Introduction

This chapter will look at the various influences that informed CSR adoption at Noranda. The role of senior management is central to the explanation, both in providing internal leadership and promoting a proactive approach towards environmental challenges facing the company. The proactive approach was informed by an appreciation of early mover advantages, both in terms of anticipating environmental regulation and in promoting voluntary standards for the mining industry nationally and globally.

As a major mining and smelting corporation with global operations, Noranda had a significant range of environmental challenges to manage, and was one of the largest polluters in Canada. Issues included mine wastes (such as tailings) and reclamation, air and water effluents (such as sulfur dioxide, mercury, and arsenic), and energy usage. To add to the challenge, these issues had to be handled at multiple sites, with different technologies, equipment of various ages, diverse effluent streams, and differing provincial and national (Canada) and state (US) regulations. There are between forty and fifty effluent discharge standards applicable to metal mining operations in Canada (Vietor Reference Vietor2002). These standards apply to the metals themselves (copper, lead, zinc), as well as oils and greases, phenols, total dissolved solids, and volatile organic compounds. There are standards applied to the chemicals used in, or generated by, smelting and refining, and for Noranda, the most difficult of these to address was sulfur dioxide (SO₂). Noranda’s operations also generated fluorides, various hydrocarbons, nitrogen oxides, and perfluorocarbons.

The nature of Noranda’s business, covering both mining and smelting processes, produced structural incentives to address wide-ranging environmental challenges. The highly polluting nature of Noranda’s business made the company a target of regulatory scrutiny, promoting senior management to both anticipate potential regulation, but also work with government and NGOs in the development of standards. In addressing these challenges, Noranda sought to promote a win–win situation, where improvements in environmental performance would improve efficiency, reduce costs, and enhance the company’s competitive position. The highly decentralized organization of Noranda was a further structural feature, which presented challenges at the operational level in terms of implementing CSR policies from head office. The decentralized organizational structure presented the most difficulties when Noranda sought to address (or failed to adequately address) the social effects of its operations.

Noranda recognized that its CSR (and later, sustainable development) policies had to be informed by long-term considerations, not just by short-term quarterly profits. Management was not content with mere environmental compliance, but also sought to promote long-term value. This philosophy was informed by the fact that in the mining sector, capital investments are for thirty-plus years, and long-term planning needed to be factored in to protect Noranda’s investments. Senior management sought to create a value company that would be around for a long time, and was not fixated solely on profit-making (Executive 3, September 11, 2008; see Table 1.4 for full list of company interviews).

Institutional setting: external pressures (global and domestic)

Up until the 1960s, Noranda operated in an external environment that could be described as permissive, in so far as acceptance of its operations was concerned. Prior to the 1960s, industry as a whole assumed that the assimilative capacity of the environment would suffice to absorb effluents and emissions. Any environmental damage could thereby be treated as an externality, and companies did not have to bear the cost. It was further felt that a company’s contribution came through producing its product and generating employment. Indeed, belching smokestacks were a symbol of prosperity and industrialization, and Noranda’s original corporate logo was of five smokestacks. This logo was changed in the 1970s, when smokestacks came to be associated with pollution.

In the 1960s and 1970s, that thinking began to give way to the realities of greater public environmental awareness and the introduction of regulations in industrialized countries, including Canada. The enactment in the 1970s of legislation affecting worker health and safety and environmental externalities prompted Noranda to address the environment, health and safety aspects of its operations. With extensive operations in Ontario and Quebec, Noranda was subject to the respective Mining Acts of those two provinces. Noranda had to adjust to meet new environmental regulatory requirements.

Actual or impending government regulation is widely considered to be a prime motivator for companies in moving forward with CSR. While it is certainly the case that Noranda had to respond to stricter environmental requirements, managers were unanimous that this development alone was not a key driving force in the adoption of CSR policies. Noranda saw the value of working with industry, government, and NGOs in the development of standards, with a view to avoiding expensive adaptation after the fact, but not as a means to avoid regulation. As Noranda noted in its 1992 environmental report, its voluntary environmental auditing program “goes far beyond simply complying with government regulations” (Noranda 1993: 15). Since the cost of implementing new governmental requirements is very high, Noranda found it strategic to anticipate government regulation, a classic early mover consideration.

Growing public awareness and the expanded regulatory framework provided the context for Noranda’s evolving CSR policies. An early influence on Noranda was the growing awareness and concern over acid rain, caused by sulfur dioxide emissions (Executive 4, August 28, 2008). In 1980, the Coalition on Acid Rain was created. Its membership included environmentally concerned Canadians, high-profile individuals, environmental groups, and federal and provincial Environment Ministers. The Coalition’s influence grew over the course of the 1980s, as it gained support from former Prime Minister Brian Mulroney and the then US President, George Bush Sr. The coalition’s efforts paid off when in 1990, Bush Sr. passed a revised Clean Air Act that committed the US to reduce its acid rain emissions (Heaps Reference Heaps2006: 17). In Ontario, the government’s “Countdown Acid Rain” called on Ontario’s four main sources of acid rain to cut their SO₂ emissions. The companies targeted included Falconbridge (Noranda’s subsidiary), Ontario Hydro, Inco, and Algoma Steel. Noranda was responsive to these developments, but could not be described as reacting to them.

