Stakeholder engagement is critical for establishing a mutual understanding of one another’s needs, interests, aspirations and concerns. That perspective is a key input for making decisions to support business objectives related to growth, risk management and operational excellence, and for collaborating to address local stakeholder priorities. Simply put, constructive stakeholder relationships are essential to securing and maintaining our social license to operate and creating mutually beneficial outcomes.
Our approach to stakeholder engagement is to systematically identify our stakeholders and engage with them through ongoing dialogue to share information about our business, respond to questions, listen to their observations and act on their concerns, as appropriate.
In general, we prioritize our level of engagement with different stakeholder groups based on their proximity to – and interest in – our activities and their ability to influence our business. At the operational level, the practical outcome of this prioritization is that our workforce, business partners, local communities and host governments tend to be our most important stakeholder groups. The diagram below shows our key stakeholder groups at both the corporate and operational levels.
|Employees and their representatives||Communities||Government|
|Financial community||Business partners
||Customers and suppliers|
||Industry peers and associations|
Our engagement tactics vary based on the nature of the interaction and the stakeholder groups involved. For instance:
- We engage regularly with local communities and employees through formal meetings and town halls, small-group and one-on-one interactions, surveys and grievance mechanisms.
- We work closely with our business partners through governance bodies and ongoing discussions to address material issues and opportunities.
- Our procurement and marketing teams are in constant communication with our suppliers and customers, to ensure smooth operations and customer satisfaction.
- Our investor relations department manages proactive and reactive interactions with investors, analysts and media, always in accordance with securities requirements.
- We meet with government officials in our home country and operating jurisdictions to build relationships, manage regulatory affairs and advocate on policy issues of importance.
- We manage partnerships with developmental non-governmental organizations and respond to advocacy groups, as needed.
- We take an active role in various industry associations, to advance sector-wide concerns, align with broader expectations, gain a broader perspective on industry, and contribute to innovation.
Corporate Standards to Support Stakeholder Engagement
We have specific requirements for engaging investors, media, government and employees; however, to ensure there is a consistent approach to stakeholder engagement across the company, our Stakeholder Engagement Standard applies enterprise wide. The standard describes our expectations for stakeholder identification and mapping, annual engagement planning, engagement processes and practices, how to record dialogue, and how to respond to feedback and views received from stakeholders. We also have a complementary Indigenous Relations Standard that sets out our commitment to building mutually beneficial relationships with indigenous peoples affected by our activities in a way that recognizes and respects their unique rights and cultural attributes.
An important aspect of engaging with our stakeholders and building social license is listening and responding to community concerns and incidents. Our ongoing community relations activities are designed to capture and resolve most of these issues before they escalate. But for those issues that do, it is important to have a credible community grievance mechanism in place. As described under Human Rights, all sites have some type of mechanism in place. We also developed a company-wide Grievance Mechanism Standard in 2016 to provide clear expectations on how we collect, classify, investigate, respond to and close out operational-level community grievances. Implementation will continue into 2017.
Diverse Operating Environments
Although we see the value of taking a structured and consistent approach to stakeholder engagement at all of our sites, the breadth and depth of engagement activities will vary greatly, given the disparate nature of each of our operating environments. Our Fort Saskatchewan refinery has been in operation since 1954 and is located within the city limits of a well-developed urban area near Alberta’s capital. The refinery is situated within an industrial zone with several other heavy-industry businesses. Local residents are familiar with the nature of industrial activities, including their benefits and potential risks. Because of this level of awareness and understanding, and our mature relationships in the community, we can take a practical and targeted approach to our engagement activities with the community, government and industry. Watch this video to learn more about life in Fort Saskatchewan.
In Cuba, we have two longstanding joint ventures with state-owned entities, and have an economic association with the government to operate our Oil & Gas business. As such, our engagement is focused on our partners and the central government. For community investment initiatives, we work closely with provincial and municipal governments and with donors and non-governmental organizations that have a presence on the island. We see opportunities to build on our good relations with the government to ensure our evolving approach to engagement aligns with the Cuban operating environment, which itself is becoming more accessible to foreign investors.
