

Business drivers for social investment generated from the case studies
(Esteves, 2007a)
Major Higher level objectives Lower level objectives
objectives
Minimised Absence of interruptions to Reduced likelihood of
risk operations stakeholder protest action
Stable social environment Resilient, vibrant local
community with minimal
dependence on operations
Adequate services and
infrastructure for
population needs
Improved capacity of
under-resourced or
ineffective government
agencies
Effective community projects Stakeholder participation
in design and
management of
community projects
Increased levels of co-
funding/leveraging of
community projects
Improved governance
and management of
projects
Major Higher level objectives
objectives
Access to a pool of local
labour
Retention of non-specialist
local labour
Access to a pool of non-core
contractors
Access to a mobile pool of
employees within the region
An ethical corporate culture,
through building employees’
social awareness
A culture of innovation and
leadership
Brand Strengthen company brand
value and and reputation
reputation
Lower level objectives
‘Job-ready’ programs,
e.g., skills development,
health promotion
programs
Employee retention
through, e.g., mentoring,
home support, housing
Enterprise development in
non-core areas
Regional skills
development
Employee involvement in
community projects
Employee involvement in
addressing complex
sustainability problems
Increased awareness of
company presence
Building new company
brand and identity

Access to Positive relationship with
land local communities, based on
acceptance and trust
Positive relationship with key
regional, State or national
stakeholders
Access to land for mineral
and water resources
Cost Access to local suppliers
reduction
Reduced costs of closure and
post-closure
Reduced costs associated with
environmental remediation/
mitigation
Human Attraction and retention of
capital highly trained specialist
labour
Repaired community
relationships affected by
past environmental,
health and safety
incidents
Local community
acceptance of expansion
to operations
Lower incidence of
complaints from affected
landholders
Support of key
stakeholders for
expansion of operations—
to existing operations or
new areas
Positive legacy post-
closure
Successful negotiation of
land access agreements
Resettlement of
community
Skills and enterprise
development in support
industries
Development of diverse
economies and capacity
building to reduce
community dependence
post-closure
Stakeholder involvement
in remediation/mitigation
planning
Contribute to attractive
lifestyle with access to
housing, services, culture,
recreation, etc.
and the potential for social investments to address these
issues, with community participative processes through
needs assessment and stakeholder partnerships.
Conclusions
Testing the SIDAT approach showed how ‘strategic’ social
investments involve entering the domain of government. For
example, one of the participating companies selected the
following as focus areas for investment: skills development
and training, health, primary education, local economic
development and water management in a drought environ-
ment. A clear business logic, understanding of the social
problem and stakeholder willingness to work with the
company in addressing the problem gave participant compa-
nies the confidence to take on a larger responsibility than
previously and lead dialogue and problem-solving processes.
This finding supports the view of Ferguson (1998), who
argued that this requires reconceptualising transnational
companies as a key player in a new system of govern-
mentality. This may blur the lines between business and
government, but it does not necessarily mean undermining
or substituting the state. The appropriate role for mining
companies is what Petkoski and Twose (2003) referred to
as ‘leading from behind’. The logic is that, within an agreed
regional development framework and commitment from
various contributors to that framework, government can
target its development programs more effectively.
A further insight is that SIA has shown itself is a useful
field to draw on in order to guide decisions on corporate-
community investment. SIA has the potential to be an
effective means of involving affected communities in
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A.M. Esteves / Resources Policy 33 (2008) 39–47 45

Phase 1: Problem
Phase 7: Review
Structuring
• Monitor and report on project • Identify & weight business
performance
drivers for social
• Integrate with annual business investments
plan
• Evaluate every 3-5 years Phase 2: Social
Development Needs
Analysis
Phase 6: Project Planning &
• Identify social context,
Implementation community needs, assets,
• Develop project plan aspirations, resilience,
• Establish project management, perceived and actual impacts
reporting systems & governance
Phase 3: Preference
Evaluation I: Setting
Phase 5: Preference Objectives
Evaluation II: Selecting • Aggregate business &
Projects Phase 4: Alternatives Generation community objectives
• Select project • Multi-stakeholder consultation to • Rank & select community
• Develop business & social understand community needs needs to be addressed
indicators and measures • Identify alternative strategies
• Screening for project sustainability

Fig. 1. Integrative social investment decision process using Social Investment Decision Analysis Tool (SIDAT) (Esteves, 2007a).