Starting in the late 1970s, several important developments had a direct impact on Noranda and thinking within the corporation. One noteworthy example of this was the 1979 Mississauga train disaster and the resultant mass evacuation (Executive 2, October 23, 2011). In November 1979, a large freight train derailed in Mississauga, a city twenty kilometers from Toronto. The train exploded because one of the tank cars carried propane, and a mass evacuation was ordered because some tank cars carried chlorine (other cars carried styrene and toluene). The evacuation of 218,000 people from the surrounding area made it the largest peacetime operation in North America until the New Orleans evacuation after Hurricane Katrina (Slack Reference Slack2009). The resultant public outrage and questions about the safe transport of dangerous chemicals sensitized Noranda to potential long-term vulnerabilities in its operations (Executive 2, October 23, 2011).

The second significant incident was the chemical accident in 1984 in Bhopal, India, when a chemical spill at one of Union Carbide’s plants led to thousands of deaths. In the view of one executive, Bhopal was the trigger that set in motion a major review and reform of Noranda’s management systems (Executive 1, December 9, 2011). As a company that handles, produces, and transports dangerous chemicals, management was concerned whether such a tragedy could happen to Noranda (Executive 1, February 13, 2006). In fact, the very next day, a senior executive sought to establish what chemicals Noranda stored in large volumes. Disconcertingly, he found that Noranda did not have this information readily at hand in corporate office (Executive 4, August 28, 2008).

Plant managers were asked what emergency response plans were in place, and suppliers were spoken to. Attention turned to the Brunswick smelter in Belledune, Quebec, which had a plant that stored large amounts of ammonia to make fertilizer. It was discovered that there was a plan in place for emergency response, but that it had not been kept active (Executive 4, August 28, 2008). This proved to be an eye-opener, as it showed that even when a plan is in place, ongoing steps had to be taken to ensure it could be effectively activated. For example, personnel changes meant that people would not necessarily know what to do.

This realization prompted Noranda to launch an extensive training program for plant managers at all the plants, entailing regular drills and test trials of systems in place. Noranda brought in an expert from the United States to help properly train environmental coordinators. Noranda took steps to ensure that emergency response plans were in place at all operations, and developed an elaborate audit program covering four areas: environment, health, industrial hygiene, and emergency preparedness (Frantisak Reference Frantisak1990: 8). The internal audits involved teams of three or four people, drawn from a pool of seventy people, who received continuous, specialized training. The teams would visit each plant at different times to review compliance with the four types of audits.

A draft report on the findings would be prepared, and the plant would then have to develop an action plan in response (Executive 4, August 28, 2008). The action plans were reviewed at least once every quarter, and the results were presented at regular Board meetings. These audits, and the policy and programs supporting them, were developed as part of Noranda’s overall management system, and pre-dated the development of the ISO management systems. ISO’s subsequent 14000 environmental management system (EMS) was influenced by the system Noranda established, because Noranda participated in the development of the standards. Noranda’s efforts, in turn, were reinforced because management saw other business leaders thinking the same way (Executive 1, December 9, 2011).

The costs to Union Carbide as a result of the Bhopal disaster were not limited to that company alone. The disaster proved very damaging to the reputation of the chemical industry as a whole. After Bhopal, Noranda approached the Canadian Chemical Producers’ Association (CCPA), seeking help in the development of protocols for the handling, storage, and transport of hazardous chemicals (Noranda was a member of the CCPA as a result of its sulfuric acid business). Noranda also went to its suppliers, such as Dow Chemicals, seeking help in the development of protocols. A five-day session was held in Toronto, bringing together chemical suppliers, with one-day sessions devoted to the discussion of each chemical in turn. Noranda therefore worked in tandem with CCPA, both influencing the development of what became the Responsible Care^®program, and interacting with suppliers in seeking help in developing its own standards (Executive 1, December 9, 2011).

Under the Responsible Care^® program, companies undergo independent external audits, and can achieve certification that they are handling chemicals safely and responsibly. Noranda became the first, and for many years the only, mining and metals company to have its operations certified under the program, including its Mines Gaspé in Murdochville, the Horne smelter in Rouyn-Noranda, and the CEZinc operation in Valleyfield, Quebec (Five Winds 2000: 78). Noranda sought Responsible Care^® certification for the transport of hazardous materials and achieved compliance by 1997. Membership in this professional association influenced Noranda’s approach to public outreach and management systems for environment, health and safety (EHS) (Executive 2, October 23, 2011), while also influencing the development of internationally adopted standards for the chemical industry.

A third development which influenced thinking in Noranda was the 1989 Exxon Valdez oil spill. In a 1990 address, the then VP, EHS, Frank Frantisak, noted the huge costs to Exxon after the oil spill. At the time, the estimated cost to Exxon of the clean-up alone was US$2.5 billion, and 11 per cent of the US adult population stopped buying Exxon gasoline, and another 11 per cent said they were considering doing so (Frantisak Reference Frantisak1990: 2). As of 2008, Exxon had paid US$3.4 billion in remediation, fines, compensation, and other costs (Anderson et al. Reference Anderson, Gold and Bravin2008: B10). The message Frantisak brought home to senior management was that Noranda should seek to avoid such economic and legal risks, a clear business case for CSR adoption.

Global developments continued to have growing salience for Noranda in the 1980s and 1990s. During this time, environmental awareness and concerns gained momentum, as countries signed on to global environmental treaties, and transnational advocacy networks kept the environment on the global agenda and drew attention to corporate malpractice. The rise of management systems under the ISO influenced Noranda’s efforts to improve its CSR performance. Noranda’s CEZinc operation in Valleyfield, Quebec was the first zinc plant in the world to achieve product-quality certification under ISO 9000 (Executive 2, October 23, 2011). By the late 1980s, Noranda was also becoming aware of the growing significance of the emerging norm of sustainable development.

