Corporate social responsibility: a perspective from Peru

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Int. J. Liability and Scientific Enquiry, Vol. 4, No. 1, 2011

Corporate social responsibility: a perspective from Peru Mariela Casanova-Claros School of Law, University of Glasgow, 5-9 Stair Building, The Square, G12 8QQ, Scotland E-mail: [email protected] E-mail: [email protected] Abstract: This paper intends to explore the role of law in establishing and directing corporate social responsibility in Peru mining sector for the purpose of awakening the concern of those involved and interested in the topic of identifying actions that would be most appropriate to promote and support the development of CSR in the mining industry in Peru. For this purpose we will review the legal framework in Peru and specially the legal domain in the mining sector through the special view of the Green Paper from the European Commission on Corporate Social Responsibility as a tool of reference since it represents the European Union’s decision of being the leader in promoting CSR behaviour and the starting point, in an elaborate document of organised thoughts, lines of behaviour, guidelines and developments on CSR for EU’s companies for fostering a new framework to promote CSR. There is no other document with such an aim and such challenges. Keywords: corporate social responsibility; social responsibility; corporate citizenship; social responsibility investment; accountability; corporate law; company law; mining sector; Peru mining activity; stakeholder engagement; sustainable development; Peru. Reference to this paper should be made as follows: Casanova-Claros, M. (2011) ‘Corporate social responsibility: a perspective from Peru’, Int. J. Liability and Scientific Enquiry, Vol. 4, No. 1, pp.76–90. Biographical notes: Mariela Casanova-Claros is a PhD (law) research student at the School of Law, University of Glasgow. She has been a Professor at the Law School of the University San Martin de Porres of Lima, Peru, since 2004 where she teaches security law, corporate law and contract law. Just before coming to Glasgow, she was appointed as Convener in the Corporate Law programme. She holds a Master’s degree in International Business Administration from the Polytechnic University of Madrid, Spain and a Master’s studies in Law with mention in International Economic Law from the Pontifical Catholic University of Peru as well as in Business Law from the Francisco de Vitoria University. Before joining the academia, she was in the legal practice mostly in banking area. Her research interest lies mainly in the area of corporate law, contract law and international law.

Copyright © 2011 Inderscience Enterprises Ltd.

Corporate social responsibility




The emergence of private initiatives for corporate responsibility, including the development of codes of conduct, management systems for improving compliance with these codes and non-financial reporting standards, has been an important trend in international business over the last 30 years. The European Union has taken cognisance of the vital role of corporate social responsibility (henceforth also referred to as CSR) in achieving sustainable business success. Several legal initiatives have been formulated to ensure that corporate behaviour becomes more responsible when it comes to ethics, working conditions, environmental sustainability, etc. These principles could be applied along the essential dimensions of corporate activities as they allow us to explore the complex relations that come from the business operation and aim to identify the role of the actors involved in CSR. The aim of this paper is to explore the role of law in establishing and directing CSR, particularly in the mining industry in Peru using the EU framework in CSR as a tool of reference. Currently, there is no legal framework in Peru, specially the legal domain in the mining sector governing CSR in Peru’s mining sector.


Corporate social responsibility

The interdisciplinary nature of CSR (Tully, 2005) does not allow reaching a single definition of what does CSR really means. There are also many works making reference to CSR without achieving a unanimous consensus, but around them certain common attributes could be repeatedly identified referring to CSR issue as social, human rights as well as environmental concerns and that there is no doubt that it has to be regarded as a set of voluntary commitments (Glinski, 2007). Some examples can be found in the following definitions: Quoting Paluszek and Davis, Caroll highlighted that an early view of CSR considered CSR as the impact of the company’s action on society and the responsibility of the individuals for the effect of their actions within a social system as they belong to it (Carroll and Buchholtz, 2006). A survey made by the University of Nebrija (2007) explains that the term refers to all the obligations and legal and ethical commitments, both national and international impacts arising from the organisations’ activities in the social, labour, environmental and human rights concern. The Commission of the European Communities defines CSR in the so-called Green Paper as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” [EU COM, (2001), p.366]. Even though the United Nations’ Global Compact, an initiative by the General Secretary Kofi Annan (1999), does not define the concept of CSR, the principles that make it up somehow define their commitment and are grouped around the four areas that guide CSR, the Human Rights, Labour Standards and Environment concern as well as against corruption. All of them derived from the Universal Declaration of Human Rights, the International Labour Organisation’s (ILO) Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention against Corruption.