Our most robust stakeholder engagement program takes place at Ambatovy, given its size and location in the biodiverse and impoverished country of Madagascar. Ongoing dialogue through several channels with local residents, the host government and a variety of civil society organizations has been, and continues to be, important in building mutual understanding, managing expectations, and earning and maintaining our social license.
|Ambatovy||Fort Saskatchewan||Moa||Oil & Gas and Power||Total|
|Number of community meetings||690||39||7||14||750|
We continue to engage regularly with the communities near our operating sites in all of our jurisdictions. We took part in 750 community meetings in 2016, and are pleased to report that there were no significant community incidents or disruptions during the year. (As mentioned under Health and Safety, there were two community fatalities in 2016, but they were managed responsibly and have not resulted in any community ill will.)
Ambatovy held a total of 690 community meetings during the year. Significant themes included Ambatovy’s operations, impacts and benefits to Madagascar; local governance; royalties’ distribution planning; human rights; grievance management; resettlement and land use around the mine; rumours and misinformation; public health and safety awareness; water quality; community-based environmental conservation; and security awareness.
Fort Saskatchewan participated in a total of 39 community meetings in 2016. This participation included direct engagements with municipal authorities, educational institutions, charitable organizations and industry, open houses, and multi-stakeholder meetings such as those led by the Northeast Capital Industrial Association. These interactions provide us with insights into the cultural, social, political and industrial fabric of the community, as its aspirations and concerns evolve. In 2016, engagements were also framed around the Operating Approval renewal process which was initiated during the year. The permit renewal is not due to the provincial regulators until early 2018; however, the Fort Saskatchewan site has been engaging early and often on this topic.
We also make special efforts to stay connected with former employees. As the refinery has been operating for more than 60 years, there are many multi-generational families of workers – as well as “alumni” – living in the area who remain interested in the company and who serve as our informal ambassadors. For many years, we have been contributing to the Sherritt Seniors’ Club, whose membership consists of Sherritt retirees based in Fort Saskatchewan. They take tremendous pride in their years at Sherritt and are among the company’s greatest ambassadors. As a token of appreciation, Sherritt supports an annual Club dinner, where senior management gets the opportunity to interact informally with this important stakeholder group, and provides an update on the company.
In Cuba, we participated in 21 meetings involving municipal and provincial authorities in Moa and the communities near our Oil & Gas and Power facilities. Meetings primarily related to the planning, execution and review of community development projects. Much like Fort Saskatchewan, Moa is an industrial town. Most of the local population works in the mining industry in some way. Throughout the year, the Moa Joint Venture supports – and participates in – cultural, sporting and other community events in Moa. There is also a weekly newsletter produced by workers at the Moa site that has been in circulation since 1979 and is very well read by the local community.
In 2016, Ambatovy received 116 community grievances. Of the 116 grievances received, 100 related to impacts on society, predominantly rice fields impacted by construction activities, and a few were linked to other livelihood impacts, land acquisition and other issues. In response to the key issue of impacted rice fields, Ambatovy worked to restore rice paddies, where possible, and compensate farmers for their losses. Sixteen grievances were environmental in nature, relating to water contamination by elevated levels of manganese (described under Water Quality), and odour resulting from gas released at the plant.
We recorded a 45% year-over-year decrease in the number of grievances received compared to 2015. This drop builds on a positive trend from the previous year, which saw a 62% decline in grievances from 2014. We attribute this decrease to the success of face-to-face consultations, significant progress on the completion of rice field restoration (which was a considerable issue during construction), as well as the increasing maturity and stability of our operations.
No other community-related grievances were reported across the organization.
In 2016, Sherritt developed a Grievance Mechanism Standard, which is being implemented across the company.
