Hatch’s Approach to CSR and Lessons Learned

1. Hatch’s Approach to CSR and Lessons Learned Presented by Dr Dila Ersenkal

2. Introduction Outline: • Corporate Social Responsibility (CSR) • Global Compact (GC) • Hatch’s Approach to CSR • Hatch Case Study – Update on Transnet • Lessons Learned & Recommendations

3. Challenges in Our World • Extremes of wealth (few) and poverty (many) “There should exist among the citizens neither extreme poverty nor again excessive wealth, for both are productive of great evil”- Plato 2500 yrs ago • Serious ecological degradation

4. How to Overcome the Challenges? • Incorporate points of views of different stakeholders, • Broaden the objectives of the companies to go beyond the economic.

5. What is Corporate Social Responsibility (CSR)? "A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” European Commission. 2001. Green Paper: Promoting a European framework for corporate social responsibility

6. What is Corporate Social Responsibility (CSR)? “We define CSR as business' commitment to contribute to sustainable economic development, working with employees, their families, the local community, and society at large to improve their quality of life. ” World Business Council for Sustainable Development

7. The business contribution to sustainable development which has been defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”, and is generally understood as focussing on how to achieve the integration of economics, environmental, and social imperatives. What is Corporate Social Responsibility (CSR)? Industry Canada

8. Why CSR? • Moral obligation - to do the “right thing” – to respect ethical values as well as people and the environment • Sustainability – “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” • License to operate – the permission from government and people to carry on business • Reputation – the enhancement of corporate image and brand value Michael Porter

9. Business in Society • Ever-widening range of environmental, social and governance issues • Adopting corporate citizenship practices to ensure sustainability • Open and accurate communication on progress • Partnership and collaboration of stakeholders, society and labour • The role of investors and the finance community • Alignment with international standards

10. Engagement in CSR • Reputation enhancement opportunity • Market expansion opportunity • It helps addressing environmental standards/concerns • Senior Management requires it • Allows for recruitment/retention of the best and brightest employees

11. Common Pitfalls • Selecting an inappropriate CSR activity • Effective launch, ineffective implementation • Spreading resources too thin • Weak monitoring mechanism • Projected or perceived as a ‘green wash’ or ‘white wash’ • Often mistaken for a Public Relations exercise or philanthropy

12. Responsible Corporate Behaviour • Voluntarily going beyond legal, regulatory, and conventional requirements, • Promoting and fostering interaction with its stakeholders; characterized by respect, transparency, openness and dialogue; that is to say sound governance • Integrating social, environmental and economic aspects into the goals of the organization.

13. Potential Benefits • Stronger financial performance and profitability (e.g. through eco-efficiency; higher productivity, reduction in costs and increase in profitability) • Improved accountability to and assessments from the investment community • Positive engagement with government • Decreased vulnerability through stronger relationships with communities • Improved reputation and branding; positive public image • Enhanced employee commitment; retaining staff, enhancing employee morale

14. Triple Bottom Line… • Environmental: Compatibility between the activities of companies and the sustainability of ecosystems • Social: Social consequences of the activities of companies for all the communities concerned • Economic: Conventional financial performance, but also the ability to contribute to the economic development of the corporate operating area and stakeholders

15. Commitment to CSR • Top-level involvement (CEO, Board of Directors) • Workplace initiatives (codes of conduct, corporate policies, programs, etc.) • Social/Environmental auditing, certification and labeling • Management frameworks: i.e. AA 1000, SA 8000, ISO 14001 • Environmentally/Socially responsible investments • Intergovernmental initiatives • Signatories to voluntary standards – i.e. UN Global Compact • Reporting and Communication on Progress - i.e. Global Reporting Initiative (GRI), Sustainability Reporting

16. What is Global Compact (GC)? The UN Global Compact's ten principles in the areas of human rights, labor, the environment and anti-corruption enjoy universal consensus and are derived from: • The Universal Declaration of Human Rights • The International Labor Organization's Declaration on Fundamental Principles and Rights at Work • The Rio Declaration on Environment and Development • The United Nations Convention Against Corruption

17. UN Global Compact - HR • Principle1: Businesses should support and respect the protection of internationally proclaimed human rights; and • Principle 2: make sure that they are not complicit in human rights abuses. 

