Monday, 10 August 2015

Will Corporate Social Responsibility Adapt or Die?

By Marc Stoiber

I recently launched a book that mapped out the disruptive global trends today’s companies needed to future proof themselves against. The book in turn launched a stream of conversations, each person describing yet another sector, company or movement in need of future proofing.

I did not, however, expect Corporate Social Responsibility (CSR), itself a force disrupting the status quo of business, to be added to the list.

It was Wayne Dunn, Professor of Practice in CSR at McGill and President of the CSR Training Institute, who first described CSR’s ailment to me. In his words:

CSR is often somewhat ghettoized inside corporations, off playing in a sandbox of its own at the margins of the business.

Much of the reason for this is that the CSR professionals (myself included) have not done a good job of helping corporate divisions like Finance, Engineering, Operations, R&D, etc. to understand why CSR is important for them.

 Recent research lent credence to Dunn’s assertion, underlining that all was not well in the CSR camp.  Despite widespread adoption of CSR in business, little meaningful progress has been made across a range of metrics. Greenhouse gas emissions, for example, have grown nearly twice as fast over the past decade as compared to the past 30 years.

We’ve seen enough case studies to know that CSR makes financial, as well as social and environmental sense. We also know that not adopting CSR will ultimately lead to business disaster.

So why isn’t CSR working? The obvious answer is that our current business model isn’t conducive to creating the radical change that’s needed to restore our planet’s health.

As Michael Townsend writes

…if maximizing profit is our primary purpose, then everything else will be subservient to this aim. We can, perhaps, seek to optimize the returns we make while delivering a balanced range of environmental and societal impacts, but it is highly unlikely we can aim to maximize profits at the same time. We cannot serve two masters. In this framing, CSR only ever can be an adjunct to the main purpose of the business.

If that’s the case (and I believe it is), CSR will continue to be treated like risk management window dressing, creating little more than shiny reports to assuage shareholders. It will remain marginalized, and eventually die the quiet death of a failed experiment.

Evolution through innovation.

Peter Bakker, president of the World Business Council for Sustainable Development, described the demise of CSR in his talk at the Sustainability Science Congress in Copenhagen. However, his key argument was that leading companies are going beyond CSR by integrating sustainability into everything they do. Witness Nike’s Considered Design and Unilever’s Sustainable Living Plan. In short, the old-school concept of sustainability as risk management is being usurped by the idea of sustainability as innovation.

This model makes sense for two reasons.

First, innovators thrive on constraint. As ad legend David Ogilvy said “Give me the freedom of a tight brief.” Being forced to design a car that goes further on less gas or packaging that biodegrades not only provides focus, but spurs original thinking.

Second, eco-innovation creates a culture that eco-responsibility can’t match. We may not be able to steer companies by the old ‘profit at all costs’ ethos anymore, but as the failed experiment of CSR has shown, we can’t expect business to adopt responsibility if there is no reward. Innovation provides that reward.

So is CSR doomed? Yes. But if innovation is what steps into its shoes, we shouldn’t be grieving its passing.

Sunday, 2 August 2015

Thoughts on CSR and Value – a curious perspective

By Prof. Wayne Dunn



We need more strategic, value-creating focus and less focus on defensive, risk-mitigating compliance

Companies the world over are recognizing that there are growing societal expectations on the social value added aspects of business of all types.

 Firms everyone are adapting and evolving, searching for ways to meet societal expectations and meet shareholder expectations.  Some are finding value-creating synergies and ways to create more value for society and for shareholders at the same time.

Others end up in more of a zero-sum, value transfer type of approach (see the CSR Value Continuum for more on value-transfer/value-creation).

At the same time there is a rapidly growing and evolving set of global standards, reporting mechanisms and general compliance frameworks.

Many companies, far too many in my opinion, are paying inordinate amounts of attention to the compliance aspect of CSR and far too little to the value-creation potential that can come with creatively finding synergy and value-alignment.