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In Peru, the General Environmental Act (Act No. 28611, article 78) define CSR as a set of actions aimed at establishing a proper working environment and relations of cooperation and good neighbourliness driven by the holder of operations of voluntary adoption. These examples show us that CSR involves a shift in the focus of corporate responsibility from just making profit maximisation for shareholders to a broader responsibility to stakeholders (McBarnet, 2007) within the business activity of the company.


The EU Green Paper on CSR

The Green Paper was issued in 2001 and represents a call at European Union level to seek more active participation of stakeholders in promoting CSR and a crucial decision to organise the experiences that appear among them in order to find convergence in the framework of CSR as a vital role in achieving sustainable business success. To explore the role of law in establishing and directing CSR, particularly in the mining industry in Peru, we considered it relevant to use the EU Green Paper as a tool of reference since it could be seen as a new starting point of the interpretation of CSR as it represents the European Union’s decision of being the leader in promoting CSR behaviour, as well as the effort in establishing and laying down in an elaborated document the organised thoughts of the development of CSR in EU’s companies. Hence, the Green Paper and further response from the European Commission [EU COM, (2002), p.347] permit to achieve a consensus in defining CSR, lines of behaviour, guidelines and developments on CSR from all the actors involved for EU’s companies for the fostering of a new framework to promote CSR at national to international levels. Hitherto, there is no other document with such aim and such challenges. As mentioned earlier, the Green Paper defines CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” [EU COM, (2001), p.366]. For this purpose, ‘companies’ stands not only for those large ones but also for all types of enterprises, public and private, including SMEs and cooperatives, at both the European and world-wide-levels [COM, (2001), p.366]. Hence the triple bottom around CSR concern: People, Planet and Profit (Mc Barnet, 2007). In accordance with that document “Being socially responsible means not only fulfilling legal expectations, but also going beyond compliance and investing ‘more’ into human capital, the environment and the relations with stakeholders” [COM, (2001), p.366] with whom they interact, such as employees, shareholders, investors, consumers, public authorities and NGOs. It means that if “CSR is behaviour by business over and above legal requirements, voluntarily adopted.” [COM, (2002), p.347], in doing so, companies are investing in their future and they expect that the voluntary commitment they adopt will help to increase their profitability [COM, (2001), p.366]. In this way identifying the actors of CSR, the Green Paper describes later on the special role that each one plays in CSR issues. In this line of thinking, the Green Paper also highlights that “CSR should nevertheless not be seen as a substitute to regulation or legislation concerning social rights or environmental standards, including the development of new appropriate legislation.” Because “In countries where such regulations do not exist, efforts should focus on putting

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the proper regulatory or legislative framework in place in order to define a level playing field on the basis of which socially responsible practices can be developed” [COM, (2001), p.366]. The European framework for CSR would be organised, on ‘a voluntary basis’, under the following three guiding principles that should be applied along the two essential dimensions of the business activities, the internal and external dimension (Voiculescu, 2007): 1

CSR concerns will have to be an integrated part of the business operations


CSR activities will necessarily be informed by the interaction with all stakeholders in a community


CSR activities should go beyond common regulatory and conventional requirements. To complete the reasoning, one more principle should be added:


‘CSR activities at national and international level’, as now-a-days business goes beyond the boundaries creating a productive way to build up a multinational framework, as it is also recognised and fostered by the Green Paper document.

Thus, from the Green paper and the subsequent response communication, a starting point has been established from which the outline of those practices that are within the mere law compliance and those one which are beyond them could begin and be considered as CSR practices. So to be CSR is to go beyond the law. Then the behaviour promoted on CSR is not just to satisfy the law requirements but, for the purpose of setting up whether corporate business activities go beyond the legal requirements, corporations have to identify firstly if they are satisfying the law requirements and if it is so, then all further actions would be considered as CSR’s issues if it is the case, playing law an important role to define the starting point on CSR practices.