18. UN Global Compact - Labor • Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; • Principle 4: the elimination of all forms of forced and compulsory labor; • Principle 5: the effective abolition of child labor; and • Principle 6: the elimination of discrimination in respect of employment and occupation. 

19. UN Global Compact - Environment • Principle 7: Businesses should support a precautionary approach to environmental challenges; • Principle 8: undertake initiatives to promote greater environmental responsibility; and • Principle 9: encourage the development and diffusion of environmentally friendly technologies.

20. UN Global Compact – Anti-Corruption • Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery. 

21. Benefits of Participation in the GC • Adopting an established and globally recognized policy framework • A platform to share and exchange best and emerging practices • The opportunity to advance sustainability solutions in partnership with a range of stakeholders, • The opportunity to link business units and subsidiaries across the value chain with Global Compact Local Networks around the world  • Access to the UN's extensive knowledge of and experience with sustainability and development issues. • Utilizing Global Compact management tools and resources, and the opportunity to engage in specialized workstreams in the environmental, social and governance realms.

22. Hatch’s Approach to CSR Examples of Hatch Initiatives : • Environmental Services Group (ESG) Project Management Framework • Compliance with ISO 14001 Standard • Sustainability Reporting

23. Structured on basic PLP Framework- Philosophy behind management systems- Integration of environmental, sustainability, and community issues in projects ESG Project Management Framework Business Planning Front End Loading Phases FEL-4 Project Implementation Start-up & Operations FEL - 1 FEL - 2 FEL - 3 Conceptual/ Study – Define Project Options Pre-Feasibility Study – Select Most Viable Option Feasibility Study – Develop Project Definition

24. ESG Project Management Framework • Sustainability Strategy Development • Risks and Opportunities Management • Legal Compliance • Environmental and Social Design Criteria • Environmental Management • Social Impact Management • Stakeholder Engagement • Local Employment • Relocation • Workforce Training • etc.

25. Compliance with ISO 14001 • Corporate Level Environmental Management Systems • Projects Level Environmental Management Systems

26. Sustainability Reporting Hatch Sustainable Development Report 2010

27. Case Study – Update on Transnet Project • HMG Joint Venture (comprising Hatch, Hatch, Mott MacDonald and Goba) • a 5 year contract to manage the major infrastructure development programme (Transnet’s Expansion Programme) • National Infrastructure Plan • Rail expansion • Port expansion • 27 projects with a combined capital value of R80 billion.

29. National Infrastructure Plan • Development of sustainable development criteria • High level screening studies • Layout options for future developments • Determination of the potential change in the economic value of ecosystem’s goods and services • Identification of new major rail corridors

30. Rail Routing Options • Screening and Routing Studies • Identification and planning of environmental permitting requirements • Co-ordination of environmental impact assessments

31. Port Developments • Environmental studies to plan the dredging activities • Identification of offshore disposal sites • Integration of Environmental Impact Assessments (EIA) with project design

32. Oreline Port – Saldanha Bay

33. Saldanha Bay: Status Quo

34. Saldanha Bay: Future Layout

35. Saldanha Bay: Long Term Potential

36. Background • The oreline is a the export corridor (~863 km of rail line) connecting the iron ore mines in the Northern Cape of South Africa with the Port of Saldanha in the Western Cape • Saldanha Bay is a natural deep water bay constructed in 1976 and the towns in its immediate vicinity has grown alongside its development • The closer proximity of residential development and the property boom in coastal towns in South Africa led to more conflict between communities and the port as a result of dust • Some houses in the immediate vicinity has been stained with a red to pink discolouration due to iron ore dust fallout • Since 2000, the capacity of the exports have grown from 38 Million tons per annum and new mines are establishing with a view of utilising the link • Future projections are to increase export to ~100 million tons per annum (MTPA) • HMG were involved in conceptual studies for future expansions as well as execution of current expansion up to 60 Mtpa through various phases