developing community goals, identifying issues affecting
local sustainability, and engaging groups within the
communities to work with the company in addressing
and monitoring these issues. Amongst those mine sites
involved in the research that had conducted SIAs and
restricted the application to mine project development
(with a focus on mitigating negative impacts, rather than
realising long-term benefits), it became apparent that the
potential value of the methodology was being limited. This
traditional approach presents a lost opportunity to engage
local communities in developing a program for ongoing
investment. Effective investment requires ongoing engage-
ment and monitoring, and an adaptive organisational
response to changes in the social context.
Effective decision-making is also based on knowledge of
both actual and perceived areas of need. This requires
rigorous assessment of impacts and the socio-demographic
environment on a regular basis. A proactive, open and equi-
table approach towards addressing impacts and social issues
will reinforce the community’s willingness to be involved
in setting objectives for mutual benefit. Also, an ongoing
program, to a greater extent than a never-to-be-repeated SIA
project (at least until the next expansion’s statutory planning
process), is more likely to have a systemic impact, through
advising all parts of the business that potentially benefit
through social investment, such as HR, procurement,
employee development and community relations.
Based on the results of the study, a set of eight principles
are proposed, underpinning a social investment strategy
that creates value at the level of the business unit/site and
affected communities.
(i) Social investments in the resources sector should be
evaluated in consideration of how they create
business value, ultimately derived from: (i) access
to land, (ii) risk minimisation, (iii) cost reduction,
(iv) building human capital and (v) reputation/social
license. The latter driver represents an externally
attributed concept, a consequence of how stake-
holders perceive company activities are being carried
out. As such, these are interdependent on other
business drivers and should not be considered as
isolated ends to be achieved in themselves through
the instrument of social investment. Therefore, as a
vehicle to reach reputation as an ultimate destination,
social investments should consider how they lever all
drivers.
(ii) It is important that companies have a clear under-
standing of the issues affecting sustainability in the
regions in which the company operates, based on
sound data and stakeholder engagement. Effective
decision-making requires ongoing engagement and
monitoring, and an adaptive organisational response
to changes in the social context. This involves
rigorous and periodical assessment of impacts and
changes in the socio-demographic environment.
(iii) Performance measures should clearly identify the
social investment pathways to creating both business
value and community value. A commitment to
demonstrate accountability and transparency by
designing performance measures that take these
pathways to desired business outcomes and commu-
nity outcomes into account reinforces stakeholders’
willingness to be involved in setting objectives for
mutual benefit.
(iv) A social investment strategy should have a clear goal and
value proposition, and be delivered in an integrated way
through multiple mechanisms—partnerships, community
 ARTICLE IN PRESS
46 A.M. Esteves / Resources Policy 33 (2008) 39–47
funds/foundations/trusts, sponsorships, donations and
employee involvement programs. There is a clear logic
between social investment objectives and the appropriate
funding and governance arrangements to address social
development issues. There is also a clear logic between
the social investment strategy, stakeholder engagement
strategy, strategic plan, various functional business plans
and annual budgets.
(v) Delivering a social investment strategy requires close
integration with other parts of the business, such as
Human Resources, Procurement and mine develop-
ment planning. An arms-length, self-contained ap-
proach to managing social investments, dominated
by the aim of influencing stakeholders, limits the
potential value of investments.
(vi) Social investments should take place in a context of
constructive engagement with the affected commu-
nity. The willingness of the community to participate
in developing a social investment strategy, and
to work with the company in addressing areas of
need, is contingent upon the history of company
engagement with the community. Attitudes tend
to be based on acceptance of the mine presence, the
extent to which engagement activities were mean-
ingful and transparent, and the extent to which the
mine responds to community concerns related to
impacts.
(vii) A mining company’s social investment should have a
primary focus on stakeholders that are most affected
by operations. This group expects to benefit and
believes that the company should firstly address
negative impacts prior to considering contributing
to ‘enhancements’, reducing perceptions of ‘giving
with one hand and taking away with another’. The
company should be able to demonstrate how,
through its social investment strategy, the company
is doing all it can to address the critical sustainability
issues of the local community. This may require a
regional or national approach, but the link back to
the local community must be clear.
(viii) Decision-making structures with external (non-com-
pany) input should be appropriate to the social
investment strategy. Structures may differ widely,
depending on the issues being addressed. Funding
and governance models should be developed after the
social investment strategy has been developed and an
assessment of partners for collaboration has been
undertaken, in a way that enhances the chances of
program success.
Acknowledgements
The author expresses thanks to all the people who were
interviewed for this research and to the others who
contributed their time and thinking. In particular, grateful
acknowledgment goes to Prof. Danny Samson, Prof. Frank
Vanclay, and the Editor and two anonymous reviewers of
this journal.
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