As opportunities for global expansion opened up in the 1990s, Noranda encountered a range of difficulties in gaining acceptance for its operations, and learned some difficult lessons in the process. As will be described below, the approach of senior management was to take a proactive stance to growing external pressures, seeking to exploit opportunities for corporate growth out of environmental concerns. Rather than being defensive, management recognized through such incidents as the Mississauga train derailment and Bhopal, that major polluting industries such as the chemical and mining sectors had lost society’s trust (Executive 2, October 23, 2011). By contrast, most mining companies were reactive and defensive in response to shifting societal values.

From early on, Noranda took a proactive stance to mounting social pressures to improve its environmental performance and accept its responsibility toward society. Industry’s image was seen to be poor, and it was recognized that social values were changing faster than corporate practices. Many companies had not yet appointed a VP Environment, and those that had done so had not yet come to the realization that this was the beginning of a process of change, not the end (Frantisak Reference Frantisak1990: 3). In part because of Noranda’s huge environmental footprint, but also because of management’s approach to environmental challenges, the company came to the realization earlier than most companies that it was necessary to change its thinking.

Organizational and managerial response

The role of senior management is critical in explaining Noranda’s response to its changing external environment. Since a corporation’s main purpose is to make a profit, a culture of commitment to the environment has to be set by top management (Executive 1, March 2, 2006). Otherwise, people lower down the ranks are likely to be intimidated by the historical mentality of the company – its culture, in other words. At Noranda in the 1970s, senior executives, including Alf Powis (Chairman) and Adam Zimmerman (President and CEO of Noranda Forest Inc., 1967–92), began to take an active interest in the environment. Later, the succeeding CEO, David Kerr (1987–2003), Alex Balogh (Chairman of Falconbridge and Deputy Chairman of Noranda, 1989–2006), and Peter Bronfman (late founder of EdperBrascan Corporation) continued to provide strong support for CSR initiatives.

For some executives, interest in the environment was personal, as much as professional; their children cared about the environment and were active around environmental concerns. One executive’s children, for example, were very involved with environmental issues, and supported Greenpeace (Executive 3, September 11, 2008). The executive’s thinking on the environment was spurred by the experience of his eldest daughter, who got a summer job at one of Noranda’s forest plants. She reported to him that there was gross pollution, and was convinced it was causing harm to people and the environment (Executive 3, September 11, 2008). The evidence was difficult to ignore. The executive recounted how, when playing golf near the Rouyn-Noranda smelter, he noticed the effects of sulfur dioxide blowing over, and turning the grass yellow (Executive 3, September 11, 2008). This executive, together with other senior management, formed a cohesive group who were on the same wavelength about the need for forward-thinking on the environment.

By the late 1970s, senior management recognized the need for centralized management of EHS policies. An important organizational development was the hiring in 1979 of Frank Frantisak from outside the company to the position Director, EHS. In 1982, that position was upgraded to Vice-President, EHS. From 1994 until his retirement in 1998, Frantisak served as Senior Vice-President, EHS. He was replaced by David Rodier, who had been President of Noranda’s zinc operations (CEZinc). Rodier oversaw the initial merger of Noranda’s and Falconbridge’s EHS functions, until his retirement from Noranda in 2003.

Frantisak emphasized the importance of leadership from senior management in a 1990 address to Ontario Hydro (Frantisak Reference Frantisak1990). Referring to the disastrous 1989 Exxon Valdez oil spill, Frantisak asked who was responsible for the spill; Exxon’s Board, the CEO, President, VP for Environment, or the ship’s captain (Frantisak Reference Frantisak1990: 2). In answering his question, Frantisak declared that “Exxon’s Corporate Environmental Culture and corresponding Environmental Management System, or its absence, is responsible for the disaster”(Frantisak Reference Frantisak1990: 2). He identified the Board and senior officers as the architects of corporate culture.

Noranda’s first environmental policy statement was adopted in 1965, and served as a broad statement of principles. Three components of CSR policy were identified, including environment, health, and safety. Until the end of the 1970s, EHS policies were implemented in a very decentralized fashion. Safety was considered an operational issue, and was dealt with directly by plant managers. Occupational health issues were dealt with by various people working independently, with local responsibilities. Site managers were responsible for implementing corporate policies and achieving specific goals. Strategic planning around CSR began in the late 1970s at CEZinc, which initiated external communications with local communities in 1987 (Executive 2, October 23, 2011; Executive 1, December 9, 2011).

The EHS management structure in the early years was very decentralized and specialized, much like the company as a whole. Noranda Inc. had four divisions covering mining, oil and gas, forestry, and manufacturing, with Frantisak responsible for the oversight of EHS in all four divisions. Noranda Minerals had separate and largely independent business units for each of its major areas of mining and metals activity, including copper, zinc, nickel, and aluminum smelting. (All documents are listed as ‘Noranda Inc.’ in the References.) Many of the mining and smelting operations had their own environmental managers. There were very few corporate policies for the mining groups of companies, but Frantisak was responsible for developing a corporate environmental policy. Upon his appointment in 1979, Frantisak brought in people who could coordinate the environmental, OHS, and industrial hygiene components of corporate strategy.

Throughout the 1980s, Frantisak worked on coordinating Noranda’s EHS policies on a company-wide basis. In the mid-1980s, an environmental committee of the Board of Directors was established, with responsibility for setting the principles of corporate environmental practice. The senior VP, Environment, was responsible for presenting an environmental report to the Board on a quarterly basis. The report covered issues such as compliance or non-compliance with environmental laws, steps which needed to be taken in instances of non-compliance, progress of ongoing environmental audits, and any cases of environmental charges or convictions (Frantisak Reference Frantisak1990: 5).