3.1 Principles applied along the essential dimensions of corporate activities 3.1.1 CSR concerns will have to be an integrated part of the business operations When companies assume CSR concerns as an integrated part of the business operations this must be applied having in mind the two dimensions identified on corporate activities: the internal and external dimensions. The internal dimension As sketched out in the Green Paper, “… social responsibility practices involve employees, shareholders, management [COM, (2001), p.366]. “CSR can only be taken on by the companies themselves” [COM, (2001), p.366], in such a way that company in the internal relations produced by their business activities should only act in accordance with the guidelines established for the company, in which they also should have assumed the interaction with their stakeholders within social responsibility. In this way, if there is no conscience as a company structure of adopting and identifying CSR’s concerns, it means, from the shareholders, their management (Chief Executive Officer and their Directors) and those ones to their employees relationship and the other interlocutors of the community with whom they are related, little or nothing could be done to translate the practice, in turn, to the external dimension. The role of each


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of those actors comes from the company law in prime facie and, in a complementary way, from the corporate governance combined code. CSR’s concern as a strategic investment within the core business strategy, the management and their operations should be administered without leaving aside the prime responsibility of the company, namely, making profit [COM, (2001), p.366]. In other words, it is about interaction between all companies’ concerns that involves a shift in the focus of corporate responsibility from just generating profits to other social concerns with their stakeholders on how profits are made (McBarnet, 2007).

Actors involved CSR practices involve employees, shareholders and the management and can only be implemented by the company itself , in such a way that the company in the internal dimension should act in accordance with the guidelines that such company has, in which the relationship with the stakeholders would be included [COM, (2001), p.366]. It means that CSR’s concern in a company is related to good Corporate Governance and, hence, good corporate governance should bear in mind CSR’s concerns when engaged in management. Corporate governance is defined by the Green Paper as “a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate Governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined (OECD Code – 1999).” It means that CSR’s concern in a company is related to its good corporate governance. 1

Shareholders: creditors/funding/investors As a principle, shareholders in all of their forms should enter into a dialogue with companies based in the mutual understanding and objectives. The dialogue is made through their management, particularly, their chairman. If shareholders are not decided to do so, little or nothing could be done as we all know the problems derived from such lack of dialogue.


Management: Board of Directors/CEO The success of a company is related to its management through an effective board which is collectively responsible for the success of the company, and to its chairman and chief executive within a framework of prudent and effective controls and of a set of values and standards, understood and met by everyone. The chairman is responsible for the leadership of the board, ensuring its effectiveness in all aspects of its role and setting its agenda, as well as for ensuring that the directors receive the information they need accurately and on time. The chairman should also ensure effective communication with shareholders.


Employees The Green Paper states that ‘Employees are major stakeholders of companies’. It is important to implement innovative actions to get a two-way dialogue between employees and managers’ representatives that can structure permanent feed-back in order to consolidate CSR practices.

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Legal framework The management structure and the set of relationships between the shareholders, management and those with stakeholders is in principle ruled by the company law, the constitution and the company’s article, and in a complementary way by the corporate governance combined code. The “voluntary CSR within enterprises can only be implemented to the extend compatible with the basic legal framework within which enterprises operate, namely the various laws around the world relating to business organisations and the constitution of individual enterprises” (Ward, 2008). The external dimension – stakeholders In a world of globalisation, CSR involves not only employees and shareholders but also business partners and suppliers, customers, public authorities and NGOs representing local communities as well as the environment [COM, (2001), p.366]. Hence, in the external relations that corporate activity produces, companies will also have to act in accordance with the guidelines on CSR established for the company as a structure, having in mind for that purpose the relationships that exist with the clients, suppliers, competitors, local community, environment and the societal in general as mentioned above. This level of commitment reached by the companies with repercussion in all the levels of the relations with third parties, including transnational and multinationals, if it is the case.

Actors involved 1

Business partners and suppliers Companies’ interest is to work closely and in the long run to build a relationship with business partners, suppliers as well as with alliances, joint venture partners and with franchisees because in this way they can reduce complexity and costs and increase quality. Business operations might result in practice a supply chain throughout all the companies involved that are connected each other in such a way that social performance of one of them reflects itself in the others. In the same way, corporate venturing facilitates the development of new innovative enterprises [COM, (2001), p.366].


Customers Companies, as business activities, provide products and services that in CSR concerns are expected to be offered in an efficient, ethical and environmentally aware manner through all the interlocutors’ chain at national and international level. In so doing, companies would build lasting relationships with customers. “Surveys have shown that consumers do not only want good and safe products, but they also want to know if they are produced in a socially responsible manner. For a majority of European consumers a company’s commitment to social responsibility is important when buying a product or service” [COM, (2001), p.366].


