Negative community impacts such as adverse impacts on human rights and disruption to the lives of indigenous people, can lead to controversies which seriously impair the business value of the involved company. Poor management of community impact conflicts with the companies’ long-term interest in promoting corporate social responsibility. The SIPA Capstone team has identified key factors explaining why controversies related to community impact occur and, in some cases, reoccur, by conducting research on case studies.
The two-step case study consisted of desktop research on three companies (BHP, Iberdrola, LUKOIL) regarding their performance in managing community impact, and a gap analysis of their policies and management measures against benchmarking standards. The team found six applicable indicators to be most important in explaining and assessing the occurrence of controversies related to community impact: Land Resettlement, Joint Venture-Business Partnerships, Indigenous Peoples/FPIC, Community Consultation, Remediation, and Grievance Mechanisms. In order to prevent reoccurrence of controversies, the team recommends that investors (financial institutions) and companies assess community impact, by focusing on those indicators.
*Any reference made herein to "client" is strictly in the context of the organization's participation in the Capstone project, and shall not create any other relationship between the organization with SIPA, Columbia University, the Capstone team, the faculty instructor or any other entity.