In 2016, government relations activities focused on building key relationships and addressing regulatory and political risks and opportunities in the jurisdictions where we operate. Throughout the year, we met regularly with high-ranking representatives of national, provincial, regional and local governments, state-owned enterprises, diplomatic missions and multilateral organizations. Priorities included:
- Engaging and broadening relationships with the Cuban government and state-owned companies to advance mutually beneficial projects, secure approvals for regulatory matters, and support Cuba’s developmental priorities
- Addressing governance challenges in Madagascar to ensure laws and regulations are respected and remain stable and predictable, especially in the lead-up to the 2018 presidential election campaign
- Advocating for climate change regulations in Alberta that are science based and fair to trade-exposed industries
- Initiating discussions with the regulator on the Fort Saskatchewan site’s operating permit renewal
- Advocating for approvals of community development projects and funding for Cuba and Madagascar, including disaster-relief initiatives
- Building and maintaining relationships with the relatively new Alberta and Canadian governments
- Encouraging stronger Canada–Cuba and Canada–Madagascar relations
In January 2016, we signed an important agreement with the Government of Madagascar to secure payments worth several millions of dollars in value-added tax owed to Ambatovy. The terms of the agreement were fairly well respected all year.
In October, we had the opportunity to interact with Canada’s delegation to Cuba, led by the Prime Minister. We were encouraged by this state visit and other exchanges between the Canadian and Cuban governments, as a means of strengthening bilateral relations.
In November, La Francophonie, a summit of French-speaking countries, was held in Madagascar. Canada’s delegation was again led by the Prime Minister. As Canada’s largest foreign investor in Madagascar, we had the opportunity to engage at high levels with both the Canadian and Malagasy governments in the lead-up to and during the summit.
Additional information on our political and regulatory risks can be found in our 2016 Annual Information Form, including an overview of how we are affected by the U.S.’s Cuba embargo and the Helms–Burton Act, which, among other things, prohibit us from doing business in the U.S. or with American entities.
Partnerships with non-governmental organizations (NGOs) and other civil society organizations continue to play a key role in our approach to addressing stakeholder issues and opportunities. Over the years, we have enjoyed mutually beneficial relationships with NGOs in Madagascar, Canada and Cuba. In 2016, we had more than 40 active partnerships with local, national and international NGOs and civil society organizations. The vast majority of these partnerships involved our work at Ambatovy in Madagascar, in particular to support environmental conservation and management. For a complete list of Ambatovy’s active partnerships, visit the Partnerships page on Ambatovy’s website.
In 2016, Ambatovy partnered with the United Nations in Madagascar, signing a joint declaration to co-operate in areas of common interest, including social and economic development priorities of the Alaotra-Mangoro and Atsinanana regions and improving the standard of living of local populations. Both parties have worked in the fields of child protection education, HIV/AIDS awareness and prevention, and emergency preparedness for a number of years.
In 2016, Ambatovy also made progress on the three significant NGO partnerships that it entered into in 2015. Two involved Conservation International and Asity Madagascar (which is associated with BirdLife International) in conservation work in biodiversity offset areas that Ambatovy is responsible for (refer to Biodiversity and Land Management for more information). A third partnership was established with Search for Common Ground (SFCG), a well-respected peacebuilding and conflict transformation NGO. The original partnership agreement is centered on accomplishing two primary objectives:
- To enhance the capacity of Ambatovy staff and local community members to engage in constructive, solution-oriented dialogue, in order to build trust and improve mutual comprehension among both groups so they can work through issues of concern more effectively, and
- To strengthen stakeholder understanding of the role of local authorities and communities in advancing good governance, and the role of government and other actors (NGOs, industry, etc.) in building sustainable communities and supporting participatory development, with the aim of enhancing the broader capacity for achieving community development aspirations.
A Phase II with SFCG was negotiated over 2016, and signed in early 2017, which will focus more specifically on the impending presidential election in Madagascar in 2018. The SFCG partnership work is also expanding geographically, to work in the areas of the pipeline and Toamasina.