Public authorities It is recognised by the Green Paper that CSR is important for public authorities to the extent that it has implications for all economic and social actors [COM, (2001),


M. Casanova-Claros p.366] and due to the evidence suggesting that CSR creates value for society by contributing to a more sustainable development [COM, (2002), p.347]. Another document that has pointed out the role of the public policy on CSR and then, in an indirect way, that of the public authorities is the commission’s communication on sustainable development, supported at the Göteborg European Council [COM, (2001), p.366].


NGOs/civil society Green Paper response also stresses the important role played by international organisations and the civil society as well as governments in raising awareness and enforcing implementation of internationally agreed social and environmental standards [COM, (2001), p.347], as well as in deploying legal mechanisms to constrain business (McBarnet, 2007). In the same sense, Doh and Guay pointed out that “The rising influence of NGOs is one of the most significant developments in international affairs over the past 20 years”. Making reference to other authors, Doh and Guay also highlight that NGOs have been responsible for major changes in corporate behaviour and governance (Doh and Guay, 2006). Therefore, NGOs on a global scale are identified by governments, commentators and business itself, as one of the key ‘drivers’ of the contemporary CSR movement” (Mc Barnet, 2007).


Environment/local communities “CSR is also about the integration of companies in their local setting, whether this be in Europe or world-wide.” In these societal expectations is that “companies contribute to their communities, especially to local communities, by providing jobs, wages and benefits, and tax revenues.” There is a symbiotic relationship between companies and the community in which they operate since each one depends on the other for health, stability, and prosperity. For example, companies “recruit the majority of their employees from the local labour markets, and therefore have a direct interest in the local availability of the skills they need.” On the other hand, “business can also be responsible for a number of polluting activities: noise, light, water pollution, air emissions, contamination of soil, and the environmental problems associated with transport and waste disposal” [COM, (2001), p.366].

Legal framework In the same line of thinking stated above, the set of relationships between the CSR’s actors and CSR issues must consider the existing basic legal framework that has direct relation with CSR issues, such as with customers, environment, health, human rights concerns as well as its private law tools used to prevent or to correct behaviour as are the contract law and the tort of law.

3.1.2 CSR activities will necessarily be informed by the interaction with all stakeholders in a community As explained above, corporations, as centres of economic unit searching an economic benefit in their business activities, are a point of convergence of relations inside and outside them [COM, (2001), p.366]. This special characteristic of the company, without fear to be wrong, appears in almost all the companies at world-wide level, being able to

Corporate social responsibility


be a difference between one jurisdiction that reached its own level of development and the others. In the same sense, “companies’ approaches in dealing with their responsibilities and relationships with their stakeholders vary according to sectorial and cultural differences” (Hansmann and Kraakmann, 2004). Therefore, the point of convergence of the relations in the internal dimension of the company will appear, in principle, according to the corporate structure and the relation that takes place as a result of it between owners (shareholders) and the management (chief executive officer and directors), as well as with the employees, on a basic way. The point of convergence of the relations in the external dimension of the company will appear, in principle, from its corporate structure in the way that CSR was assumed inside the company and the commitment that companies want to take with their stakeholders as a result of business activity with clients, suppliers/creditors, competitors within a market (in economic terms), in a local or international community, environment and societal in general (today also called civil society) in which the corporate operates. All the parts involved in the corporate activity with a same basic common interest, as it is the sustained development growth of the company in order to allow, in turn, the sustained development of the economy [COM, (2002), p.347], in interest of all.

3.1.3 CSR activities going beyond common regulatory and conventional requirements As we mentioned before, the European Union’s Green Paper states that being socially responsible is to go beyond full compliance of legal obligations and CSR should not be considered a substitute to regulations or legislation concerning social rights or environmental standards, nor can it ignore the development of new appropriate legislations. In countries without such regulations, efforts should focus on putting the proper regulatory or legislative framework to define a uniform environment from which to develop socially responsible practices. In that line of thinking, going beyond legal compliance does not mean that it does not lead to development of relevant standards; and for countries with no regulation, social responsibility efforts should focus on structuring the missing legal framework. Thereby the voluntary social responsibility does not necessarily imply inhibition from the development of appropriate legal bases. Hence, in some cases, we have to reach the level of the standard through the law in the way explained above to go beyond the law and achieve the social responsibility desired. Consequently, for the purpose of knowing whether a company is achieving the social responsibility issues according to the terms of the Green Paper referred to above, it should be important to start from confirming whether the company is fulfilling its legal obligations and from that whether the practices implemented on CSR concerns go beyond the baseline of such commitments. This distinction will be helpful as starting point for evaluating CSR practices although we have to recognise that sometimes it will be difficult to define whether the company is achieving its commitment on CSR because the line of accomplishment under legislation to the line beyond it could be blurred. There will also be important for that purpose to review the legal framework where the company is operating “… to ensure that approaches to CSR are coherent and compliant with Community policies and with international obligations” [COM, (2001), p.366], if it is the case.


