The term social contract actually pertains to a theory that suggests that certain people or organizations have the tendency to give up a portion of their freedoms to an authority, a ruler, or a magistrate—which in most cases are terms used to refer to the government or any ruling organization, in exchange of the assurance that their remaining rights would be untouched and protected. This theory essentially opens the question on how ruling organizations or governments must define the boundaries between certain stakeholder groups’ natural and legal rights. In this paper, the author focuses on the comparison between Ineos Group Limited (INEOS) and De Beers’ stakeholder management strategies, as far as the concept of social contract is concerned.
De Beers, through its corporate social responsibility (CSR) strategies, aims to change that perception. Its CSR department, for example, is heavily invested in Canada, particularly in areas like “education, the arts, community development initiatives and health projects either directly or through Impact Benefit Agreements” . Consistent compliance with government regulations has been the key behind the company’s good relationships with the government. In addition to that, tis positive track records in investment and community engagement also allowed it to continuously receive licenses and grants from the government.
Ineos, on the other hand, offered an innovative approach in terms of government partnership. The company basically grants a certain portion of landowning rights to the communities (for their shale extraction sites in the US). In the UK, they have established partnerships with the government so that it would not have any reason to deny its license and permit applications. These joint venturing strategy plus their environment friendly packages appear to be their edge against other companies in terms of government stakeholder management. Ineos gets continuously awarded with new exploration licenses by the UK government because of its commitment to the country’s safety and environmental standards .
De Beers has made it clear that as a mining firm, it wants to focus on sustainable natural resource exploration and extraction projects, putting the safety of its employees and the members of the surrounding community) as well as the profitability of the planned operations into careful consideration . The employees (i.e. mine workers), in turn, are required to maintain good relations with the members of the community in order to prevent any operational disruptions; at some point, the company even prefers to employ locals in order to boost their employment status.
For Ineos, despite the risky and hazardous nature of their employees’ job, the associated risks are mitigated by prioritizing safety of their operations . They do this by continuously updating their engineering standards. They also focus on minimizing their projects’ impact on environmental degradation. They back their words with action by investing a significant portion of their earnings on infrastructural modifications that are aimed at keeping their employees safe during normal day to day operations .This only shows that their employees are among their top priorities in terms of stakeholder management
De Beers keep the members of the surrounding community, particularly the Namibian community in South Africa, happy, by ensuring that they are fulfilling their part of whatever deal has been made with the community. Despite the presence of some reports that suggest that De Beers is an unethical company, there are hard evidences that the company indeed finds ways to keep communication and negotiation lines open . In terms of spending for social programs, the company spent roughly $42.6 Million in 2012 . Below is an example of their commitment to the community, via sharing of holdings.
Da Beers Namibia Joint Venture
Ineos, on the other hand, is more focused on providing educational and awareness programs about shale gas exploration and extraction (i.e. fracking) to improve its relations with the community and to correct their misconceptions about their business. Such programs are also aimed at motivating the community members to work with the company in making use of the shale gas as a driver of economic growth—that is, by showing them the benefits of a healthy shale gas industry. In terms of social spending, Ineos spent a gigantic (compared to De Beers) $3.57 Billion for social programs in recent years.
In summary, both companies have its own set of strengths and weaknesses in terms of CSR and stakeholder management. The evidence, however, shows that they are both striving to create positive images of themselves. Whether that is just a public relations stunt or a genuine response to their stakeholders’ calls to improve their operations is entirely up to them. Based on numbers, however, it appears Ineos is more committed to Stakeholder Management than De Beers. Ineos, on the other hand, has been more detailed about their plans and actions that are pro-community as evidenced by the image below.
Ineos Social Program Funding 1
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