In 2016, there were new partnerships established as well. Ambatovy facilitated a partnership with the population of the Vohitrambato community and a Malagasy company called Homéopharma that focuses on developing and producing natural products for health and well-being, to plant 8,000 noni trees (noni is a tree in the coffee family used to help treat a variety of health problems such as diabetes, high blood pressure, arthritis, aches and pains, inflammation, infections, etc.). The objective of the partnership is to help the community gain an additional source of regular, reliable income. Farmers in Vohitrambato have received training in agriculture techniques and fruit growing. Homéopharma financed the purchase of the noni seedlings, and will provide technical advice for the noni production, ensure monitoring and quality control of the plantations, and will buy the noni crop from farmers.
Multi-Stakeholder Initiatives and Associations
In 2016, we participated in 21 multi-stakeholder initiatives and industry associations to engage in constructive dialogue and/or strategic activities with stakeholders that share a common interest in the issues that matter to our business. Below is a list of the groups we participated in last year. Significant topics that they pursued included application of voluntary standards, understanding and influencing regulatory developments in various jurisdictions, sharing and developing best practices, improving governance in the sector, identifying emerging trends, opportunities and risks, and broadening networks and perspectives.
“We are very pleased with our ongoing collaboration with Ambatovy, because the involvement of the private sector is essential in the sustainable development of Madagascar.”
– Violet Kakyomya, United Nations Resident Coordinator in Madagascar
Now more than ever, stakeholders – from local communities to host-country governments and civil society organizations – expect to experience tangible benefits and increases in their standard of living from natural resource extraction and processing. This is particularly true in jurisdictions where economic development has been lagging, infrastructure is lacking and human development indices are low.
Within the industry, there is recognition that mining and energy companies have a role that extends beyond the simple provision of returns to shareholders. For a company to be truly sustainable, it must build broad social license and demonstrate that it delivers a net-positive benefit to local communities and to society as a whole. That is why benefitting people and helping catalyze the development of sustainable communities is so important to us.
Managing the expectations of local stakeholders, particularly in less-developed jurisdictions, is paramount, especially as we struggle with the low commodity price environment. When a large business enters an undeveloped jurisdiction, there are often expectations that it will solve many, if not all, of the area’s inherent socio-economic challenges. We are committed to helping improve the lives of people near our operations, but we rely on host-country governments to discharge their obligations regarding basic services, particularly in the areas of health, education and infrastructure.
Because of the diverse operating contexts of each of our sites, the range of community development priorities varies dramatically. Community needs differ significantly from Canada to Cuba to Madagascar. As such, we have adopted a flexible approach to community development, while at the same time establishing company-wide guidance that ensures our values and expectations are preserved. In each jurisdiction, our investment decisions strive to support:
- Socio-economic development
- Public health and safety
- Natural and cultural heritage
In addition, our Community Investment Standard aligns with evolving good practice to maximize the value of our contributions, both to the recipients and to our business. (The standard was assessed by London Benchmarking Group (LBG) Canada as part of the design process.) It requires that we establish employee-led community investment review committees (CIRCs) at divisional/site and corporate levels to provide governance and oversight of decision-making. We take great care to avoid real or perceived conflicts of interest and to ensure spending complies with our business ethics and anti-corruption policies. All community investment reporting is now assured by LBG Canada on an annual basis.
Economic Benefit Footprint
When evaluating the overall financial impact that our presence delivers at local and national levels, we measure our economic benefit footprint, which includes payment of taxes, royalties and regulated fees to governments; the procurement of goods and services at the local and national levels; payment of local salaries, wages and employment benefits; and community investment spending. In 2016, we contributed more than $750 million in economic benefits to local communities and host governments around the world. The following table presents a breakdown of our economic benefit footprint for the year.
|Indicator Components||Ambatovy||Fort Saskatchewan||Moa||Oil & Gas and Power||Total Sherritt|
|Payments to governments||27,303,950.00**||7,908,501.00||20,300,000.00||19,393,762.56||74,906,213.56|
|Local salaries, wages and benefits||34,320,593.86||107,201,093.00||55,000,000.00||13,824,198.27||210,345,885.13|
|Economic benefit footprint*||347,169,001.80||200,985,998.00||166,029,152.00||72,075,762.74||786,259,914.54|
* This calculation includes the sum of the value of spending on local suppliers, local salaries and wages, payments to government, and community investment. All reported on a 100% ownership basis.