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3.1.4 CSR activities at national and international level European countries might promote CSR both within European Union and abroad, in this line of thinking was elaborated the OECD Guidelines for Multinational enterprises. These guidelines are recommendations addressed by governments to multinational enterprises. At the same time, CSR’s concerns could be reached through the set of agreements with third countries and regional groups, international trade and transnational companies. All these principles described along, together with other factors that appear through the relationship between the CSR’s actors, push the companies to incorporate CSR in the business operations as it is the case of the economic, social and political forces as well as legal forces at national and international levels (McBarnet, 2007).


CSR framework in Peru- mining sector

Due to the nature of CSR’s concern, there is some legislation appropriate for its development. In areas such as environment, labour, human rights as well as health, we cannot ignore that such legislation permits appropriate understanding and development in good behaviour. Nevertheless, it would get confusing if we did not identify appropriately which improvement in business operations comes just from the mere law compliance and which ones go beyond the law and could be considered as CSR’s practices as it was conceptualised by the Green Paper. In this line of thinking it is important to explore the Peruvian legal framework, in order to identify whether the core of the Peruvian legislation is developing a special framework on CSR and, hence, the law is helping in establishing and directing CSR issues in Peru’s mining sector. In this sense we are going to review the most important related legislations.

4.1 Legal domain in Peru: CSR framework 4.1.1 The Peruvian constitution Establishes the person entitled to a balanced and healthy environment and the state to regulate within a social market economy. •

Constitutional court – resolution in the mining area (constitutional court): Resolution No.0048–2004-PI-TC of April, 2005. In this ruling the Court develops the scope of CSR with a point of view in which “private enterprise as an expression of an important sector of society has a special responsibility to the State” being necessary to bear in mind that the social aspect leads to three dimensions, i.e., “as a legitimate mechanism to establish some restrictions on private activity, as a clause allowing to maximise the principle of solidarity, correcting any distortions that may cause the market for an almost natural way”, thereby enabling , a set of mechanisms that allow the state to comply with social policies that seek the welfare of all citizens and, finally, as a way of promoting the sustainable use of natural resources to ensure a balanced environment suitable for the development of life.

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4.1.2 Corporate law 1

Company Law, Act No. 26887 (articles 114, 171, 172 174,175) It establishes compulsory meeting of shareholders in general at least once a year, as well as, the performance of the position of director with the diligence of an orderly businessman and a loyal representative. It also establishes the powers of management and legal representation necessary for the administration of society within the company purpose as well as the directory’s obligation to provide shareholders and the public with sufficient, reliable and timely information provided by law on the legal, financial and economic society aspects.


The Securities Market Law, Legislative Decree No. 755 (enacted by the Executive Power with the same range of law) The purpose of this Act is to promote the orderly and transparent securities market, as well as adequate protection of investors in case of public companies based on disclosure and transparency information.


General Mining Law, Legislative Decree No. 109 (and its regulations) Specific law for the mining sector, that gives business owners benefits such as tax deduction for investments in public service infrastructure, or in assets to satisfy claims for housing and welfare for workers, the compensation of cost of health benefits to their workers and dependents, among others.

4.1.3 Labour legislation/human rights/health legislation 1

Labour Law, Act No. 27711 One of the goals of this Act is to ensure full compliance of national rules and practices related to labour standards and rules from the ILO. In addition, it provides as one of its attribution the promotion of CSR standards.


Supreme Decree 009–2007-TR (Administrative Act, enacted by the Executive Power related to normative regulatory content, hierarchically lower-ranking law) This regulation approves the Plan to Combat Forced Labour. Within its structure it provides that for Development, Strengthening and Social Participation, companies should “develop and implement a CSR strategy beyond compliance with legal obligations and promote their voluntary participation in the eradication of work forced”.


