1500011334759100972820September 3, 2018
7340036300September 3, 2018
150001133475455004864735SUSR8412 Assignment 2Group assignment Koketso Zimba| Sayuri Krishna| Buhle Qomoyi| Kairavee maharaj| Fezeka ngwenya7340036300SUSR8412 Assignment 2Group assignment Koketso Zimba| Sayuri Krishna| Buhle Qomoyi| Kairavee maharaj| Fezeka ngwenya4500339725center290090900
In the current generation, most organisations have to build a portfolio of incremental and radical innovation, working towards sustaining the business, spreading its influence into the existing and new markets, along building a relationship with the government and communities. In this study we analyse sustainability, its concerns with the effect of action taken in the present upon the operations available in the future, the measures used and analysis of how the resources are consumed by the business in relation to the way they can also be generated. (The Independent Institute of Education (Pty) Ltd 2017, 2017, p. 52).
In reference to Lonmin organisation, in this study we seek a deeper understanding of sustainability and its requirements. We also assess the importance of sustainability in companies, the elements of sustainable paradigm and frameworks. The study concludes by outlining some recommendations on how to improve Lonmin’s sustainable framework and relationships with the government and communities in South Africa as a business.
Sustainability and its importance to organisations
“The greatest threat to our planet is the belief that someone else will save it” (R, Swan, 2018). The future is not inevitable. There is no crystal ball, however it is known that if our course is not changed, we simply end up in the same direction in which we are already headed, and this is where sustainability comes into play. “Sustainability can be defined as the effect of human action in the present and its impact on the options available for future generations” (Theis and Tomkin, 1:2012).
The Brundlandt Report can be defined as “world commission on environment and development (UN-sponsored body) report which proposes a ‘global agenda for change’ and specifies how sustainable development can be achieved” (Business Dictionary, 2018). The Brundlandt report has the status of being the launching pad for the global agenda on sustainability. That is why the Brundlandt report’s definition of sustainability is a safe starting point to use as a base: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (Olsen, SS, 2018). The report was used to address the issues of sustainability, specifically environmental issues in forestry and fisheries but it also included economic and social issues that needed to be addressed. With regards to Lonmin’s sustainability approach it is very clear that there is linkage between the Brundlandt Report and the strategy of the company. “Our approach to sustainability arises from our values, which are defined in the Lonmin Charter our values are based on zero harm to people and the environment, and we strive towards high performance across the business” (Lonmin, 2018).The importance of sustainability matters is recognised in Lonmin’s strategy.
The importance of sustainability in business is boundless. Lonmin is a shining example of how a company can conduct sustainable business. The advantage of adopting a sustainable strategy in business is that firstly it is good for the environment. Sustainable businesses are good for the environment. Because of this fact companies should be concerned about sustainability strictly for ethical reasons. Caring about the planet should be enough motivation to adopt sustainable business practices. “Lonmin’s commitment to Zero Harm focuses on managing and minimising the environmental impacts of our operations. Both the core mining and metallurgical processing activities have an environmental impact that need to be prevented, mitigated or remediated” (Lonmin, 2018). Secondly, there is a reduction in waste and energy costs in the business.
Sustainable businesses are able to cut down on energy and waste costs, which will in turn have a positive impact on the bottom line. This will also attract and motivate employees. Employees who feel they can make an impact on social and environmental issues while on the job are twice as satisfied with work as those who don’t, happy employees are productive employees. Lonmin states, “We are conscious that we will only achieve our strategic goals by attracting, developing and retaining appropriate skills set required to sustain operational excellence. Rebuilding trust and strengthening the Company’s relationship with employees and their unions has been a key focus in recent years” (Lonmin, 2018). Lastly sustainability is good for the company’s reputation, clients and investors are drawn to sustainable businesses. That good reputation can also spread throughout the communities where the business locations are based. This could also potentially lead to positive media exposure.
It is definite that sustainability is a transformational process focussed on changing societies, economies and the environment for the future. (The Independent Institute of Education (Pty) Ltd 2017, 2017, p. 35)Sustainability is aimed at compromising three contradictory factors: societal development, economic growth and environmental conservation. All three elements are known to possess equal importance, however humans have identified economic development as the most dominant. (The Independent Institute of Education (Pty) Ltd 2017, 2017, p. 35). Although sustainability is complicated, businesses play a pivotal role. The journey of an unsustainable to a sustainable business is difficult due to obstacles. It requires balance, trade-offs and is most vital. It is business friendly in nature and assists people looking after the planet. (Nash B, 2017).
An example being: the decision to degrade a certain ecosystem in order to facilitate commerce, food production, or housing. However, the extent to which tradeoffsare made before irreversible damage results is not always known. This has resulted in strong sustainability being associated with many tradeoffs being restricted in, however weak sustainability in contrast is associated where tradeoffs are unrestricted and unlimited. (The Independent Institute of Education (Pty) Ltd 2017, 2017, p. 35)Despite this it is important to note that both economic and social systems are created by man whilst the environment is not. Therefore a functioning environment underpins both society and the economy. (The Independent Institute of Education (Pty) Ltd 2017, 2017, p. 35).
