[PDF] Community Development Toolkit - CommDev

CASE STUDYFinancial Valuation (FV) Tool for sustainability investmentsThe case of Newmont GhanaPLANNING TOOLSThere is a growing body of work for quantifying the impact of sustainability programs andtaking a more strategic view of community investment decisions. Intuitively, mining companiesunderstand the business case for being a good corporate citizen and generating positiverelationships with communities, civil society and governments that enable key businessdrivers, including access to land, government approvals, access to resources and access tocapital. Quantifying the value of these investments and planning accordingly, however, haslong posed a challenge for companies and community development practitioners.Through a multilateral partnership, including the IFC, Rio Tinto, Deloitte, Newmont, theMultilateral Investment Guarantee Agency (MIGA) and the Government of Norway, the FV Toolwas developed which quantifies the return on site-specific sustainability investments. Thisvalue is generally understood to take the form of either direct value creation (i.e. reducedcosts, generated benefits) or indirect value protection (i.e. risk mitigation, programeffectiveness). Such information helps to justify and stabilize the annual budget thatcompanies devote to sustainability efforts. It creates incentives, within companies, to investin their communities. The FV Tool is a web-based software available at www.fvtool.com.Ahafo gold mine pilotThe Newmont Mining Corporation Ahafo mine has been pilot testing the FV Tool over thelast several years and is currently testing the potential of formally integrating the FV Toolin its budgeting and capital project process planning for operational investments related tosustainability, impact mitigation and community benefits. The company firmly believes itsperformance in the areas of environment and social responsibility (ESR) is key to its futuresuccess. While this sentiment is broadly shared throughout the company, there are divergentviews among the company’s internal stakeholders as to how much the company should bespending on sustainability investments and what the benefits are to the business in moreconcrete terms.Newmont anticipates that the tool will better enable the environment and social teams tocommunicate, in more rigorous terms, the value of the sustainability investments. While theFV Tool provides an estimated net present value (NPV) range of a specific sustainabilityportfolio, the true value of using the FV Tool is the process, cross-functional engagement andability to provide explicit rationale for each program in terms of direct value creation and riskmitigation.Conversation with non-sustainability functionsManagement of programs and budgets with direct sustainability outcomes and impactsreside with different non-traditional sustainability functions in a company. For example, theNewmont Ahafo Linkages and Apprenticeship programs are managed by Supply Chain andLearning and Development functions and are designed to generate local business opportunitiesand enhanced skill training for local community members. An intense data collection processwas required to generate inputs into the FV Tool. The FV Tool provided a common platformfor risk, social responsibility, human resources, health and safety, supply chain, operationsand land teams to engage in discussions to understand the strategy, data, analysis anddecision-making process related to sustainability investments and associated expenditures.Value protection and risk managementESR and risk teams worked closely to identify risks from the Newmont Ahafo mine’s riskregister that are being managed by sustainability investments, including managingcommunity expectations for jobs and benefits, in-migration, water quality and access,public relations, stakeholder engagement and compliance-related issues. The FV Toolprocess strengthened the understanding and convergence between risk, finance and➜120 Community Development Toolkit