This not only limits the value that can be created for society AND shareholders, but also serves to position CSR in a ghettoized corner, far removed from core value-creation functions and prone to be first in line when budget crunch happens (see CSR in Budget Crunch Times)

I just received an email from a friend who has developed a technology/system that has the potential to be transformative in terms of rural child education in remote and impoverished areas.

They reached out to the CSR Managers/Leaders of 500 companies working in this area to suggest that there could be some synergy with the social license/social value.

Not one responded!  Follow-up phone calls suggested that the many (they said most) saw CSR as a defence mechanism and that strategic, creative, value-creation types of approaches are last resorts, to be deployed in times of crisis.

Strategic, creative, value-creation types of approaches that seek to find and develop alignment between societal and shareholder interests, and involve other stakeholders and partners, have been proven to be doable, affordable and less difficult than most believe.

Yet so many still default to defensive, compliance-focused, value-transferring (value-draining) sorts of approaches.

Thursday, 30 April 2015

Kperisi Shea Butter Women receive support from evanhealy



Women in Kperisi in the Wa Municipality of the Upper West Region of Ghana have received support from evanhealy and its development partner WACA. The two companies are supporting the women get Fair Trade and Organic Certification for their Shea Butter products.

The initiative is to help provide livelihood support to the women in the form of capacity training in Shea Butter picking, processing, marketing, soap making among others to help improve their standards of living and the quality and marketability of their Shea Butter.
The women numbering about 35 have been assured of an already market in the United States and Canada. In this light, evanhealy and its development partner are working assiduously to ensure that quality Shea Butter is produced for the international market.

Prof. Wayne Dunn, President of WACA in an interaction with the women in Kperisi assured them of his company’s readiness to support them improve their lives by providing them with a constant ready market in the US and Canada and by helping to get their products certified. He said the certification process is quite tedious and expensive but that the two development partners would do all they can to help them.

According to him, the best way to empower people particularly women is to help build their capacity by training them to acquire sustainable livelihoods. He said it was unacceptable for various organizations, whether local or international to continuously write proposals to donor partners for funding in the name of helping poor people in Northern Ghana but which many a time end up in the pockets of individuals. He said the two partners in the near future would extend their support to other women in the region and this he believes will go a long way to help alleviate poverty in many homes.

Evan Healy, founder of evanhealy said, ‘We are pleased to continue our direct support to the women and families that make this wonderful Shea Butter’.
A resource person who is also the Managing Director of Meridian Agricultural Services (MAS), Mr. Aaron Attefa Ampofo took the women through various training models. He appealed to them to send their children to school and not engage them in the collection of shea nuts or other duties that would affect their learning adversely.

Evanhealy is an artisan brand of certified organic skin care. The company was founded in 1999 by Evan Healy and David Gordon and is based in San Diego, California in the United States of America. The brand is sold in 600 natural foods stores in USA and Canada. The company works with family farms, women’s cooperatives and tribal villages as part of their ‘Faces of the Earth’ initiative to bring the plant knowledge of indigenous people to the western world.

Francis Xavier Tuokuu is a Writer, Blogger and Consultant on Corporate Social Responsibility. He is the Executive Director of Centre for Responsible Business-Ghana (centreforresponsiblebusiness.blogspot.com). You can reach him via fxtuokuu@yahoo.com or +233 506425707

Thursday, 23 April 2015

Does CSR only apply to sizable corporates?

By N. Craig Smith, INSEAD Chaired Professor of Ethics and Social Responsibility

Corporate social responsibility (CSR) is largely associated with big companies.  They are more high profile and thus attract more media attention and they are particularly concerned to protect and enhance their reputations with the broader public as well as key stakeholders.  They are also often better-resourced and more able to invest in CSR.  However, CSR is important for small and medium-sized enterprises as well (SMEs are organizations of up to 1,000 employees).  Size matters, not so much in whether an SME should engage in CSR but in relation to why and how?  To appreciate the relevance of CSR to SMEs, we need first to examine the meaning of CSR and why companies give attention to it; we can then turn to what CSR means to SMEs given their characteristics and how they differ from large corporates.