The Brundtland Report
It is the most important event in the embodiment of sustainability. It has catalysed the most change. The main aim was to meet the needs of developing countries by reducing poverty. In order to reduce poverty, the report stated that economic growth must be less harmful to the environment and not deplete natural resources. This report enabled leaders to bridge the gap between developing and developed countries (Nash B, 2017).
The Triple Bottom Line
John Elkington’s coined the concepts of the ‘triple bottom line’ namely ‘People, Planet ; Profit’ (Social, Environmental and Economic) (Nash B, 2017).He argued that companies should be preparing three different bottom lines. The triple bottom line aims to measure the social, economic and environmental performance of the business over a period of time. (Hindle T, 2009).
This measures how socially responsible an organisation has been throughout its operations. (Hindle T, 2009). The social bottom line measures profits in terms of human capital and the position that a business hold s within society. It is increased via fair and beneficial labour practises as well as through community involvement. It is evident that if an entity is not nurturing positive relationships with the wider community, then client retention sinks. It also measures sustainability with the understanding that a desirable workplace will always operate. The Global Reporting Initiative (GRI) has developed guidelines for businesses to measure their impact. (Chamberlain A, 2013)
The maintenance of their social licence to operate is fundamental for Lonmin’s sustainability. The targets that have been articulated in their social and labour plans (SLPs) are constantly being reviews, and they seek to react swiftly to pressing socio-economic challenges faced in the greater Lonmin community. Their focus remains on education, skills training and development, the provision of health facilities and infrastructure. (Lonmin, 2018).
This measures profit in terms of the impact that business has had on its economic environment. Businesses can expand its positions in the economy and survive the future through the TBL. It measures the ability to be in business via environmental impact, community relationships and economical contributions. (Chamberlain A, 2013)
Lonmin conducts their business in a way which is socially and environmentally responsible and sustainable. They believe it is essential for the future of their organisation and stakeholders. (Lonmin, 2018)
Transformation within their company and workforce as well as improving employee accommodation and living conditions is imperative to strengthening our relationships and securing their social licence to operate. Other initiatives aim to improve health, wellness and productivity, and strengthen their employee relationships. (Lonmin, 2018)
This measures how environmentally responsible it has been.(Hindle T, 2009)The TBL states the less impact businesses have on the environment and less usage of natural resources then the business will be more successful for longer. This means managing, monitoring and reporting on consumption, waste and emissions. Correct business models ensure that waste reduction and green policies are given to levels of the business. (Chamberlain A, 2013)
Lonmin’s commitment to Zero Harm focuses on managing and minimising the environmental impacts of their operations. Both their core mining and metallurgical processing activities have an environmental impact that need to be prevented, mitigated or remediated. Our regulatory environmental obligations are tied to our legal licence to operate, and our social licence to operate also depends on the way we conduct ourselves as good corporate citizens. (Lonmin, 2018).
An analysis of Lonmin’s Sustainability Framework
Sustainability Assessment is concerned with guiding concepts, frameworks and information sets that are appropriate for decision support. The scope of concern is enlarged from economic affairs narrowly defined, to the ecosystems of the planet and the long term.
Although there are numerous advantages within the mining environment, it often has a negative impact on landscapes where resource extraction has taken place, and always affects other basic natural resources that humans depend on (Hilson, 2006). Mining is generally portrayed as an activity that is socially and environmentally disruptive (Peck ; Sinding, 2003:7), with its negative impacts hardly being noticed when operations initially began.
Every mining company develops its own strategies to combat and control the impacts of its operation on the community and the environment. Lonmin has documented this sustainability report as means of disclosure. (Lonmin Platinum, 2008). Some of the strategies developed by Lonmin have helped to mitigate the adverse impacts of mining on the environment and to instil skills that are beneficial to the community members through training and employment opportunities (Lins and Horwitz, 2007:13).
Mining activities have the following impacts: disturbance to landscape and topography; poor management of waste such as ore stockpiles, spoils, tailings, and dumps; loss of topsoil and greenery (due to topsoil removal and acid water). Underground mining, if not well managed, also has long-term negative impact with regard to acid water or mine water decanting to rivers, and failure of old underground workings will normally lead to surface sagging which can result in damage to houses, roads, and other infrastructure such as power lines.(KUNTONEN-VAN ‘T RIET, 2007).
Lonmin has strict policies in place to execute supervision for the longevity of their products in a way that is both social and environmentally responsible. They strive to re-cycle waste and prevent pollution and damaging the environment by all means possible. Lonmin’s other focus is to comply with plans (such as, Site-specific Safety, Health, Environment Community (SHEC) and Safety, Health, Environment, Risk and Quality (SHERQ) policies, environmental regulations etc.) in order to have effective environmental management in the areas where they operate.
Lonmin is committed to minimize environmental impact of its operations, by reducing or mitigating their impact. They strive to do so by reducing their environmental footprint through the usage of cleaner technologies and improved efficiency in the usage of resources such as water and energy.