Frantisak sought to cultivate a uniform corporate environmental culture while, at the same time, respecting the highly decentralized management culture of Noranda. Given the fact that a corporation’s primary purpose is to make a profit, it is very rare for change to come from the bottom up. The development of policies and programs was largely the result of a top-down process. However, given the decentralized nature of Noranda, the company relied on plant managers to implement policies set by senior management. Most plant managers were committed to environmental improvement and safety, but in 1999, one plant manager was let go because of lax safety attitudes (Executive 1, August 20, 2008; Executive 2, August 26, 2008; Executive 4, August 28, 2008). To promote consensus, Frantisak sought to build strong, positive relationships with the plant managers. He also conducted focus groups with employees before launching any new environmental initiatives. Extensive training programs, such as NEAT, the Noranda Environmental Awareness Training Program, helped to promote a culture of concern for the environment within Noranda (Executive 1, February 13, 2006).

Safety from early on was a top priority for Noranda, and remained so through the merger with Falconbridge. Beginning in the 1970s, regular on-site visits were conducted by the corporate safety committee. Twice a year, two or three senior executives would go to the sites to talk to plant workers and get verbal feedback on issues from workers and union representatives (Executive 2, August 26, 2008). Annual workshops were conducted on safety at all sites, and off-site meetings were conducted with site managers at the Noranda Technology Centre near Montreal.

In the 1980s, a similar but separate process was initiated for environmental issues. All plants received annual visits from senior EHS executives, and larger ones received visits two or three times a year (Executive 4, August 28, 2008). During each visit, the entire environmental program would be reviewed, and this would be discussed with the plant manager, and room for improvement identified. These visits provided the plant manager with the opportunity to ask questions and raise issues of concern. By the mid-1980s, most large plants had people in place whose sole responsibility was the environment, as well as health and safety. All plants had technicians in place who were responsible for monitoring and measuring emissions (Executive 4, August 28, 2008).

Policies on EHS issues tended to be driven by head office, and drafts were not sent to plant managers. However, annual meetings were conducted at head office with all environmental coordinators. The purpose of these meetings was to discuss current policies, but also future policies, which provided the opportunity for feedback from the people who would ultimately be responsible for implementing new policies. There was also a degree of policy coordination with people throughout the organization with responsibility for specific issues. These various measures were important in instituting a culture of commitment to CSR within Noranda.

Policy development

In a case study on Noranda conducted by the Harvard Business School, Frantisak divided the evolution of Noranda’s EHS policies into five time periods. Prior to 1965, Noranda operated in an “era of innocence” when the environment was taken for granted and treated as an externality (Vietor Reference Vietor2002: 4). The period 1965 to 1980 was the “era of naivety,” when Noranda was content to issue policy statements on the environment, such as the one adopted in 1965. The naive belief was that pieces of paper would be sufficient to move Noranda in the right direction.

The third period, from 1980 to 1990, marked the beginning of systematic efforts to address environmental concerns, which Frantisak called the “era of trying.” Frantisak characterized the period 1990 to 1995 as the “era of action,” when a range of initiatives were undertaken, both in terms of Noranda’s internal policies, and the development of its external relations (Vietor Reference Vietor2002: 4). It was during this period that global environmental developments became more influential, as reflected in the growing international support for the principle of sustainable development. Frantisak characterized the period from 1995 on as the “era of culture,” where attention to the environment was considered to be ingrained in Noranda’s culture.

During the third period, the “era of trying,” from 1980 to 1990, Noranda introduced a substantially revised environmental policy statement. Noranda’s first environmental policy statement, adopted in 1965, was simply an expression of management’s commitment to the environment (a summary of major policy developments can be found in Table 4.2). The revised 1985 statement enunciated five principles to which Noranda would adhere, including a commitment:

1. 1. to meet or exceed applicable laws and regulations at all its sites;

2. 2. to evaluate and manage risks to human health, the environment and physical property;

3. 3. to conduct periodic environmental, health, hygiene, safety, and emergency preparedness audits;

4. 4. to conduct environmental impact assessment studies for all new projects and for major expansions to existing facilities; and

5. 5. to present a quarterly report to the Board of Directors on the state of the environment, health and hygiene, and safety and emergency preparedness at each operation.

(Noranda 1991: 4–5)

Principles three and five were clearly influenced by the need to avoid disasters, such as the one at Bhopal.

To implement this policy, Noranda introduced a comprehensive internal environmental auditing program, covering the four areas of environment, health, industrial hygiene, and emergency preparedness. Noranda also began to perform environmental impact assessments of its operations, and to prepare detailed emergency response plans and reclamation plans.

The period 1980 to 1990 was marked by an important strategic decision to incorporate recycling as a major part of Noranda’s business plan. Noranda had reached a crossroads when, in the late 1970s, the local mines that supplied most of the feed to the Horne smelter in Rouyn-Noranda were nearing completion. Noranda had to decide whether to abandon the smelter (and the surrounding community, which owed its existence to Noranda) or become a custom smelter (Five Winds 2000: 69). At the same time, there was growing scientific and public concern about the effects of acid rain on forests and aquatic resources. There was also the prospect of regulatory pressure to reduce smelter emissions of sulfur dioxide. The thinking was to create a win–win situation, where environmental improvements would create financial benefits for the company. In approving projects, the Senior VP, EHS advised the Board to consider two factors: 1) what will the financial return be; and 2) how will the environment be enhanced (Executive 1, February 16, 2006). He believed that both goals could be accomplished.