37. Phase 1A • Installation of dust mitigation measures to reduce fallout dust and particulate matter in the surrounding environment • Management of long term air quality monitoring in surrounding environment in order to determine standards for iron ore dust fallout and to monitor the port’s performance against increase in export volumes • Estimating and planning of compensation for surrounding land owners affected by iron ore dust staining

38. Phase 1B • Expansion of port facilities to handle 47 Mtpa (from 38 Mtpa) of iron ore exports • Reclamation of land and installation of infrastructure (1 new stockyard, stacker / reclaimers, conveyors, port buildings, etc.) • Engaging with local public in Environmental Monitoring Committee meetings providing feedback on Environmental and Social process including construction feedback and progress of assessments • Dredging of ~ 7000 m3 for optimising ship loading and ship position • Drafting of monitoring protocols and supervision of construction and supervision of monitoring during dredging

39. Phase 1C • Refurbishment of existing infrastructure to reduce dust emissions (installation of cleaning slabs, condition monitoring, and chute improvement to reduce spillage.) • Improvement of operations to increase throughput from 47 – 60 Million tons per annum through better ship berthing and use of conveyors, stackers/reclaimers and reducing equipment down time • Management of Environmental Assessment process, consultants and applications for licences and permits

40. Phase 2 • Management of consultants and EIA process for large EIA (~US$ 4 m) consisting of 23 specialist studies • The EIA studies investigated the impact of the aspects of the development proposal: • Reclamation of >20 ha of sea • Construction of new tipplers • Dredging of large volumes of seabed to enable berth positioning • Construction of new stockyards and associated infrastructure • Relocation of port buildings Reclamation Dredging for berths 3 & 4, SL 3 & 4 Reclamation, Stockyards, Stacker-Reclaimers 5, 6 & 7 Tipplers 3 & 4

41. Ngqura: Status Quo

42. Ngqura: Long Term Potential

43. Public Consultation • Public consultation as part of the EIA processes • Engagement of public through: - Transnet’s normal communication channels - Environmental Monitoring Committees

44. Developing a Permitting Strategy • Integrate EIA and permitting processes with the life cycle of the project • Cross pollination of information and ideas between the engineers and environmental/social team

45. Directed by the Transnet Foundation Focus on: Rural development & poverty relief in region’s within the Company’s areas of operations Alignment with national Government initiatives Transnet CSR

46. Scope Health Examples “Miracle train” reaches 45 000 patients each year Supports rural health care facilities Optometry Psychology Dentistry Health care Medicines United Nations Public Service Award for improving service delivery Transnet CSR Transnet CSR

47. Scope Education Sports Containerised assistance Examples Sharp Minds! Get Ahead in Life Programme - Maths, Science & English Aims to use sport as an intervention agent to address social problems at schools Facilities constructed from shipping containers. - Police office - Social service centre Transnet CSR

48. CSR Drivers in Developing Countries Internal: • Cultural tradition • Socioeconomic priorities • Governance gaps • Market access • etc. External: • International standardization • Investment incentives • Stakeholder activism • Supply chain • etc.

49. Cultural tradition Ubuntu – values-based traditional philosophy of African humanism Political reform Changes towards democracy Redressing past injustices Improved corporate governance Black economic empowerment CSR Drivers in Africa

50. Lessons Learned… • Environment, sustainability and community issues are an integral part of the project management. • Educate the client (upfront & through out the project) about the process and possible pitfalls and risks. • Public Participation - illiterate, no formal education, must inform them in a way that they can participate meaningfully (language, form of communication, training). • Integrate permitting processes into the project schedule. • Ensure technical information required from engineers for environmental and social specialists is identified early and scheduled. • Too much pressure on the authorities can backfire (if not on current project, then the next one) • Manage scope changes closely, both with the client and for it’s impact on the environmental and social studies along with the project schedule and cost.