** At Ambatovy, the payment method for royalties is under development and no royalty payments were released in 2016.
Approximately 60% of our benefit footprint results from the purchase of goods and services from local- and national-level suppliers serving our operations. Given that Madagascar did not have a large-scale mining industry in place prior to our arrival, the Ambatovy Joint Venture has invested great effort in developing a local supply chain. The Ambatovy Local Business Initiative (ALBI) provides support to local businesses and entrepreneurs through training, mentoring and capacity-building programs. ALBI was created to fulfill Ambatovy’s “buy locally, hire locally” policy. To this end, ALBI is fully integrated within Ambatovy’s Supply Chain Management Department to identify local businesses capable of responding to company and market needs. By maximizing local procurement, Ambatovy provides a much-needed impetus to the Malagasy economy and to entrepreneurs. Read about ALBI’s work in this case study and go here to learn about a small but promising ALBI-funded project involving wood recycling.
Local salaries and wages account for our second-most-significant contribution, reflecting the importance of our sector in raising the standard of living and creating wealth in communities adjacent to our operating sites – in both developed and developing jurisdictions – through well-paying jobs.
Our payments to governments in 2016 also represented a significant contribution to host countries and communities, and increased over previous years at Ambatovy (due to now being an operating mine) and Fort Saskatchewan (due to increase in tax rates and compliance costs provincially). We strive to ensure that these payments are openly and transparently reported, so that our contributions to national, regional and local governments are recognized, and to encourage accountability for the spending of those funds, which should go towards building essential infrastructure and increasing access to education and healthcare, especially for populations near our operations. As a Supporting Company of the Extractive Industries Transparency Initiative (EITI), we are committed to the transparent reporting of payments to governments. Ambatovy has actively encouraged and supported the Government of Madagascar’s EITI candidacy and reporting efforts over the last several years and is an active member of Madagascar’s National EITI Committee. Visit this website to review EITI Madagascar’s latest report, which was published in 2016. Throughout the year, Sherritt also developed an internal process to meet the reporting requirements of the Government of Canada’s Extractive Sector Transparency Measures Act (ESTMA), which – much like EITI – requires companies in the sector to publish payments to governments in all jurisdictions. In 2017, Sherritt will publish its first ESTMA report, which will contain 2016 data.
In Madagascar, Ambatovy is participating in a collaborative approach with other national and international stakeholders to develop a mechanism to distribute royalty payments to local communities. Read this case study to learn more.
Community investment expenditures represent slightly less than 1% of our total economic benefit footprint.
The table and graph below show the relative focus areas of Sherritt’s community investment, with the vast majority of investment contributing to socio-economic development in all jurisdictions where we are present.
|Public health and safety||$2,014,329||29%|
|Natural and cultural heritage||$22,785||1%|
Note: These figures are reported on a 100% ownership basis. They also include: contributions from corporate and administrative offices that do not directly benefit communities around our operating sites; all in-kind and leveraged investments; voluntary contributions from our entire workforce, including temporary and contract workers; all program management costs; and all community investments that were made in 2016, regardless of the eligibility criteria set out in the audit conducted by London Benchmarking Group Canada. These considerations account for the discrepancy between this community investment total and that used in the Economic Benefit Footprint table and the G4-EC1 table.
Overall, Sherritt’s total amount allocated towards community investment in 2016 decreased from the previous year. This was largely due to a drop in spending at Ambatovy, which is focusing more on relationship building and engagement with the community and less on supporting big development projects. In 2016, public health and safety spending was higher than in the previous year, reflecting the significant amount of support that Sherritt provided to relief efforts for natural disasters and emergencies in its host jurisdictions.