To succeed in this transformation, Noranda had to take a long-term approach to technology development and smelter modernization. The 1980s witnessed substantial investments in environmental research and technologies at the Noranda Technology Centre, based in Montreal. The Centre’s annual budget grew to US$50 million by 1990.

A series of major capital projects to strengthen the business and environmental performance of the copper smelter at Rouyn-Noranda ensued. An emerging and untapped source of feed for the smelter was identified in the form of electronic scrap and other secondary materials containing copper, gold, silver, platinum, and palladium (Five Winds 2000: 79). In 1984, special facilities were constructed for scrap processing at its Brunswick plant in New Brunswick. Noranda took a similar path with its copper smelter in Murdochville, Quebec. The smelter was modernized and expanded in 1996–7, but was shut down in 2002, due to the mine closure and high costs (Five Winds 2000: 70). By 2000, Noranda had become the world’s largest custom processor of copper and precious metal-based feeds, processing scrap from used or obsolete products, such as phones, personal computers, children’s electronic toys, printer cartridges, and costume jewelry (Five Winds 2000: 79).

Frantisak characterized the period 1990 to 1995 as the “era of action,” when Noranda worked hard to clean up its operations and take the lead in environmental compliance (Vietor Reference Vietor2002: 4). In 1990, Noranda became the first Canadian company to publish an environmental report (for the 1989 reporting year), in which it reported on its environmental performance for its North American operations. In the preparation of the report, interviews were conducted with interested stakeholders, including NGOs, government, the academic community, and employees (Feltmate, Interview with Frantisak, 2008: 31). In order to respond to growing public environmental awareness and concern, Noranda expanded its communications with external audiences, including shareholders, governments, media, community, and special interest groups such as NGOs (Noranda 1991: 7).

According to one executive, the need to educate and inform Noranda’s own employees was a major impetus behind the decision to start environmental reporting (Executive 4, August 28, 2008). With such a decentralized organizational structure, the EHS team in head office was aware that employees were not that well-informed about what the company’s policies were, or about the environmental impact of the operations in which they worked. Generating awareness amongst employees would help them to see the role they could play in improving environmental performance. A second impetus for the reporting came from the recognized need to get information out to the local communities that were directly affected by Noranda’s operations (Executive 4, August 28, 2008). Action plans published in the reports would put pressure directly back to the plant from the local communities. It was expected that the reports would encourage plant managers to hold meetings with local community members, and thereby promote ongoing dialogue (Executive 4, August 28, 2008).

A major commitment was made to environmental research, to develop cleaner and more efficient technologies, with CAN$4.4 million invested in 1990 (Noranda 1991: 7). In 1991, the Clean and Efficient Technologies (CETECH) research program was established at the Technology Centre in Montreal. Noranda invested CAN$4 million in the initiative, which addressed the question of how to make copper smelting more environmentally friendly. Research focused on how to reduce energy use, and it was found that it was possible to save 10 per cent of energy use without capital investment (Executive 1, February 16, 2006).

During the early 1990s, more data came to be included in the reports relating to water discharges and air emissions. Beginning in 1991, data was provided on the number of environmental audits conducted affecting environment, health, and safety, and, starting in 1992, on the number of environmental studies conducted. In the 1993 report, note was made of efforts to promote environmental best practices, and spending on environmental research in 1992 increased to CAN$24 million (Noranda 1994: 15). In 1995, Noranda began to publish emissions data on a per-site basis.

Throughout the 1990s, Noranda sought to reduce the amount of SO₂emissions from its smelters. This was a difficult challenge, in light of increased smelter production in plants in Quebec and New Brunswick, as well as at its Altonorte copper smelter in Chile. To reduce the emissions of SO₂, and increase “sulfur fixation,” Noranda made investments at its smelters in Rouyn-Noranda, Murdochville, and Altonorte. One way Noranda sought to reduce emissions was to use SO₂ to manufacture sulfuric acid, a saleable product. In an effort to improve its converter processes, Noranda developed the Noranda Continuous Converter, and the first one was installed at the Horne smelter at a cost of US$55 million. A similar installation at the Gaspe smelter allowed Noranda to expand production without increasing emissions. US$160 million was spent at Altonorte to boost sulfur fixation to over 90 per cent (Five Winds 2000: 72–3). Fully 50 per cent of Noranda’s capital budget in the 1990s was spent on environmental improvements and clean-up, with a view to meeting the goal of full compliance with stricter environmental standards (Executive 2, August 26, 2008). Table 4.1 below shows Noranda’s environmental expenditures during the 1990s.

Table 4.1 Noranda’s environmental expenditures (US$ millions)

Source: Noranda, various EHS reports.

Frantisak characterized the period from 1995 as the “era of culture,” where attention to the environment was considered to be ingrained in Noranda’s culture. As the then Chairman and CEO, David Kerr, was quoted as saying in the 1995 EHS report:

The important thing is that there is a strong core-value commitment from the senior management and the Board of Noranda. In addition, there is a manager at each site whose compensation, in part, is tied to how well he or she deals with environment, health and safety concerns.

(Noranda 1996a: 3)

To integrate environmental awareness and performance into the corporate culture, it was recognized that commitment to the environment would have to emanate not just from senior management at the top, but down through the line to plant managers and all employees.

In the same report, Noranda launched its new environmental policy guidelines, which reflected Noranda’s accumulated learning about its environmental capabilities. Key features of the updated environmental policy were the intention to act as “exemplary leaders” in environmental management, a commitment to the principle of sustainable development, and the design of control systems at all facilities to minimize risks to health, safety, and the environment (Noranda 1996a).