There are many definitions of CSR.  Fundamentally, however, CSR refers to the obligations of the firm to society or, more specifically, the firm’s stakeholders—those affected by corporate policies and practices.  The EU’s widely-disseminated definition stresses that CSR is voluntary, goes beyond what the law requires, and is an integral part of the business: it is “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with stakeholders on a voluntary basis.  It is about enterprises deciding to go beyond the minimum legal requirements and obligations stemming from collective agreements in order to address societal needs.”  This is a recent definition, but it is not a new idea.

Not a New Idea

The idea that business has societal obligations was evident at least as early as the nineteenth century. Visionary business leaders in the aftermath of the Industrial Revolution built factory towns in the U.K. and in the United States, such as Port Sunlight near Liverpool (founded by William Lever in 1888 and named after the brand of soap made there) and Pullman on the outskirts of Chicago (founded by railroad car manufacturer George Pullman, also in the 1880s).  These towns provided workers and their families with housing and other amenities when many parts of the newly industrialised cities were slums.  The motivations of these benevolent capitalists were mostly intrinsic, but enlightened self-interest was also often a factor.  Industrial unrest was common in the big cities; the founders of factory towns hoped to reduce labour problems by looking after their workers.

Enlightened self-interest is also a factor when a company such as Swire Beverages Ltd., a Coca-Cola bottler in China, invests in water conservation measures in its bottling plants.  Swire Beverages strives hard to reduce its water use ratio, the ratio of the volume of water consumed in the plant (including water used in cleaning) to the volume of beverage produced.  Swire reports a ratio of 1.75:1, a reduction of 39 percent since 2004, in its 2010/11 sustainability report.  This represents billions of litres of water saved in a country where there is a growing water crisis.  Consistent with the EU definition of CSR, Swire is acting voluntarily beyond what the law requires and on an issue that is at the core of its business.  While addressing its social and environmental obligations, Swire is also mitigating a business risk, both with regard to the availability of a key resource necessary for the production of its product and in terms of its reputation and license to operate.  No doubt Swire’s water conservation strategy is informed by the controversy faced by a Coca-Cola bottler in the Indian state of Kerala, which was closed down for allegedly abusing water resources and contributing to a water shortage.

These examples highlight why companies give attention to CSR.  They [their managers] may well be intrinsically motivated—wishing to do the right thing—but the rise to prominence of CSR of late is driven primarily by a strengthening of the “business case”.  The CSR business case comes in many different forms.  In essence, however, it rests on the recognition that attention to corporate social and environmental responsibilities is generally in the long-term economic interests of the firm.  Managers have a responsibility to consider those affected by company actions; equally, however, those stakeholders are often able to exert pressure on a company if it does not—even to the extent of shutting down the business, as Coca-Cola found in Kerala.  This is particularly true for large companies subject to intense media scrutiny.

CSR is not Philanthropy

There are still today plenty of companies who have yet to move beyond the idea of CSR as philanthropy—in some cases, at their peril, as the Coca-Cola case illustrates.  When companies implement “strategic CSR” they can find there are many benefits, including strengthened corporate and brand reputations and enhanced trust with key stakeholders (customers, employees, regulatory agencies, suppliers, and investors), improved risk management, increased revenues from innovation to identify new business opportunities, and reduced costs from efficiency improvements. 

What does this mean for SMEs?  Very simply, at its roots, the same motivations for attention to CSR apply.  There can be intrinsic motivations and more instrumental, “business case”, motivations.  However, there are some important differences in motivations and in CSR practices, reflective of the characteristics of SMEs.

Firstly, SMEs are generally managed by their owners, who are also often their founders.  This can lead to profound differences in commitment to corporate purpose.  Few successful entrepreneurs start businesses solely with the intent of making money.  This was true of William Lever when he founded the business that became Unilever—selling soap saved lives.  Today’s founders of start-ups also often have some societal need in mind.  This close involvement of owners and founders in SMEs means that commitment to purpose is much easier to engender than in a large, publicly-held corporation.  Indeed, they may not call it CSR (and William Lever didn’t when he built Port Sunlight), but SMEs for this reason can be more socially responsible than their much larger counterparts.