Lonmin has focused on securing, optimising and avoiding water resources pollution through their integrated Water and Waste Management Plan and Environmental Management Plan, they also strive to minimize waste production through recycling and reuse processes. (Lonmin Plc, 20165:90)
Social wellbeing and support South Africa’s health agenda.
Social licence to operate
An important element in their agenda is maintaining the social licence to operate. A watching brief is kept on the targets that are articulated in social and labour plans (SLPs), and seek to react swiftly to pressing socio-economic challenges faced in the greater Lonmin community (GLC). The focus remains on education, skills training and development, the provision of health facilities and infrastructure.
Building capacity in local communities is an important element of SLPs which is addressed thorough enterprise development and procurement programmes.
Lonmin aims tries to position itself as an organisation that cares about the general well-being and upliftment of its employees and communities, by trying to improve their living conditions, offering wellness and assistance programmes, developing their skills, and playing a part in rectifying historical inequalities contributing to the transformation, transparent and ethical practices. (Lonmin Plc, 2017:24)
A circular economy is a new paradigm for an industry since it aims at generating ecological, social and economic value resulting in effectiveness improving the state of the environment and even go beyond sustainability. (Kopina & Blewittt, 2015:238)
Profitability and returns are crucial to Lonmin, they strives to increase production while minimizing expenses by making sure that their assets reach their most efficient and most profitable points in terms of cost, production and productivity. Lonmin’s profitability rest in the level of transparency, investment in new technologies, operational efficiency, and responsiveness to changing commodity prices. Their strategy has been fixed on reduction of their fixed cost, removing of high-cost production and investing in stakeholder relationships in order to obtain financial security.
Lonmin also strives to improve the economical state of the communities they operate in by creating more jobs, contributing to tax, helping develop local and national economies, investing in socio-economic development, as well as benefits-sharing agreement that the organisation has with the government and the communities. For example, the project to build affordable housing for the communities in which Lonmin operates. (Lonmin Plc, 2017:17-24)
Recommendations for Lonmin to improve
Better community and employee relations
Lonmin’s sustainability in South Africa, has been largely affected by its history of confrontational interrelationship with its labour which imply a lack of trust and transparency between the organisation and its employees. There seems to be a huge gap between the alignment of the organisations’ goals and the goals of the employees, which affects the productivity and the ability of the organisation to yield profits, resulting in more wage cuts. This issue needs to be addressed or else the sustainability of the organisation will be compromised. (Hojem, 2014: 13)
Sustainable trade-off management
In the mining industry one can say that there’s no win-win situation in terms of economic, social and environmental returns, therefore, Lonmin needs to better “weigh-up” the positives and negatives impacts of these three dimensions. Lonmin should strive to balance sustainability, competitiveness and transformation, by fulfilling these elements. They should seek to encourage a more equitable and inclusive South Africa, improve the living conditions of the communities and employees, as well as improve the health and income of employees. These efforts will act as Lonmin’s long-term investment in the community and employees as this will pay off in the long run.
Lonmin has a clear history of trade-off between profit making and its employees. Where they would rather endanger and cut off its employees so they can keep making profits and making strong returns to shareholders. They should rather accepts small loss in the economic performance of the organisation to generate a more meaningful social and environmental returns as this will create a greater positive contribution towards its sustainability.(Hahn et al, 2017: 218).
Investing in communities in which it operates
According to Maseko (2018:1) North West and Limpopo are mineral-rich but these provinces are also among the most poorest in South Africa. Lonmin should find a way to improve the standard living of the communities it operates in, by offering the communities access to decent living conditions. By doing so, the organisation’s profits will improve due to improved productivity, better operation stability because of reduced absenteeism. (Maseko, 2018).
Lonmin has formalized agreements and processes, it has adopted standards and it publishes reports frequently. However, there isn’t much on what it practices on the ground. Lonmin needs to create metrics that assess its efforts in improving the communities it operates in. It should adopt an integrated reporting where they get their sustainability reports to the same standards as their financial reports in attempt to attract investors. (Goldfields, 2017:2)
Lonmin should use the Internet of Things (IoF) to improve the safety of its employees as in 2017, in just 3 months, 6 employees died in Lonmin’s mines. Therefore, the use of IoF, which connects appliances and heavy machinery used at mines to the internet which enables for real-time monitoring, allowing for quick reacting to potential issues and hazards. This solution facilitates predictive maintenance rather than preventive. (Turner, 2018)
It is important for an organisation to acknowledge sustainability and its requirements, having sustainable goals for the organisation which are clearly measured and outlined on how it will influence the organisation’s delivery and performance. Managing everything accurately with the right resources so that its success benefits everyone. Having to see different strategies and experience companies like Lonmin’s operation, it is evident that other companies can face a challenge when it comes to sustainability and it can also be misused by other companies claiming to have sustainable operations which are not even implemented or correctly managed, however with the recommendations outlined above for improvements to Lonmin processes and putting them to practise, it can have positive impact which increases their capabilities and performance in the industry, the organisation can be set on another level.
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