During this period, Noranda strove for continual improvement in its environmental management systems. In 1994, Noranda hired an independent consultant to review its EMS, and compare it against the environmental management standards then being developed by the International Organization for Standardization. Noranda’s EMS was found to be highly compatible with the ISO 14001 standard that was published in 1996. This is not surprising, as Frantisak served as leader of the Canadian delegation to the ISO Technical Committee on the Environment that helped establish the ISO 14001 standard. The decision about whether or not to pursue ISO certification was left to the discretion of site managers (and as of 2003, none chose to do so). Noranda did not see the added value of the bureaucratic review, even though it could have self-declared to be compliant with ISO 14001 (Executive 2, December 2, 2011).

The review led to the identification of five areas requiring improvement, including:

1. 1. a better definition of the concept of sustainable development

2. 2. better plant-level adaptation of environmental, health and safety management systems

3. 3. greater environmental input prior to capital expenditures and improved tracking

4. 4. more tools for reviewing the environmental management system

5. 5. a review of the reporting structures for environmental managers.

(Noranda 1996a: 5)

Noranda set up internal task forces to deal with each of these areas. Detailed discussions took place, and focus groups were established to explore the issues. Noranda made use of “scenario planning” as a decision-making tool, with a view to comprehending major trends likely to unfold over the long term.

Out of this process emerged in late 1996 a new environmental framework for the company, known as Environment 2000 Plus (1996b). As announced in the 1996 EHS report, Environment 2000 Plus was intended to ensure the complete integration of environment, health, and safety into every business decision, to ensure that environmental considerations were an integral and fundamental part of the business. As Trevor Eyton, Senior Chairman, EdperBrascan, explained in a 1997 address: “No major business decision is being made without first considering its environmental implications, and no major environmental expenditure is approved without first considering its economic impact” (Eyton Reference Eyton1997: 24).

The policy aimed to unify Noranda’s environmental management systems within its various companies (mining, metallurgy, oil and gas, and forestry) across the corporation. To avoid the problem of “silo” management, environmental management was to be fully integrated “into all phases of business activities, from process research, new products, development of new facilities, operation of our plants, marketing/customer relations, and planning of the future” (David Kerr, as quoted in Vietor Reference Vietor2002: 6). Rejecting the concept of the “triple bottom line” (Elkington Reference Elkington1998), Noranda strove for one bottom line, with contributions from economic, environmental, and social areas. Senior management hoped that through this policy, Noranda could realize more on its environmental investment. A key objective of Environment 2000 Plus was “not to maintain our leadership only in the areas of environment, health and safety, but to use it for improved competitiveness” (Noranda 1996b: 7)

With the arrival of David Rodier to the Senior VP, EHS position in 1998, a major new initiative towards continuing improvement in EMS was the Environment, Safety and Health Assurance Process. Its goal was to provide a means to ensure that the root causes of problems were identified and addressed, so that deficiencies would not be repeated from one audit to the next (Noranda 1999a: 5). The transition to this new assurance process took several years, as each operation was expected to develop and implement an environmental framework. It was further revised in 2002, in preparation for the merger of Noranda’s and Falconbridge’s business services functions, including EHS.

Two major hurdles were encountered in the implementation of the ESH Assurance process. The first was that, consistent with Noranda’s decentralized structure, site managers were expected to implement the process. This burden was an added responsibility without the benefit of additional resources, and site managers resented the prospect of increased bureaucracy and paperwork, resulting in considerable push-back. The second, and related, hurdle was that senior management was not prepared to devote significant new resources to this program (Five Winds 2000: 77). To address these problems, senior management reiterated its commitment to continual environmental improvement, and an effort was made to educate site managers on the economic benefits of sound environmental management. Staff compensation was linked, in part, to the implementation of the EHS framework, and site managers were made accountable for specific objectives and targets (Five Winds 2000: 77).

Another example of Noranda’s win–win approach to environmental issues was with respect to the major challenge confronting Noranda of reducing its greenhouse gas emissions (GHGs). As with other aspects of its business, the challenge was approached as both a business and environmental issue. Since metallurgical processes are energy intensive, finding ways to reduce energy consumption reduces costs, as well as helping the environment. Despite substantial increases in refined-metal production since 1990, Noranda’s total greenhouse gas emissions in Canada remained near 1,000 kilotonnes CO₂ per year, due to energy efficiency improvements, increased recycling, adoption of new process technologies, and mine closures (Five Winds 2000: 73). All the same, despite these improvements in energy intensity, the goal of actual reductions remained elusive. Canada’s signing in 1998 of the Kyoto Protocol was therefore a major source of concern for senior management. Given the nature of Noranda’s business, the realization of actual reductions was seen to compromise the company’s competitive position.

Noranda advised the government that it should use Canada’s Kyoto commitments to enhance the efficiency and competitiveness of Canadian industry on a global basis. Noranda felt that the government should enter into contract with industry, to help move it forward on meeting emissions targets (Executive 1, March 2, 2006). With a definite timeline and clear targets, such a process would allow industry to work with government on what would be expected in five years, and allow companies the time needed to make the necessary adjustments. In this respect, Noranda was far ahead of much of industry and the government of the day.

The aim to work with government in establishing emission reduction targets is consistent with the early mover logic of being in a position to shape eventual environmental regulation. Table 4.2 provides a timeline of the major changes put in place by Noranda to implement its CSR. In all of these initiatives, Noranda was an early mover, relative to other mining companies. In terms of environmental reporting, Noranda was an early mover not just in mining, but in industry as a whole.