Secondly, with SMEs, it is more personal.  Personal relationships are often key to their success.  Internally, employees are likely to all know each other and be well-known to management.  While it is not unknown for large companies to refer to employees as “family”, this term is more evident and arguably more authentic when used in the SME context.  This may well mean that their employees are treated better than those in larger companies.

Personal relationships also figure externally, with SMEs often deeply involved in their local communities.  They may contribute substantially in terms of providing employment and they may also rely heavily on business relationships with customers and suppliers and others based in the local community.  Again, for this reason, SMEs can prove to be more socially responsible than big corporates.  In one extreme and ultimately ill-fated example, Aaron Feuerstein, the CEO of Malden Mills in Massachusetts, continued paying the salaries of his workers while the factory was being rebuilt after a fire.  While ill-fated because the company ended up in bankruptcy, the story reveals a depth of commitment not only to employees but also to the local community.  More typically, given their embeddedness, SMEs can be expected to invest in the local community to a much greater extent proportionately than larger companies, with contributions ranging from protecting jobs, to skills development, to infrastructure improvement.

Thirdly, SMEs are likely to be less well-resourced than big companies.  One beneficial consequence might be that while they give attention to the substance of CSR, they are less likely to focus on the trappings, such as CSR communications.  More generally, however, it is likely to mean that less funds are available to invest in initiatives that might be socially or environmentally beneficial, especially if the economic pay-off is less obvious or longer term.  As important, there are fewer people to give time to CSR, especially where, in some cases, companies are operating hand-to-mouth.  Yet finding the people and the time may be critical.  For example, SMEs increasingly find that they are part of a value chain where a large company downstream (for example, a major brand or a retailer) is demanding attention by suppliers to sustainability metrics and performance.

The Case for CSR in SMEs

Some of the business case considerations for CSR may carry less weight with SMEs, at least in terms of their own operations.  For example, while reputation is important for any business, there are typically greater reputational risks for large companies.  Similarly, license to operate, in the broad sense of corporate legitimacy, is also more of a concern for a larger corporate than an SME.  Consider the recent Rana Plaza tragedy in Bangladesh, where over 1,100 workers died in the collapsed factory building.  What keeps the CEO of a large branded apparel company awake is the possibility of the brand being exposed as having sourced from a factory with unsafe labour conditions—with its labels found amongst the ruins of the factory (as happened to many major brands in this instance).  The reputational pressures are less for an SME.  However, pressures on the larger corporates will inevitably translate into pressures on their suppliers, including SMEs.

SMEs might also be less able to bring to scale the efficiency gains that can come from attention to CSR or exploit the business opportunities that might come through innovation in the form of new, more sustainable products.  However, these business case considerations for CSR remain present.  Indeed, new start-ups are being established right now exploiting green-tech opportunities.  In sum, while size matters, not least in what gets done, SMEs have many of the same reasons for engaging in CSR that large companies have, both in avoiding downside risk and in exploiting upside opportunities.  In many cases, they may also be more intrinsically, if not better motivated, to give CSR attention.

Thursday, 2 April 2015

Who? Me? Responsible for CSR?

By Prof. Wayne Dunn

Shared value requires shared responsibility: whose responsibility is corporate social responsibility? Watching some of the discussion on corporate social responsibility it sometimes seems like governments, communities, NGOs and everyone else expects to sit back and have somebody (aka business) deliver CSR to them on a silver platter. WRONG!! Corporate Social Responsibility is not something a company does to or for communities, governments or others.

To be successful and sustainable it takes a shared and collective responsibility with all stakeholders.How could it be any other way? Yet, far too often we see major stakeholders, governments, communities,NGOs and others, placing all the responsibility on companies, almost as if they expected them to play the role of Government (or SantaClaus).

Sometimes too, we see companies sitting back and trying to leave the responsibility to other stakeholders, including often other companies or industries. Neither approach will work very well.Those communities and organizations that are pro-active in organizing and planning CSR activities and sharing in the responsibility with companies, will find that they simply get more value at the end of the day. And, they will gain more capacity as well, and more ownership over their destiny.

