The Main Aspects of Corporate Social Responsibilty - Coursework Example

Project Topic: Business of Mining and Corporate Social Responsibility Newmont Mining Corporation Newmont Mining Corporation is one of the leading mining companies in the world which specialises in extracting gold and copper. The company was a major shareholder in the gold mine of Yanacocha which is situated in Cajamarca, Peru. The gold mine was recorded to be the second largest in the world. However, the project forced 26 families in Cajamarca to relocate 30 miles to the south of the city. The major stakeholders are the gold mines that are situated at different parts of Peru, the employees, the workers and the investors who invested in the company. The Choropampa Incident The devastating incident of Choropampa had occurred in 2 June 2000 which raised questions on many issues that went against the safety procedures and mining practices of the company. A truck filled with mercury left the mines of Yanacocha on that day to deliver the product to Spain where it will be filled in thermometers and many other devices. On the way along the dusty roads of the mountains, towards the city of Lima, which was a small town in Choropampa, the containers of mercury which were poorly secured began to spill on the roadways. The driver thus stopped the truck in the small town of Choropamapa and by the time he can take any action to handle the situation, 151 kilograms of mercury had spilled over the 25 miles of roadside in the town. Lack of knowledge regarding the harmful effect of mercury, affected the residents of the town as they it to be valuable metal. The children played on the silver beads without knowing the ill effects of the beads (WGBH Educational Foundation, 2002) Adding to the pathetic incident, the mines offered $30 to each of the residents who helped them to collect 1 kilogram of mercury with bare hands. The mines also hired day labourers for collecting the mercury but failed to protect the workers from the harmful effects of mercury. The mine toxicologists flashed in the television that mercury is not dangerous and assured the mass that symptoms would be resolved within a week or two. However, the assurance was criticised by the U.S. Environmental Protection Agency (EPA) as they sated that mercury is a hazardous metal and cause serious damage to health at elementary stage. After few days the effect of mercury was seen in about 100 residents of the town (Environment Protection Agency, 2002). They feel sick, became blind, had neurological damage, muscular pain and even experienced memory loss. Adding to the horror, in November, 2002 the environmental consultant hired by Newmont recorded that several kilograms of mercury was unaccounted and they were drained in the nearby Jaquetepeque River watershed which served water to about 3000 families and irrigated 15,000 hectares of farmland. Consequences of the incident The two perspectives that contributed to the conflict between the stakeholders (mines and the locals) are as follows: 1) The incident served a warning for Newmont that the company should rebuild their relationship with their local residents as the angry locals blamed the mines and requested the government in power to close it down. 2) It was examined by Compliance Advisor of IFC that the mining operation of Newmont did not met the Peruvian standards as well as the US standards. Several issues were held against the company like the water, air, road and also health. The consequences were imprisonment after criminal prosecution. The incident cost the company their hard earned reputation which can never be rectified in future (IFC, 2014). After realising the fact that Yanacocha gold reserve will face hard decline in near future, the partners of Newmont began to purchase permits and lands in the nearby town of Cerro Quilish which was believed to hold around millions ounces of gold. The company realised that Cerro Quilish was the last hope to revive their business in Peru. However, the residents of Cerro Quilish and Cajamarca believed that the mountains are sacred and regarded them as their god who provided them with water. When the government came to know about plan of the company of levelling the mountains, it declared that Cerro Quilish was a protected area. However, the company took the issue to the Peruvian court and won the case in 2004 and started its expansion which closed irrigation canal, La Ramada and deprived 240 families from water. The public reaction was abrupt and there was an uprising of about 10,000 protestant who gathered in the public square in Cajamarca. Thus the company has to seize its operation and felt that their operation in Peru was in jeopardy as the support from the locals’ detoriated. The devastating news of leftist coming into the power in October, 2010 lamed the company’s expectation of continuing business in Peru (Hecht & Herald, 2005). Recommendations The management of the company could have taken the responsibility of the affected families their responsibility by providing them free medical treatment. Their lack of responsibility had lead to this situation and thus they could have accepted their blunder in public and promised to rectify the situation instead of criticising going for further extension of mines in Peru. References Environment Protection Agency. (2002). Health Effects. Retrieved from http://www.epa.gov/mercury/effects.htm Hecht, P. & Herald. M. (2005). Peasants in Peru near showdown on mercury spill. Retrieved from http://www.minesandcommunities.org/article.php?a=1384 IFC. (2014). Summary of Project Information. Retrieved from http://ifcext.ifc.org/ifcext/spiwebsite1.nsf/0/F0235F25F6B14D50852576C10080D11B Russell, E. (2002). Newmont faces federal suits over mercury spill. Retrieved from http://www.bnamericas.com/news/mining/Newmont_faces_federal_suits_over_mercury_spill WGBH Educational Foundation. (2002). Peru: The curse of Inca Gold. Retrieved from http://www.pbs.org/frontlineworld/about/episodes/404.html 2. The Dangers of Social Responsibility Synopsis Social responsibility concept has become prominent in today’s management