Corporate Social Responsibility (CSR) involves a number of activities that a company can perform for the welfare of the society and the environment. The goal is to maintain a healthy relationship between the company and its stakeholders and the public.

CSR is a new concept in the 21st century whereby companies are persuaded to include, in their business model, actions which promote social responsibility. This has been due to various forces, which includes public scrutiny, international norms and political pressure

However, the act of being socially responsible by organizations is not new. During old times it can be observed that social responsibility of organizations were performed mostly through philanthropic works such as charity. For example in the African context, the farm owner, during harvest, was morally obliged not to collect the left overs in the field. The notion was that somebody who is poor in community might come to pick them up.

Social responsibility involves activities that promote ethical behavior. The ISO 26000, defines it properly, “it is the responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behavior…”

CSR goes beyond the realm of legal compliance. CSR requires investing more in human capital, the environment and the relationship with stakeholders.

What are the laws governing CSR in mining sector in Tanzania?

The Mining Act Cap 123 Re.2019 (the Act) together with its regulations governs the overall conducts of mining activities in Tanzania. The Act is formulated to embrace and implement the aspiration of the country towards mining which are provided in the Mining Policy 2009. One of the objectives in the mining policy requires the government to strengthen involvement and participation of local communities in mining projects and encourage companies to increase corporate social responsibility (CSR).

Section 105 of the Act, requires mining companies to prepare a CSR plan, annually. The CSR plan must be agreed on with the relevant local authorities and the government through the relevant ministries.

Specifically, the regulation governing Corporate Social Responsibility towards the community is the Mining (Corporate Social Regulation) Regulations, 2023 (The Regulation), which came into force in June, 23rd, 2023. Before the regulations there was no clear framework which regulated the CSR in the mining sector.

However, mining companies, especially multinationals, used to practice CSR towards the surrounding communities on a voluntary basis. This was either to improve the living conditions of the communities in which they operate or to, at least, reduce the native impact of mining projects.

What is the Mining (Corporate Social Responsibility) Regulations, 2023 ?

The Mining (Corporate Social Responsibility) Regulations, 2023 (the Regulations), governs the social responsibility of mineral rights holders towards the community in which they operate.

It provides the procedure for formulation and implementation of the corporate social responsibility plan. The Regulation applies to holders of prospecting license, special mining license, mining license, primary mining license, mineral processing smelting and refining license.

CSR Plan / Strategy

A CSR plan or strategy is a plan which is formulated by the company, and sometimes in corroboration with the relevant stakeholders, in order to execute and analyze the company’s social responsibilities initiatives.

The common practice is that, based on the CSR plan, annually, most companies will issue a report concerning social responsibilities in order to show the extent of which the social objectives where utilized. CSR practices have a number of benefits, though sometimes the benefits are obscure. Having a comprehensive CSR strategy or plan can help the company to realize the exact benefits she intends from practicing CSRs.

It is a mandatory requirement for mining companies to prepare and submit a credible CSR plan annually in corroboration with the relevant stakeholders, according to section 105 of the Mining Act.

What are the benefits of CSR?

CSR can benefit the society and the organization in many ways. In general in order for an organization to survive in its operations it needs a health ecosystem. The main objective of social responsibilities is sustainable development, says the ISO 26000.

Some of the benefits of CSR can be so directly associated with the company’s profitability and overall performance. Some of the benefits of CSR may include:

  • Positive company reputation;
  • Positive impact towards the community;
  • Employee loyalty and also attracting high talents;
  • Increase in production;
  • Increase in revenue;
  • Competitive advantage;
  • Relationships with companies, governments, the media, suppliers, peers, customers and the community in which it operates.

Who are the key players of the CSR?

Various stakeholders play a role in CSR. Stakeholders has been used to include employees, consumers, suppliers, management, shareholders, investors and other persons who operate outside the daily activities of the company such as local communities, employee’s families, NGOs etc.

Effective CSR requires establishing dialogue with the company’s stakeholders. The company should take action to actively engage in dialogue and set policies on issues of direct social impact for relevant stakeholders.