Those companies that take the lead AND have projects where ALL stakeholders take appropriate responsibility will find that more value is created for stakeholders and shareholders. If CSR is about aligning interests so that more benefits can flow to more stakeholders (including shareholders) how does it make sense that all responsibility should be on the company or other partner to organize and do.Surely Shared Responsibility is where everyone should be trying to get to.

Let’s assume that through a collaborative consultation process amining company and local community identified that improvements in education and health were priorities.What is the role and responsibility of the community and local organizations? What is the role and responsibility of local government? What is the role and responsibility of the Sector Ministries (Education & Health)? What is the role and responsibility of the company? What is the role and responsibility of NGOs and other development actors with an interest in education and healthcare?

Think about what the roles and responsibilities should be. Then think about how the project would normally play out. This way works: In successful examples the various stakeholders will all play a proactive part in the overall project, exhibiting leadership, collaboration and initiative as required. The project is truly made up of partners, working together and through their collaboration and collective responsibility helping to achieve results that none of them could achieve on their own.

This way, not so much: In other cases one partner (often business, but not always) is looked at to lead and take the bulk of the responsibility. Other stakeholders sit back and expect benefits to come to them. Regardless of which partner, or partners are left with the bulk of the responsibility, the project won’t succeed nearly as well as if there was a collective sharing of responsibility.

Do your CSR projects sometimes end up looking like this? Ironically, in projects where the bulk of the responsibility is left to one or two partners, they are the ones that get blamed if things don’t work perfectly.Is it any wonder that some get frustrated and, if they keep going, end up frustrated and cynical. Who? Me? Responsible for CSR?

Ironically, in projects where the bulk of the responsibility is left to one or two partners, they are the ones that get blamed if things don’t work perfectly. Is it any wonder that some get frustrated and, if they keep going, end up frustrated and cynical. So, Whose Responsibility is Corporate Social Responsibility?

Look at any CSR projects that you are involved in. Is there a collective responsibility? If not, why not? And, what will you do to change that and facilitate collective responsibility.Blaming the partners who have been carrying the responsibility probably isn’t the most productive response. Training and encouraging all partners to accept a fair share of responsibility is a far better way to go.

CSR can be an effective mechanism for creating value for society and shareholders. But, it doesn't work well for anyone if responsibility and ‘ownership’ is not shared amongst all stakeholders.

Wednesday, 18 March 2015

Prof.Wayne Dunn on CSR


There has been a lot of talk about the obsolescence of corporate social responsibility (CSR) – what do you think?

I wanted to say that I think the talk is rubbish, but really I believe it is because the phrase CSR is used to describe an increasingly broad and diverse set of activities. I don’t agree with this broadening of the definition. I believe that CSR is about finding alignment between corporate interests and community and other local interests; finding ways to concurrently create value for local stakeholders, shareholders and others, while simultaneously respecting the environment. How can that ever be obsolete? Companies and communities that take a mutually beneficial value creation (rather than philanthropic) approach to CSR will find exciting and sustainable ways to collaborate – and that will never become obsolete.

What is key about the value-creation approach to CSR is to be creative about finding those actions and projects that can be beneficial for companies, communities and others, and to systematically manage them. And, at the same time, be open to ways to maximize the value to all. CSR isn’t a zero-sum game. Increasing the value to community stakeholders shouldn’t simply be equated to spending more on the company’s part, it is about the community receiving more value.
This is obviously a much longer discussion but what is crucial to systematically achieving this sort of value-centric approach to CSR is to apply the same rigour to evaluating and managing CSR as a company does to its normal capital and operating investments. This forces managers to focus on more efficient ways of delivering value to local stakeholders and improves both the company’s return on that investment and the overall value received by the community.

Why does it appear to be so hard for communities and mining companies to collaborate?

The simplistic answer is because their approaches are too narrow and self-interested and too rooted in looking backwards. I believe the path to fostering more mutually beneficial collaboration between mining companies and communities is for both parties to be open and look for creative opportunities where their respective interests can be served by collaboration. I have worked on over 35 mining and community projects on every continent and in nearly every situation; from the Amazon to the Arctic, from Africa to Papua New Guinea, from the Andes to Eurasia. I have yet to see one where there wasn’t an opportunity for mutually beneficial collaboration. I have seen somewhere this wasn’t realized, but it was because one or both parties were unwilling to let go of a narrow, self-interested, historically focused, way of thinking about and seeing the other party.