As was the case in 2015, Ambatovy is responsible for allocating the most significant portion of Sherritt’s community investment budget, given the significant community development needs in Madagascar. Ambatovy’s central mechanism for investing in communities is the Social Investment Fund (SIF), a one-time $25 million allocation established in 2012 in partnership with the Government of Madagascar. The SIF supports several projects, such as updating public institutions, like schools and electrical generators; and building new ones, like markets and roadways. In order to qualify for SIF funding, projects require support from beneficiary communities, the government and Ambatovy. In 2016, spending was allocated to the 17 projects approved in 2015. The SIF has almost been entirely allocated to projects.
In Cuba, we have been providing about half a million dollars in annual funding for important projects relating to public health and safety, transportation, sanitation, education and culture in communities adjacent to our operations for more than 10 years, as part of our longstanding commitment to sharing prosperity with the Cuban people. Every project we fund is directly linked to Cuba’s national, provincial and local development priorities. We believe that Cuba provides a model in development planning for other jurisdictions, and we are proud to support the country’s efforts. Refer to this case study for additional information on our contributions to Cuba in 2016.
At the Fort Saskatchewan site and in Calgary and Toronto, where we have administrative offices, community investment is much less significant and is used to support employee engagement, philanthropy and meeting the needs of the less fortunate. Our corporate office in Toronto makes strategic investments to support divisional and site-level priorities, such as conservation programs in Madagascar and community health in Fort Saskatchewan. In 2016, the corporate office partnered with CARE Canada and the Government of Canada on a multi-year, multi-million dollar project to support sustainable economic growth and entrepreneurship in Cuba. Although funding has been allocated by Sherritt and the Government of Canada, the project is still pending approval from the Cuban government. Leveraging opportunities that provide broader funding and stakeholder support, such as this one, help to strengthen our reputation as the partner of choice, committed to “shared prosperity”.
In 2016, Sherritt also directed significant resources to disaster relief, including funding to the Canadian Red Cross for the wildfire recovery efforts at Fort McMurray, Alberta; to the International Committee of the Red Cross for Hurricane Matthew relief in the Bahamas, where Sherritt has a marketing office; and to the United Nations Development Programme for rebuilding efforts in Cuba as a result of the same hurricane.
Sherritt employees have long been active participants in the communities where we operate, both during and outside of work hours. With implementation of Sherritt’s Community Investment Standard underway, we aim to further encourage and better organize employee volunteerism through a variety of delivery options.
In 2016, 36 Ambatovy employees worked with a local non-governmental organization, Mitia, to support the implementation of a school/community nutrition project at one of the resettlement villages in Madagascar. Volunteers helped families and school instructors prepare, cook and serve meals to 315 pupils. Supported by Ambatovy, the school canteen has also created a school vegetable garden.
Employees at the Moa site contributed to saving lives through the employee blood donation program. In 2016, nearly 300 workers donated nearly 150 litres of blood to the regional hospital.
In 2017, we will uphold our longstanding community investment commitments and continue to pursue strategic opportunities that allow us to leverage partnerships, establish a flagship project and build our reputation and social license, while being conscious of the financial challenges that affect our ability to make such investments.
Through an employee giving initiative at the Fort Saskatchewan site, employees elected to donate more than $50,000 of their pay to the United Way, supporting various local charities, in 2016.
“Ambatovy demonstrates a strong commitment to community engagement, both at senior management and technical staff levels.”
– Hilde Demain, Country Manager, Search for Common Ground
“Sherritt has co-operated with Cuba and has taken part in the country’s development plans for more than two decades, to support the company’s commitment to being a responsible foreign investor and our mutual priorities for sustainable economic development that benefits our country.”
– H.E. Julio Garmendía, Cuba’s Ambassador to Canada, Ambassador Extraordinary and Plenipotentiary of the Republic of Cuba