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, sharing information about our business, responding to questions, listening to their observations and acting to address 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 NGOs 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.

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 a mechanism in place. We have a company-wide Grievance Management 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 in taking a structured and consistent approach to stakeholder engagement at all of our sites, the breadth and depth of engagement activities varies, 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. It 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 very 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 and 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 that 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 556 38 3 12 609

We continue to engage regularly with the communities near our operating sites in all of our jurisdictions. We took part in 609 community meetings in 2018, and are pleased to report that there were no significant community incidents or disruptions during the year.

Ambatovy held a total of 556 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. All of these topics were addressed in the context of the presidential election campaign in Madagascar, which dominated public discourse over the course of the year.

Fort Saskatchewan participated in a total of 38 community meetings in 2018. 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.

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 has the opportunity to interact informally with this important stakeholder group and provides an update on the company.

In Cuba, we participated in 15 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. A weekly newsletter produced by workers at the Moa site has been in circulation since 1979 and is very well read by the local community.

Community Grievances

In 2018, Ambatovy received 110 community grievances. Of the 110 grievances received, 106 were related to impacts on livelihood and land access, predominantly rice fields impacted by construction activities, land acquisition and other issues. In response to the key issue of impacted rice fields, Ambatovy worked to restore rice paddies, where possible, and compensated farmers for their losses. The remaining four grievances were categorized as environmental or other.

The Fort Site received one community grievance related to a noise complaint which was investigated and closed.

Last year, Sherritt received 82 community grievances. The increase in 2018 is directly attributable to an instance in which 51 landholders at Ambatovy filed the same grievance together and were counted individually. Barring this anomalous event, overall concerns regarding the project continue to decrease compared to Ambatovy’s construction years, continue to decrease due 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 to the organization.

Government Relations

In 2018, government relations activities focused on building key relationships and addressing regulatory and political risks and opportunities in the jurisdictions where we operate. During the year, there were national campaigns and elections in both Cuba and Madagascar, resulting in new leadership and changes in government officials in both jurisdictions. 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 with newly appointed officials within the Cuban and Madagascar governments and maintaining relationships to advance mutually beneficial projects, secure approvals for regulatory matters, and support developmental priorities.
  • Addressing governance challenges in Madagascar to ensure laws and regulations are respected and remain stable and predictable, especially during 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, which has been extended only to January 2020 due to resourcing constraints of the provincial regulator.
  • Advocating for approvals of community development projects and funding for Cuba and Madagascar.
  • 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 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 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 for a number of years in the fields of child protection education, HIV/AIDS awareness and prevention, and emergency preparedness. In 2018, this included consultation with UNICEF in Madagascar on Children's Rights and Business training for suppliers.

Sherritt partnered 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.

In 2018, Ambatovy continued its partnership with Search for Common Ground (SFCG), a well-respected peacebuilding and conflict transformation NGO. The focus of the partnership has been on the following:

  • 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. Read more about the work of SFCG here.

In 2018, Sherritt’s Fort Site partnered with WinSETT and other industry participants on a research study to improve diversity and inclusion. Read more about our work in 2018 on workplace inclusion here.

Multi-Stakeholder Initiatives and Associations

In 2018, we participated in a number of multi-stakeholder initiatives and industry associations to engage in constructive dialogue and/or strategic activities with stakeholders who share a common interest in the issues that matter to our business. Below is a list of the groups in which we participated last year. Significant topics 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.

“As the MLA representing Fort Saskatchewan-Vegreville, it’s incredibly important to be speaking with our industry partners that are within Alberta’s Industrial Heartland, including Sherritt International.

It is critically important to understand local issues from a variety of stakeholder perspectives including the company’s perspective, so I can communicate with the provincial government about issues that may arise from past, present and future policy decisions. Sherritt and its people have helped to provide input on many issues that impact operations including, but not limited to, the Canada Alberta Government Job Grant, Environmental Regulations, Health and Safety legislation, industry competitiveness and technologies development.

Working together in a collaborative fashion is how we achieve a greater understanding of the challenges and opportunities for Alberta, and allows us to work to find innovative solutions.”

– Jessica Littlewood, former Member of the Legislative Assembly (MLA), Fort Saskatchewan–Vegreville

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 improvements to 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.

