The Consequences of Company Objectives, Misconduct and Political Risks on the Fulfilment of Risk-based Due Diligence and Corporate Sustainability Practices: An Exploratory Case Study Analysis of The Mining Industry

Abstract

The scope of conventional business conduct is undergoing significant changes and expanding in response to evolving societal, regulatory, and political expectations. Driven by increasing demands for environmental sustainability, human rights protection and responsible conduct, businesses are expected to enhance their internal policies and risk screenings in order to minimise the potential negative impacts of their operations. However, in the context of the mining industry, attaining such thorough policies encounters a variety of distinct challenges and dynamics which hinder opportunities for effective implementation and adherence. For multinational firms navigating complex political landscapes particularly, ensuring alignment with such standards is especially difficult due to the various stakeholders involved, and the prevalence of varying risks. Consequently, this thesis seeks to explore such dynamics and risks through a literary and theoretical qualitative analysis of select case studies in the mining industry. In particular, the considerations of company objectives, misconduct, and the interaction with the political risks of corruption and instability are examined, to recognise how such factors impact firm decision-making and adherence to internal standards. In representing the evolving environmental and social expectations placed upon firms, the above factors are analysed specifically regarding their effects on the fulfilment of company risk-based due diligence and corporate sustainability standards. In evaluating this, the thesis aims to identify the implications of business interaction with political risk(s) and its resulting consequences on the abilities of firms to operate responsibly, sustainably and to effectively maintain robust screening controls. The findings of the analysis and broader discussion highlight that mining companies can face a broad spectrum of financial, legal, reputational, and operational consequences for the poor implementation of risk-based due diligence and corporate sustainability initiatives. Driven by the objectives of profit maximisation and continued resource access, the selected case study firms engaged in various forms of misconduct and had to manage the interaction with complex political risks, undermining the fulfilment of effective due diligence and corporate sustainability policies. The analysis additionally noted three considerations of relevance to the broader mining industry, specifically, the challenges posed by state ownership in mining projects, the reliance on legal rulings to institute change and the inherent environmental and social dilemmas of mining. Through consideration of these conclusions, the thesis aims to contribute a unique perspective on the challenges and dynamics posed in the mining industry, thereby offering valuable insights concerning the strategies to reduce company risk exposure and adherence to ethical standards.