Supreme Decree 017–2005-JUS This Decree approves the National Human Rights Plan 2006 – 2010 prepared by the National Human Rights Council, as part of the commitment made by Peru following the signing of the Declaration and Program of Action World Summit on Human Rights held in Vienna in 1993, UN Member States and the Peruvian State in particular. This legal instrument provides for “Promoting and rewarding good practices of CSR that may require substantial improvements in working conditions and living conditions of employment sectors, the rational use of natural resources and sustainable development, transparency in management information and in


M. Casanova-Claros offering quality goods and services, the corporate fiscal responsibility and commitment to developing these.”


Supreme Decree No. 009–2005-TR This Decree approves regulations on Safety and Health at Work. This legal instrument defines within its Glossary the Management System for Safety and Health during work period, stated as “... intimately connected with the concept of CSR, in order to raise awareness about offering good working conditions for workers, thereby improving the quality of life for them as well as promoting the competitiveness of firms in the market.”


Ministerial Resolution No. 118–2007-TR (Regulation of lower status enacted inside the Ministry’s faculties) This regulation creates the Certification of Good Labour Practices according to that provided in the Guidelines for Social and Laboral Policy 2006–2011, approved by Ministerial Resolution No. 095–2007-TR, which is set as “one of the priorities of the current management of the Ministry of Labour and Employment is to promote CSR.”


Ministerial Resolution 173–2002-TR (article 8, numeral h) This Resolution approves the Regulation of Organisation and Functions of the Ministry of Labour and Employment Promotion. This regulation sets as a function of the ministry to promote CSR standards, and to develop competitive advantages based on the provision and certification.

4.1.4 Environmental legislation 1

General Environmental Law, Act No. 28611 (article 78) In its Chapter on Business and Environment regarding the CSR, it states that “The State promotes, disseminates and facilitates the voluntary adoption of policies, practices and mechanisms of CSR understanding that this is a set of actions aimed at establishing a proper working environment and relations of cooperation and good neighbourliness driven by the holder of operations”.


Supreme Decree 059–2005-EM Regulation of environmental liabilities of mining, related to environmental social responsibility’s bonds as a financing tool for environmental remediation of areas impacted by mining environmental liabilities, a non-refundable and non-interest in order to mitigate negative impacts on the health of the population and the property surrounding ecosystem.


Supreme Decree 018–1992-EM (article 17 item i), modified by the Supreme Decree 042–2003-EM) This decree regulates procedures in mining area and hence provides as requirements to solicitors of mining concession, a prior social engagement. According to the legal text it must be submitted in the form of affidavit in which companies engage to accomplish a series of actions as outlined below and to submit an annual affidavit of sustainable development activities:

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to perform production activities under a policy for environmental excellence

to operate with respect for institutions, authorities, local culture and customs, while maintaining a favourable relationship with the population of the area of influence of the mining operation

to maintain a continuous and timely dialogue with regional authorities and local people in the area of influence of the mining operation and their representative bodies

to achieve with the people of the area of influence of the mining operation an institutional framework for local development; develop studies and assisting in the creation of opportunities for development beyond the life of the mining industry

to promote preferably local employment, providing the training opportunities required

to acquire local goods and services for the development of mining activities and personal attention.

Supreme Decree 038–98-EM Approves the environmental regulations for mining exploration activities and through which preventive measures are taught to prevent damage to the environment and used to prepare the draft Environmental Impact Study to be submitted to obtain the mining concession.


Ministerial Resolution No. 304–2008-MEM/DM It rules the process of public participation in the mining sector together with the Ministerial Resolution No. 028–2008-EM which approves a new regulation improving mechanisms of Citizen Participation in the mining sector. It regulates the responsible participation of any person or entity, individually or collectively, in the processes of decision making from the competent authority on the sustainable use of mineral resources in the country.

4.1.5 International law Peru has signed those International conventions involved in the Global Compact such as in Human Rights, ILO, Rio Declaration on Environment and Development as well as the United Nations Convention against Corruption.

4.1.6 Other important guidelines 1

Executive Directive Resolution No. 010–2009/DE-FONAFE (guidelines for public entities) This Directive establishes Guidelines in transparent management of companies under the scope of FONAFE (National Fund for Financing of State Business) towards a transparent management of public information.


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Guide to community relations Voluntary technical document prepared by the Ministry of Energy and Mines for the preparation of social impact studies as part of the environmental impact study, community relations plans, codes of conduct, aspects relating to the consultation to the population and social responsibility policies.


