Conflict translates environmental and social risk into business costs

Franks, Daniel M., Davis, Rachel, Bebbington, Anthony J., Ali, Saleem H., Kemp, Deanna and Scurrah, Martin (2014) Conflict translates environmental and social risk into business costs. Proceedings of the National Academy of Sciences of the United States of America (PNAS), 2014 . doi:10.1073/pnas.1405135111

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Author Franks, Daniel M.
Davis, Rachel
Bebbington, Anthony J.
Ali, Saleem H.
Kemp, Deanna
Scurrah, Martin
Title Conflict translates environmental and social risk into business costs
Journal name Proceedings of the National Academy of Sciences of the United States of America (PNAS)   Check publisher's open access policy
ISSN 0027-8424
1091-6490
Publication date 2014-05-13
Year available 2014
Sub-type Article (original research)
DOI 10.1073/pnas.1405135111
Open Access Status File (Author Post-print)
Volume 2014
Total pages 6
Place of publication Washington, DC United States
Publisher National Academy of Sciences
Collection year 2015
Language eng
Formatted abstract
Sustainability science has grown as a field of inquiry, but has said little about the role of large-scale private sector actors in socio-ecological systems change. However, the shaping of global trends and transitions depends greatly on the private sector and its development impact. Market-based and command-and-control policy instruments have, along with corporate citizenship, been the predominant means for bringing sustainable development priorities into private sector decision-making. This research identifies conflict as a further means through which environmental and social risks are translated into business costs and decision making. Through in-depth interviews with finance, legal, and sustainability professionals in the extractive industries, and empirical case analysis of 50 projects worldwide, this research reports on the financial value at stake when conflict erupts with local communities. Over the past decade, high commodity prices have fueled the expansion of mining and hydrocarbon extraction. These developments profoundly transform environments, communities, and economies, and frequently generate social conflict. Our analysis shows that mining and hydrocarbon companies fail to factor in the full scale of the costs of conflict. For example, as a result of conflict, a major, world-class mining project with capital expenditure of between US$3 and US$5 billion was reported to suffer roughly US$20 million per week of delayed production in net present value terms. Clear analysis of the costs of conflict provides sustainability professionals with a strengthened basis to influence corporate decision making, particularly when linked to corporate values. Perverse outcomes of overemphasizing a cost analysis are also discussed. 
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Centre for Social Responsibility in Mining Publications
Official 2015 Collection
 
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Citation counts: TR Web of Science Citation Count  Cited 32 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 40 times in Scopus Article | Citations
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Created: Sat, 10 May 2014, 16:29:04 EST by Dr Daniel Franks on behalf of Centre for Social Responsibility in Mining