How can we be respectful of indigenous peoples and communities vis-a-vis the productive use of their land?

Say please. Say thank you. Listen. Don’t be defensive or aggressive. Spend time getting to know them as people and as a Peoples. Be open. Recognize and respect that every please will not get an immediate yes. Be a good neighbour. Recognize that relationships and trust take time. Accept that your timeframe is not necessarily their timeframe. And, of course, focus on mutually beneficial value creation opportunities (but, get to know them well enough to begin to understand that their value framework may be different than yours – this may actually create an opportunity for even more efficient value creation). Another good thing is to learn about successful partnerships and relationships.

How can our Canada be a leader in the area of CSR?

We have led, but I have not looked closely enough to know if we are a now leader. Certainly, some Canadian companies have been CSR leaders. A project I developed with Placer Dome was the first private sector company to ever win a World Bank Development Innovation Award (for a CSR project on mining and HIV/AIDS in Southern Africa). There have been other successes and there have also been abysmal failures.Over the past years the Canadian Government has been making serious efforts to both promote progressive CSR practices and raise the minimum standards of corporate conduct in this area. Many companies are also stepping up and working to address the issue in a meaningful way. But, other companies are lagging behind.

Friday, 13 March 2015

Four Strategies for Local Content Success

By Prof Wayne Dunn

Local content has emerged as one of the most pressing issues facing business in emerging markets. Rightfully so.


Planned and executed properly, local content is the most sustainable and the most cost-effective mechanism for delivering value into local communities and economies.

It has the best local value to investment ratio (ROI) and even when done poorly it can have significant positive impacts.

Effective local content strategies have two focus areas that are common across industries and geographies.  These are employment and procurement.

Get them right and your project has the foundation for a strong and resilient social license.  Local employment and procurement can also be a key component of your project’s overall economic viability.

Get them wrong and your project will struggle with social and community issues and, quite often, overall project viability.

Developing local employment and local procurement is one of the best leveraged CSR investments that a company can make.  Think about it.

The jobs have to be filled.  The goods and services have to be procured.  If they aren’t procured locally then very little of the money from them will circulate in the local economy.

If they are procured locally then virtually all of the money circulates in the local economy and has a significant multiplier effect.

Even if local content creates additional costs the socio-economic impact derived from those extra costs represent a significant return on that investment because they are leveraged by the overall employment and procurement spending.  

And, often there aren’t extra costs or the additional costs are front-loaded and the benefits last over the life of the project.

If a project isn’t maximizing local employment and procurement then it will be bringing in more outsiders.  This costs extra and can increase community tension beyond the lost employment and contracts.  (Think of an influx of single young men coming to work at a project site and the impact on local families and communities).

Successful local content strategies can not only result in strong local relationships, they can also help with a project and company’s relationship with local and national governments and regulators as well as with developmental and advocacy NGOs.

But, success is not easy

Common constraints that must be overcome to have success with local content include:

·         Projects are often based in remote locations with little or no experience with industrial employment or even salaried employment of any kind.

·         Levels of literacy are low and household economies are often subsistence based.

·         There is little or no effective infrastructure to provide training and support to assist potential workers with the transition to industrial employment.

·         Local businesses and prospective entrepreneurs lack the skills and experience to be effective providers of goods and services.  This includes both technical skills and business management skills.

·         There are no economic vehicles in the local economy that can enable effective participation in the larger contracts and opportunities.

Locally owned businesses lack the financial, operational and management capacity to compete for larger contracts, even with extensive support and assistance from the project/company.

The bulk of the overall value of contracts for goods and services cannot be broken down to a size that can be digested by local businesses and entrepreneurs.

This means that by default the local economy is effectively prohibited from participating in the lion’s share of opportunities other than as sub-contractors.

·         Programs to facilitate local content development are under-resourced and focus on short-term impacts rather than the structural issues that inhibit optimization of local content.