Table 4.2 Major organizational and policy developments: Noranda

Experiences that shaped the learning process

A most important influence on the early thinking of senior management on EHS was the experience of operating in remote northern communities (Executive 1, February 13, 2006). In 1973, a writ was served against Noranda and other companies by the Cree Indians in north-west Quebec. The Cree alleged that Noranda and other companies were responsible for acid rain and the discharge of mercury into the water system. Acid rain is caused by sulfur dioxide emissions, a by-product of copper, lead, and zinc smelting. Significant health claims were made. Frantisak was brought in as a consultant on the case (before formally joining Noranda in 1979).

Noranda took the allegations very seriously, and spent over US$1 million on studies, including a major epidemiological study of all plaintiffs (Executive 1, March 2, 2006). The case never went to court or discoveries, and there was no settlement, as the Cree were found not to have a case. All the same, Noranda realized that it could not ignore the environmental and social impact of its operations.

Another important case involving the James Bay Cree and the Quebec government was instrumental in influencing the decision of senior management to adopt a coherent approach to EHS. The Cree were opposed to the Quebec government’s decision to expand hydroelectricity development in the James Bay region, and in 1973, succeeded in obtaining a court injunction stopping all work on the massive James Bay hydroelectric project (Kanatewat v. James Bay Development Corp. 1973). The injunction specifically referred to concerns about potential damage to the environment and natural resources. Although Noranda was not directly involved in this case, its heavy presence in northern Quebec meant that it was indirectly affected.

The Abitibi region, which is south of the affected area, is dominated by mining, with the main urban center being the company town of Rouyn-Noranda (originally two separate towns that amalgamated in 1986 and site of Noranda’s Horne smelter). Noranda’s mining and smelting operations are heavy users of hydroelectricity. Hydro-Quebec, which was cited in the James Bay case, is responsible for over 90 per cent of the hydroelectricity production in the Abitibi-Temiscamingue region (Alexander et al. 2004: 10). An injunction against further development of hydroelectricity would have clear implications for Noranda.

The case involving the James Bay Cree revealed that there could be circumstances where mining companies could be denied access to their claims. This was evident in the agreement that was reached between the Quebec government and the Cree in 1975, which provided for the lifting of the injunction against further hydroelectric development in the region. Known as the James Bay and Northern Quebec Agreement, it was a far-reaching agreement that confirmed Quebec’s jurisdiction over its territorial boundaries, while at the same time accommodating the rights and needs of the Cree and Inuit communities. The agreement provided for a new land and administrative regime, including the designation of Category 1 lands (lands in and around the communities where the native peoples normally reside) for the exclusive use of the native peoples (Government of Quebec 1975: xvii). The agreement was formally enacted into law in 1977 (James Bay and Northern Quebec Native Claims Settlement Act, 1976–7).

The case was an early eye-opener for Noranda. Senior management realized that the company could not ignore the environmental impact of Noranda’s operations. The provision requiring the prior consent of the Cree for mining activities on their lands, and the one requiring environmental impact assessments (EIAs), was seen by Noranda as an indication of what was coming for the mining industry.

By the 1990s, concerns around reputation had become an important issue for Noranda and the mining industry as a whole. Where once mining companies operating in remote northern communities in Canada and around the world were out of the public mind, advancing information technologies and NGO activism ensured public awareness about poor environmental practices. One example of this reality came on the forestry side of Noranda’s operations. In the early 1990s, a proposed pulp and paper plant in Tasmania was blocked by environmentalists (Executive 2, April 22, 2003). Although an EIA had been approved for the project, Noranda learned that its Australian partner, which was left to manage the plant, had failed to adequately explain the project to people in the local community. The controversy over this project highlighted for Noranda the importance of addressing early on community concerns (it also demonstrated the perils of partnership arrangements, as Placer Dome was to learn after the Marcopper tailings spill in 1996 in the Philippines).

In the 1990s, mining companies began to encounter problems in gaining access to land for new projects, as Noranda experienced first-hand when it sought to develop the New World mine in the United States. The New World property is located near Cooke City, Montana, a short distance from Yellowstone National Park. The New World mine experience was formative in driving home the need to integrate more fully the social implications of its operations.

In 1993, a subsidiary of Noranda, Crown Butte Mines Inc., became the object of a citizens’ suit alleging water-quality violations. Crown Butte Mines was 60 per cent owned by Hemlo Gold Mines Inc., which is 44 per cent owned by Noranda. The suit cited discharges related to historic mine damage at the New World project site, as a result of actions from previous mining companies (Noranda 1995: 15). Crown Butte had been voluntarily reclaiming the historical mine workings and had committed to treat some of the historical adit discharges as part of the proposed plan of operations. Noranda invested millions in reclamation of old mine sites in the area.

In 1994, two US environmental groups, American Rivers and Trout Unlimited, initiated legal action to stop ongoing processing by the US Department of Interior of patent applications submitted by Crown Butte Mines Inc. for eleven hectares of the New World project. A variety of concerns were conveyed, but the main ones were that a mine located 2.5 miles from Yellowstone would disrupt the peace and tranquility of the area, and that the mine would adversely affect the environment.