Other guides and publications General guides that appear on the website of the Ministry of Energy ( related to CSR in the mining sector that help spread good environmental and social practices, measure social performance and handle properly issues related to it in Peru. As the Social Capital Group survey on CSR (Oxfam America, 2007) highlights, this developments are implemented in the areas ranging from child labour, forced labour, wages, benefits, working hours, freedom of association, to health and safety through environmental practices and community investment.

4.2 Factors that influence the fostering on corporate social response in Peru’s mining area In Peru, mining contributions to sustainable development depend on the willingness of companies and not on the legal mandate. There are few companies in the Peruvian mining sector applying the philosophy of CSR; there are others that are still far (Oxfam America, 2007) and there are factors that could condition the application and development of CSR, such as the following: a

financial, because funds are conditioned to the application of CSR principles


international expectations


national legislation


the local licence ~ ‘hits’ all mining projects and is one of the most influential is the social response of companies


local expectations are probably the main driver of change in Peru


‘guilds’, source of learning in the sector.

4.3 Other factors influencing the corporate social response in Peru’s mining There are other factors that although not directly bearing on CSR may influence its lack of development (Oxfam America, 2007). These are: •

transnational corporations have a very broad economic and political capability and, thereby influence government decisions in the adoption of laws and regulations, judicial and administrative decisions, taxes and financial profit, and so on

access to information and data on transnational corporations, with which to understand the complex processes is very limited

the possibility of punishing a multinational company for breaching the right to information is very limited, no matter how it is regulated

the unions have limited resources and capacity to access to relevant information.

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4.4 Major actors in Peru’s CSR in the mining sector and the Green Paper In Peru’s CSR framework the Government, the civil society and other organisations (Oxfam America, 2007) as well as transnational companies could be identified as the major actors in CSR.

4.4.1 The government public authorities The state must be the main actor in assuming its role in social responsibility. It has to be the leader in developing related standard practices in an efficient and effective manner. Nevertheless, “In developing economies in countries like Peru, the State fails in its obligations to adequately meet the need for social welfare due to insufficient resources among other reasons” (Oxfam America, 2007).

4.4.2 Civil society/ONGs and other organisations These organisations have an important role to play in the field of CSR. They assume the competence to communicate and awaken awareness in society on the significance of the subject, and promote and facilitate dialogue among stakeholders. Other actors such as unions or diplomatic representations also have a role in CSR, and likewise the National Society of Mining, Petroleum and Energy, and the Embassy of Canada, too.

4.4.3 Transnational shareholders: creditors/investors Transnational companies have an important active role in transferring to national companies, local communities, consumers and the environment, among others, their level of CSR developed in their home country through the code of conduct or agreements around the chain of suppliers, contractors, subcontractors and so on.


CSR practices in Peru’s mining

After an overview of Peru’s CSR framework, we can observe that Peru has one legal framework within which enterprises operate. This legal framework is constituted by national laws as well as international agreements and practices that would become legal and enforceable. This happens in the case of the code of conduct implemented in some cases by transnational companies and transferred to national companies or by national companies themselves, as well as in agreements achieved by contracts around the chain of suppliers, contractors, subcontractors at national and international level. Peru is brought into the development in CSR practice making emphasis of its voluntary nature, and has the desire to be engaged with it as we can see when the rules being enacted make references to the priority of the promotion and development of CSR, underlying that it is on voluntary basis. Therefore, in Peru’s legal framework there is no legislation governing CSR as such, but there are guidelines along its legislation that directly or indirectly promote it, as it is happening in the mining sector as a particular area developed on CSR in Peru, by the characteristics of the activity. Some important examples are the Resolution from the constitutional court referring to the social aspect of the private activity, the obligation of the company law for shareholders to holds meetings at least one in a year to determine


M. Casanova-Claros

the strategy of the company in which CSR issues would be contemplated, and if the company is listed at stock exchange it has to disclosure transparent information, the labour legislation implemented that has as reference the standards and rules from the ILO and empower the Ministry of Labour and Employment for the promotion of CSR standards, in environmental legislation the definition of CSR as well as the prevention to damage the environment, and specially, the Supreme Decree 042–2003-EM by which solicitors of mining concession must submit a prior social engagement in form of affidavit in which companies commit themselves to accomplish at least a series of actions related to CSR issues within the parameters established in the rule even though their non-accomplishment is not sanction and there is no coordination for an effective commitment. Therefore, there exists in Peru an important appropriate development of legal framework that would permit to establish and direct CSR practice, particularly in the mining sector as they would let us identify companies’ activities that belong to the mere compliance and those that are beyond that.

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