Below are four strategies that can help achieve local content success.

They probably won’t all work all of the time.  And some may have no applicability to your particular project or venture.

But, you may find some useful, or they may stimulate you to think of other strategies and approaches for optimizing local content.

1.       Think Cap Ex when budgeting
Developing and implementing successful local content programs isn’t cheap.  Getting to success often means overcoming significant gaps in skills and capacity, and sometimes requires development of organizational and institutional infrastructure.  This can be costly and time-consuming, yet can provide valuable long-term results.

Investments in local content development pay back over the life of the project.  Yet most budgets treat them as operating expenses, not capital expenses.  Why?

In my experience it is mostly because nobody has challenged finance and accounting on how they are treated.  But, it does make a difference.  And it should be treated as a capital expense.  The payback is over time, generally over life of project.

When local content development is treated as an operating expense it is generally under-resourced and focused too much on short-term rather than life of project impacts.

There is a strong case to be made for including local content development budgets early on in a project’s overall capital budget.  This can provide the resources and the time-frame to make it work effectively and will pay off handsomely over the life of the project.

2.       Development Corporations
The scale of most procurement opportunities is simply beyond the financial, operational and organizational capacity of local businesses and economic institutions.

Local businesses are simply unable to scale so as to take advantage of the opportunities the project presents.  And, if they were given them they would not have the capacity to manage them effectively.

This was a challenge faced by many Indigenous communities in Canada.

Development of major industries and projects on their traditional lands meant that there were large contracting and business development opportunities available to them.  But, their local businesses and economic structures did not have the scale to take advantage of them.  The opportunities and benefits went to outside providers.

A development corporation model evolved over time and proved to be very successful at enabling local capacity to bid on major contracts and activities.

In the development corporation model geographic or tribal based populations come together and form for profit development corporations that are collectively owned.  They are able to operate at a scale whereby they can engage professional management and be better able to meet the needs of modern industry.

In many cases development corporations would recognize that the scale of the contracting opportunity was so large that they needed to bring in additional operational and financial expertise.  This was often accomplished via joint-venturing with firms that could bring the missing pieces to the opportunity and supplement the strategic local content advantage that development corporations had.

Kitsaki Development Corporation – Local Content Success Story

An early example of using a development corporation approach is the Kitsaki Development Corporation, a business development vehicle created by the Lac La Ronge Indian Band in northern Saskatchewan, Canada.

Kitsaki Development Corporation is an successful example of a development corporation being used to overcome gaps and issues that inhibit local content success

The regulatory structure that was put in place to enable the development of the Uranium industry in northern Saskatchewan sought to facilitate local content development.  One of the ways it did this was to put in place a requirement that local content providers be given a specific bid preference.

Kitsaki used this preference, along with a well-executed joint-venture strategy to secure an initial contract.  It has used that strategy across a range of focused opportunities and created a venture with annual turnover in the ½ billion dollar range. The Lac La Ronge Indian Band used a Development Corporation (Kitsaki) and a strategic partnership approach to create NRT Trucking and capture a major transportation contract from a local mine.  Using the same tactics they have grown Kitsaki into a substantial economic force, generating many hundreds of jobs and contract opportunities for band members and significant revenues and profit

In the mid-1980s the bulk transportation contract was coming up for Key Lake Mine.  Kitsaki recognized the opportunity and also recognized that while it had a local content advantage, it did not have operational experience in the bulk transport business.

Kitsaki, which had astute professional management, sought out a partner that could bring the missing pieces to the venture.  It partnered with Trimac Transportation, the largest bulk transport firm in North America.

The Jt Venture that was created, Northern Resource Trucking, which was 51% owned by Kitsaki, went on to become the largest bulk transport business in Northern Saskatchewan and today provides services to industry and communities across the region.

Kitsaki used a similar approach to take advantage of other strategic opportunities in the local and regional economy.  See more here.

This development corporation and joint venture model has proven very successful for many Indigenous communities and tribal organizations across Canada and the United States.

