Stakeholder Engagement

Management Approach

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.

Sherritt’s Key
Stakeholder Groups
Employees and their representatives Communities Government
Financial community Business partners

Customers and suppliers
NGOs/Civil Society Media

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 have a company-wide Grievance Mechanism Standard to provide clear expectations on how we collect, classify, investigate, respond to and close out operational-level community grievances.

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.

A 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.

Performance

Community Relations

Ambatovy Fort Saskatchewan Moa Oil & Gas and Power Total
Number of community meetings 1,337 26 5 4 1,372

We continue to engage regularly with the communities near our operating sites in all of our jurisdictions. We took part in 1,372 community meetings in 2017, and are pleased to report that there were no significant community incidents or disruptions during the year.

Ambatovy held a total of 1,337 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. The higher than normal number of community meetings in 2017 is attributed to both the national election expected in late 2018 and post-cyclone support. See here for more information on the impacts of Cyclone Enawo in 2017.

Fort Saskatchewan participated in a total of 26 community meetings in 2017. 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 2017, engagements were also framed around the Operating Approval renewal process. The permit renewal was submitted to provincial regulators in early 2018.

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 9 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.

Community Grievances

In 2017, Ambatovy received 82 community grievances. Of the 82 grievances received, 74 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. The remaining eight grievances were environmental or operational in nature.

Last year, Sherritt received 116 community grievances. 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 2017, Sherritt progressed in implementing our Grievance Standard across the company. The Standard is intended for use by Sherritt’s sites and mandates processes that receive, investigate and manage concerns or complaints raised by local external stakeholders, in line with Sherritt’s commitment to build trust-based relationships and maintain its social license to operate.

Government Relations

In 2017, 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 in 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
  • Continuing 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 Alberta and Canadian governments
  • Encouraging stronger Canada–Cuba and Canada–Madagascar relations

Additional information on our political and regulatory risks can be found in our 2017 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

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 2017, 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.

Building on years of collaboration with UN agencies in Madagascar and Canada, Sherritt supported the UN’s relief efforts (UNDP and the World Food Programme, for example) in Cuba and Madagascar following Cyclone Enawo and Hurricane Irma in 2017. We were also thrilled to partner with UNICEF Canada to deliver a road safety program in Cuba, where the leading cause of death among young people is traffic accidents. The partnership, announced publicly in early 2018, provides three years of funding for the initiative. Read more about it here.

Read more about Sherritt’s involvement in the recently launched Child Rights and Security Checklist here.

In 2017, 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). In 2017, Ambatovy continued with their partnership with Search for Common Ground (SFCG), a well-respected peacebuilding and conflict transformation NGO. The original partnership agreement was 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. The focus of SFCG’s work in 2017 was more specifically on the impending presidential election in Madagascar in 2018, while supporting the original mission of the partnership noted above. The SFCG partnership work also expanded geographically, to work in the areas of the pipeline and Toamasina.

“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

Community Development

Management Approach

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.

Performance

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 2017, our operations generated more than $840 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 (CDN $) Ambatovy1 Fort Saskatchewan Moa1 Oil & Gas and Power1 Total Sherritt
Payments to governments 35,986,638.932 11,292,859.00 33,772,831.75 23,279,347.71 104,331,677.39
Local/national procurement 287,644,333.08 97,206,887.003 108,945,875.59 26,850,440.62 520,647,536.29
Local salaries, wages and benefits 37,401,995.40 108,562,388.00 54,818,549.79 13,664,451.58 214,447,384.77
Community investment4 1,931,381.00 229,735.00 391,168.00 489,841.00 3,042,125.00
Economic benefit footprint5 362,964,348.41 217,291,869.00 197,928,425.00 64,284,080.91 842,468,723.45
1 Reported in USD; converted using Bank of Canada’s 2017 average exchange rate of 1.2986
2 At Ambatovy, the payment method for royalties is under development and no royalty payments were released in 2017.
3 Procurement is calculated at the national level for all except Fort Saskatchewan, which refers to the Greater Edmonton Area.
4 Includes in-kind valuations
5 This calculation includes the sum of the value of spending on local suppliers, local salaries and wages, payments to government, and community investment. All reported on a 100% ownership basis.
(C$)

Approximately 62% 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 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 2017 also represented a significant contribution to host countries and communities. 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 further 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 published its first ESTMA report, which contained 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 how this initiative progressed in 2017.

Community Investment

Community investment expenditures represent slightly less than 1% of our total economic benefit footprint. The vast majority of Sherritt’s community investment continues to go towards contributing to socio-economic development in all jurisdictions where we are present.

Overall, Sherritt’s total amount allocated towards community investment in 2017 decreased by approximately 50% from the previous year. As has been the case for a number of years, 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 2017, many of the 17 approved SIF projects were marked completed or near completion. The conclusion of the Social Investment Fund in the near future will be a significant milestone in Ambatovy’s community commitments. For more information on the SIF projects, see this case study.

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 2017.

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. Over the course of the year, in implementing Sherritt’s Community Investment Standard, the Fort Site created and launched the Spirit of Sherritt giving program. Refer to this case study for more information. In 2017, the Fort Site donated a Heat Exchange Bundle with an in-kind value of over $165,000 to the Northern Alberta Institute of Technology (NAIT) for their Boilermaker program.

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 2017, Sherritt signed a three-year partnership with UNICEF Canada to support the Child Road Traffic Injury Prevention Program in promoting road safety among young people. Read more here.

In 2017, Sherritt also directed significant resources to disaster relief as a result of Hurricane Irma and Cyclone Enawo. Refer to this section for more information on the impacts of the storms.

Employee Volunteerism and Giving

Sherritt employees have long been active participants in the communities where we operate, both during and outside of work hours. With the implementation of Sherritt’s Community Investment Standard completed in 2017, our aim was to further encourage and better organize employee volunteerism through a variety of delivery options. The result was a significant increase in both the amount of volunteer hours occurring and the recording of hours already taking place on a regular basis.

In 2017, approximately 150 Ambatovy employees worked to help local communities recover from the effects of Cyclone Enawo, involving clean-up and minor repair work.

Reporting was most improved at Moa, where they recorded over 3,400 hours of employee volunteer time. Employees at the Moa site contributed to saving lives through the employee blood donation program, and were significantly involved in post-hurricane restoration, donating nearly 2,000 hours. Seven hundred hours were volunteered in the maintenance of the local community garden.

As a result of the Spirit of Sherritt program, Fort employees donated 96 hours of company time to non-profit and charitable causes that were meaningful to them, and the Fort Site donated $3,000 to causes supported by employees who volunteered over 1,600 hours of their own time. Through an annual employee giving initiative at the Fort Saskatchewan site, employees elected to donate more than $65,000 of their pay to the United Way, supporting various local charities, in 2017. This very well-organized campaign resulted in a 30% increase in donations over 2016. Since 2012, our employees have raised an impressive $820,000.00.

Sherritt’s head office for OGP is located in Calgary, Alberta. For 10 years, OGP has partnered with Alberta Children’s Hospital to host a golf tournament fundraiser. In 2017, they celebrated their 10th year, and incredibly, through donations by employees and vendors, have raised over $800,000, which has been used to purchase expensive medical equipment. The tournament, as well as participation in the hospital’s annual radiothon, was possible due to the contribution of over 150 employee volunteer hours.

“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