Managing the expectations of local stakeholders, particularly in less-developed jurisdictions, is paramount. 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, while relying 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, local community development priorities vary dramatically. 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 2018, our operations generated more than $1 billion 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 $) Ambatovy1 Fort Saskatchewan Moa1 Oil & Gas and Power1 Total Sherritt
Payments to governments 56,269,6172 14,767,265 60,981,037 21,233,725 153,251,645
Local/national procurement 327,544,037 131,845,2423 145,643,403 32,670,454 637,703,137
Local salaries, wages and benefits 37,396,968 108,631,869 54,963,983 12,838,872 213,831,692
Community investment4 644,144 35,891 261,191 332,071 1,273,297
Economic benefit footprint5 421,854,766 255,280,267 261,849,614 67,075,122 1,006,059,771
1 Reported in USD; converted using Bank of Canada’s 2018 average exchange rate of 1.2957.
2 At Ambatovy, the first lump sum payment of royalties was made in 2018 following the establishment of legislation for the disbursement of royalties in Madagascar.
3 Procurement is calculated at the national level for all except Fort Saskatchewan, which refers to the Greater Edmonton Area.
4 Includes in-kind valuations.
5 This calculation includes the sum of the value of spending on local suppliers, local salaries and wages, payments to government, and community investment. All are reported on a 100% ownership basis.
(C$)

Approximately 63% 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 represent 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. Refer to this website for more information on Madagascar’s implementation of EITI.

In Madagascar, Ambatovy has participated over the last several years in a collaborative approach with other national and international stakeholders to develop a mechanism to distribute royalty payments to local communities. In 2018, the government enacted the appropriate legislation to allow for disbursement of royalties, and the first payment was made (which was a culmination of dues as per the operating agreement). Read this case study to learn more about the process.

Community Investment

Community investment expenditures represent a small percentage of our total economic benefit footprint, but we endeavour to achieve maximum local impact with those dollars spent or donated. The vast majority of Sherritt’s community investment continues to go towards socio-economic development in all jurisdictions where we are present. Where possible and in alignment with the priority indicated in Canada’s Feminist International Assistance Policy, as well as our own strategic priority focus on diversity, Sherritt also donated to initiatives that incorporated a gender lens to both the analysis of the issue and preferred outcomes.

Overall, Sherritt’s total amount allocated towards community investment continued to decrease in 2018. Since construction began over 10 years ago, Ambatovy has accounted for an overwhelming majority of our overall community investment. This is due to the significant community development needs in Madagascar. Ambatovy’s central mechanism for investing in communities is the Social Investment Fund (SIF), a $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. Now, nearly all of the 17 approved SIF projects were marked completed. The conclusion of the Social Investment Fund in the near future will be a significant milestone in Ambatovy’s community commitments. Ambatovy remains committed to meaningful civil society partnerships and direct community investment with the greatest positive impact in our areas of operation.

In Cuba, for a number of years 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, 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 2018.

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. Refer to this case study for more information on our Spirit of Sherritt program.

Sherritt was a supporting sponsor of Courage and Passion: Canadian Women in the Natural Sciences, an exhibit at the Canadian Museum of Nature in Ottawa, Ontario, which aims to inspire young women to pursue careers in science. The museum, which is particularly popular with school groups in the nation’s capital, ran the exhibit from July 2018 to March 2019. In addition, Sherritt also once again sponsored the International Women in Resources Mentorship Programme with the aim of providing female mentees in industry with a productive mentoring relationship, the purpose of which is to retain future leaders and create a more diverse pipeline. Sherritt sponsored employee participation in the program for the second year in a row.

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, including a 2018 program update.

Employee Volunteerism and Giving

Sherritt employees have long been active participants in the communities where we operate, both during and outside of work hours. Sherritt’s Community Investment Standard further encourages and better organizes employee volunteerism through a variety of delivery options. The result has been a significant increase in both the amount of volunteer hours and the recording of hours already occurring on a regular basis.

In 2018, Moa recorded over 3,237 hours of employee volunteer time during work hours. Employees at the Moa site contributed to saving lives through the employee blood donation program, and gave back to the local community, for example, through the maintenance of roads and community gardening.

As a result of the Spirit of Sherritt program, Fort employees donated 162 hours of company time to non-profit and charitable causes that were meaningful to them, and the Fort Site donated $2,800 to causes supported by employees who volunteered their own time. Through an annual employee giving initiative at the Fort Saskatchewan site, employees elected to donate a portion of their pay to the United Way, supporting various local charities. As of 2018, Sherritt’s employees had donated over $800,000 over five years. The Fort Site employees also supported Let’s Talk Science in 2018, including volunteering at events for youth focusing on Science, Technology, Engineering and Mathematics (STEM) at the University of Alberta.

Sherritt’s head office for OGP is located in Calgary, Alberta. For over 10 years, OGP has partnered with Alberta Children’s Hospital to host a golf tournament fundraiser. In 2018, nearly $90,000 was raised, bringing the multi-year total to over $900,000 raised by employees and vendors to purchase expensive medical equipment. In addition, employees raised over $27,000 for Alberta’s annual Ride to Conquer Cancer.