A key to the sustainable success of development corporations is a strategic approach that leverages local content advantages and meets the needs of industry and other markets, often through partnerships and joint ventures.

An equally important key is effective governance and political management that give the development corporation operational space and keeps it free from political interference and manipulation.

3.       Pre-employment training
Advertise for entry level workers at a remote project and you are overwhelmed with applications.  And, the process of sifting through them is inefficient, often bringing in poorly suited applicants and leaving better suited ones off the list.

Some applicants find that the structure of industrial employment and its impact on family and life simply doesn’t fit for them.  In other cases, immersion in a structured institutional setting can bring out traits that were not evident during the screening and hiring process

Too often the end result is high turnover of employees and frustration on the part of employees, managers and the company.

A well-structured pre-employment training program can address these issues.  It can dramatically reduce turnover and provide the broader community with enhanced life-skills and livelihood potential.

It works by establishing a short-term program (typically 6-12 weeks) where a pool of prospective employees are brought into a program that prepares them for industrial employment and helps them to determine if industrial employment is for them.

The program typically consists of a range of components that are directly and indirectly related to the anticipated employment.

They include elements related to the lifestyle transition that often accompanies a move from a subsistence lifestyle to salaried industrial employment.  Some of the programming, such as household financial literacy and household economic transition involve spouses and sometimes children.

At the end of the pre-employment training the trainees have a much better sense of what all is involved in industrial employment and whether that is a fit for them and their families.
Pre-employment training helps companies to know prospective employees better and to make smarter hiring decisions.  It also helps prospective employees to understand whether industrial employment is a fit for them.  Even those that don’t move into industrial employment leave the program with valuable life and livelihood skills.


Pre-employment training gives employers the opportunity to know prospective employees over a much longer time-frame and across broader range of situations.

At the conclusion of the program those deemed the most suitable for industrial employment go into a pre-screened pool that the company can select from when it next needs to hire new workers.  This pool can also be made available to contractors and others, helping to improve secondary and tertiary level local content success.

The end result is that those who are hired and brought on board are much more likely to stay and succeed.  A big cost saving for the company, big value for the local economy and a big frustration avoider for all!

Even those that are not brought into the pre-screened pool benefit. They have learned new skills and are better positioned to secure other employment or develop alternative livelihoods.

In many cases pre-employment training can be undertaken by more than one project.

4.       Invest in education and training institutions
The skills, attitude and expertise gap between where local workers are at and where they need to be can be huge.

Especially when the local content strategy is focused beyond simply bringing in entry level workers and instead has a target of seeing local employees at all levels and across all functions in the organization.

There is a need for effective education and training programs to systematically bridge gaps and help both employees and employers.

While it may seem simpler to either do the training in-house or bring in outside experts to do the training, this can be a short-sighted approach with longer term costs.

Most times there are local polytechnics and other local training institutions.  And often they don’t have the capacity to develop and deliver the type of training needed and at the quality level required.Investing in creating the local capacity to develop and deliver effective skills training can pay dividends over the life of a project. Partnerships between local skills training institutions and their more developed international counterparts can help ensure a steady supply of local workers with the required skills AND develop the capacity for the local institution to provide a range of other pragmatic skills and livelihood related programming.

Local training institutions are local content too.

Rather than simply pass by the local institutions in favour of bringing in a qualified institution or instructor, or even doing it in-house, companies should carefully consider investing in developing local training capacity.

This would include facilitating partnerships between local training institutions and international partners who can help them to both develop and deliver effective programming to meet current requirements, and develop the institutional capacity to do so in the future.Facilitating partnerships between local training and educational institutions and highly experienced international counterparts can help create short term solutions AND put in place longer-term local skills training capacity

While this may be slightly slower and more expensive in the short term, the improved local capacity will pay many dividends, including lower costs later on and an improved local capacity to train people for a range of livelihoods and skills (thus reducing dependency on the dominant industrial employer in a region).

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These four strategies are no guarantee of success.  Local content is not an easy puzzle to solve.  But, following those strategies that can apply effectively to your project can help improve your chances of success, and can make a huge difference for local families and communities and, ultimately, your shareholders.
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