world which has its origin from the ethics. The social responsibility is accepted by organisations and has been recorded as the most related theory to the welfare economics (DeGeorge, 2011). The issue that is expressed by Theodore Levitt categorically stated that the social responsibilities and welfare are not the part of corporate interests. In the pluralistic society corporations should employ the social responsibilities in order to avoid the monolithic trends of collusion between the government and business in meeting the demand of the state of welfare. The concept of social responsibility changed its form in 20th from 19th century. There were various types of social responsibilities that were accepted by the organisations for fulfilling the objectives set by them. However, the organisations also failed in some cases to meet the requirements of the social responsibility which led to bitter consequences. The report thus summarizes the ill effects of social responsibilities which when not executed in a proper way brought in tremendous problems for the organisations (Schwartz, 2011). Introduction The concept had its origin long back from ethics and has been executed by almost every organisation. All the organisations thus felt the need for taking the society seriously where they operate and serve in. It became clear if the government failed to meet the needs of people then the business came forward to give them what they need. Thus it became more like a show off from the side of the business to take part in social responsibility programs. The business rose in the public esteem and thus no political attack could stop them from achieving the highest point of success. Thus, the social responsibility factor became the life time phenomena for an organisation to share a multitude of loyalty for the society in which they operate. The entrepreneurs dedicatedly served the people through cooperation and spiritual bliss. The syndrome of social responsibility does not show any changes in the nature of businessmen or divert them from their main self interest towards the business. It is rather viewed as the maximisation of the lifetime of capitalism “by taking the wind out of it’s’ critics sails” (Crowther, 2004). They are regarded as the only mean of dramatic performances to save themselves against the onslaught of the politicians. However, the organisation has to spend heaps of money just to safeguard the operation of the organisation from the attacks of the politicians. Thus they have to pay for playing in the market and serve people. Thus it is advantageous to keep a good relation with them in order to take orders from the suppliers. However, the whole concept looks fashionable to the employees, stockholders or the customers. New Feudalism The main function of any business is to produce profit and if it failed to do so then it will cease itself from operation. People are in need of pluralistic society where there is division or diversification in power and not danger of centralism which will lead to separation and political pressure. Thus, people are not against embracing welfare but are afraid of monolithic society which will produce harsh disciple and survival will be impossible for everyone. All the issues were turned against the corporations and danger lies in the way that other perceives the duty and responsibility of the organisation. With the end of capitalism, the profit motive of the organisation had become sublimated. Thus with the change in power the whole system gets modified and it becomes difficult for the organisations to cope up with the old pace in profit making through social responsibility. The main challenge which has been faced by the organisation is that government has been interfering too much in their every work. It had been playing a role of a player instead of an umpire. Each of the government that comes to the power wants to mold each and every being in the society according to their need and tastes. They had targeted to spread the tyranny over wide range of people, institution and values for the purest motives (Simpson & Taylor, 2013). Danger of single minded motive Thus from the above discussion it is clear that the organisations will have the better chance of survival if they do not think about their goal. Profit maximization will not be the main goal for them in real terms since it may harm their operation to a great extent. The business also recognises and respects the functions of government in order to achieve their goal of their business. The organisation will not make that scope for the government in a way that they will intrude in their business and disturb their operation by restricting many actions. The organisation should let the government to take care of the welfare of the society and they will assist the government in that work. Thus it is seen in the above discussion any intention of single minded devotion of the organisation towards profit making will make them suffer in the long term (Mariane, 2012). Summary of thoughts Thus it can be concluded that business has only two responsibilities: to maintain their elementary promise of every day operation by fulfilling the honest deliverables that they have made to the general public and to look for material gains. However, this does not portray the fact they will be losing their nerve and do whatever they want for achieving their target. They will have the responsibility to obey the guidelines of the government so as to sustain in the long run since of the government interferes in their matter it may bring in hindrance for the business to operate in smoothly. Reference Crowther, D. (2004). Perspectives on corporate social responsibility. England: Ashgate Publishing Company. DeGeorge, R. (2011). Business ethics. New Delhi: Dorling Kindersley Pvt. Ltd. Mariane, J. (2012). Business ethics case studies and selected readings. USA: South Western Cengage Learning. Schwartz, M. (2011). Corporate social responsibility: An ethical approach. Moorebank: NewSouth Books. Simpson, J. & Taylor, J. (2013). Corporate governance, ethics and CSR. London: Kogan Page Limited. Read More