Good CSR practice requires that the company should make an attempt to request and comply with the concerns of the stakeholders. In order to comply with the concerns of the stakeholders the company can enter into a form of social contract with the society in which it operates.

Regulation 4 of the Regulations requires the mining company to make sure that it corroborates with the local councils in the area where it operates in setting development priorities in the CSR plan.

What companies are required to implement the CSR model in mining in Tanzania?

The Mining (Corporate Social Responsibility) Regulations, 2023 which provides the model of CSR for mining companies is only applicable to holders of prospecting license, special mining license, mining license, primary mining license, mineral processing smelting and refining license.

Approving process of CSR plan

The CSR plan undergoes extensive scrutiny before implementation begins. The Company should submit the plan to the committee of Experts, for it to be scrutinized and confirmed. After making the necessary recommendations the Committee of experts submits the plan to the District or Municipal or City Council (the Council).

The Council can either approve the plan or reject it with reasons, if rejected it will be returned to the company for alterations and amendments. If the plan is approved the Council will submit the plan to the minister of local government and the minister of finance for final approval.

The two ministers acts on the recommendation of the special committee which is formed in corroboration of the two ministries. If the two ministers approve the plan it will be submitted back to the Council. If the plan is rejected with reasons it will be returned back to the Council for amendments or alterations.

The Council will submit the finally approved plan to the company. The company can now begin implementation of the plan and submit the plan to the commission of minerals.

The committee of experts

The committee of experts is a body of representatives of various stakeholders which is present in every community where the mining activities takes place, which oversees the CSR in the community concerned. The committee comprises of ten members. Among the members, two representatives come from the mining company. The committee is responsible for evaluating and supervising the implementation of the CSR plan in the community. It also provides expert advice to project implementers. The committee reports to the district or municipal or city council.

The Local government authority

Stakeholders concerns in the community are channeled through the local government authorities in an organized form. The deliberations of the interests of the community in relations to the companies CSR plan are conducted through the committee of experts formulated by the relevant local government authority, as provided by regulation 5 of the Regulations.

Estimated timeframe for the process of registration

In order to fast-tract the process, the Regulations have provided time caps on the above stated procedures. Overall the all process of registering a CSR plan is estimated to take at least three months.

The committee of experts should scrutinize the plan within 14 days. The Council should communicate its decision to the company within 7 days, and submit the plan to the ministers in not more than 30 days. The two ministries should communicate they decision in not more than 21 days to the district council. The District council should submit the approved plan to the company within 7 days. And the company should within 7 days submit the plan to the commission of mining.

Financing and compliance obligations

Every year the mining company is required to set aside some funds for the purpose of implementing the CSR plan. All expenditures relating to the project under the CSR plan should be reported to the Council and the mining commission. The mining company should issue a financial report relating to project expenditures to the mining commission within 14 days after the end of every quarter and an annual report within 60 days after the end of the financial year.

Audit and reporting requirements

The object of reporting is to provide transparency on how an organization contributes or aims to contribute to sustainable development.

The mining company is required to issue a quarterly report about the implementation of the CSR plan to the Council and the mining commission. The Council acts as an auditor in the implementation of the CSR plan. The audit must be conducted annually and reported to the mining commission.

Company’s standard to social reporting varies. This is because there is no agreed social reporting standard. However, as advised by the commission of European communities, in order for the reports to be useful, there should be the recognized standard on the type of information to be disclosed, reporting format, and the reliability of the evaluation and audit procedure.

It might be helpful to resort to international initiatives that are focusing on development of social reports like the social accountability 8000 standards or the global reporting initiative.

Important also is the verification of the report by the independent 3rd party of the information to be published in social responsibility reports in order to avoid criticisms.

Conclusion

Corporate Social Responsibility is now a global issue. Companies are now taking responsibility of their actions towards the stakeholders. Social responsibility has become one of the important criteria in measuring the company’s overall performance and operations.

Companies are now required to report about their actions towards sustainable development. The Mining regulation imposes responsibility on mining companies to have on an annual basis a CSR plan and report about the implementation process. The process is regulated by various political players. CSR must, however, go beyond the legal realm. However a common standard of the CSR report has not been set. Having a common standard of reporting increases the usefulness of the report.