Environmentalists could point to other recent major environmental disasters, such as what occurred at the Summitville mine in southern Colorado, owned by another Canadian mining company, Galactic Resources. In 1995, the US District Court in Montana ruled that Crown Butte was in violation of the federal Clean Water Act for failing to obtain water discharge permits with respect to water flowing from an historic mine adit and two open pits (Noranda 1996a: 11). The whole process became politicized, as then President Bill Clinton went so far as to visit the site in late August 1995, while he was vacationing in Wyoming. He subsequently announced a moratorium on the mining of 4,500 acres of federally owned land on the perimeter of Yellowstone. Meanwhile, at the behest of a coalition of fourteen US environmental advocacy groups, the International Union for Conservation of Nature (IUCN) was invited to visit the proposed mine site and in December 1995, with the environmental impact study (EIS) still pending, the IUCN declared Yellowstone a World Heritage Site in Danger (Benedetto Reference Benedetto1999: 5).

In 1995, the then CEO David Kerr acknowledged that proposing a gold mine near Yellowstone National Park was a “public affairs problem for both Crown Butte and Noranda” (Noranda 1996a: 3). He further added that “Noranda . . . will not support the development of a mine if we believe it will damage the environment” (Noranda 1996a: 3). Noranda received a great deal of negative publicity over the issue, with extensive media coverage in Canada and the US. In the aftermath of the ICUN designation, and with the Administration actively working to derail the EPA process and prevent the EIS from being released, Noranda decided to abandon the New World project.

The New World mine experience led management to realize that it had to do more to stay on top of growing public expectations about environmental protection. The dilemma for Noranda was that it had met all environmental requirements, yet had seen the EIS process sidetracked. As David Kerr noted, “it is no longer good enough to simply comply with the law . . . [as] formerly ‘acceptable’ levels of pollution are increasingly less acceptable, legal or not” (Noranda 1997: 3). As such, Noranda and other mining companies would have to voluntarily move beyond compliance to “pre-emptive” and “preventive” planning and action. Kerr spoke of the need for a “cultural shift,” entailing the total integration of environment, health, and safety into business thinking.

Appreciation of the need for a social license to operate set the stage for Noranda’s Environment 2000 Plus environmental strategy. The learning from both the Tasmania and New World examples were explicitly acknowledged in the Environment 2000 Plus document:

The impact of the New World mine was to strengthen the determination of management to respond to environmental concerns (Executive 1, February 16, 2006).

Noranda also faced its share of challenges in terms of access to markets. In the 1990s, metals came under increasing scrutiny in terms of their safety, with some metals banned outright under the Basel Convention (see Chapter 7). As a result, Noranda came under pressure from the automotive and electronics sectors to demonstrate that use of its products was safe, and that information it provided to customers was accurate, in order to maintain a presence in the marketplace in these sectors (Five Winds 2000: 72). Another major concern was the adoption of what Noranda considered to be non-tariff barriers to trade in consumer products that contain metals, especially in Europe. Noranda was concerned that measures implemented were more trade restrictive than necessary, that the risks associated with potential substitutes were not being considered (such as Bisphenol A in plastic bottles), and that there was inadequate information available for the evaluation of metals (Five Winds 2000: 81).

In the 1990s, Noranda and other companies also found that their potential access to finance was restricted by growing concerns on the part of banks about exposure to political risks surrounding mining. Noranda encountered this situation over attempts in 1998 to secure financing for the Antamina copper–zinc mine in Peru. Noranda owned a 33.75% share in the mine, together with two other Canadian companies, including Teck Cominco (22.5%) (at the time, Teck Corporation), Rio Algom (33.75%), and Mitsubishi Corp. (10%). (Rio Algom subsequently pulled out due to lack of finances, and BHP-Billiton stepped in.) Located in the Andes Mountains, 285 kilometers north of Lima, Antamina at the time was considered to be one of the largest undeveloped copper/zinc ore bodies in the world.

Securing financing for the project proved challenging, because of concerns about environmental risks in a context of bad environmental legacies, weak environmental laws in Peru, and weak capacity for environmental oversight. In 1999, a private banking consortium consisting of over twenty banks was arranged, which provided US$650 million in commercial lending, and another US$689 million came from export credit agencies, including US$135 million from the Export Development Corporation (EDC) of Canada (UNEP 2001: 45).

As a condition for their financing, the German banks insisted on changes to the original plans for getting the metal concentrate to port. Originally, the plan had been to truck the mine materials overland through the Huascaran National Park, a designated World Heritage Site, located beside the mine. Given the high volumes involved, transporting the material overland would have required a truck leaving every seven minutes, twenty-four hours a day, seven days a week (Executive 2, August 26, 2008). The German banks demanded, instead, that a 300-kilometer pipeline be built under the road to the port at Punta Lobitos, in the District of Huarmey. Up to that date, such a massive pipeline had never been undertaken, and the cost to build it was US$180 million, driving the cost of the project up by about 7 per cent. Ultimately, the pipeline proved to be a good solution, both from an environmental perspective, as well as from a cost perspective, due to savings on labor and fuel.

The World Bank also played an important role in attaching environmental conditions to its lending for the project, through the Multilateral Investment Guarantee Agency (MIGA). There were government environmental standards in place in Peru, but there was weak capacity for environmental oversight. Furthermore, as noted in a World Bank report on Peru, in the mid-to-late 1990s, there was weak commitment on the part of the government to addressing environmental issues (World Bank 2002: 21). As a condition for the US$67.5 million of coverage for equity investments of the three Canadian mining companies, the MIGA imposed lending criteria that included the World Bank Group’s elaborate procedures for environmental screening, disclosure, and public consultation. The World Bank became the de facto world standard, and private commercial banks came to insist on Bank standards in providing loans for such projects.

The above examples illustrate the barriers in access to land, markets, and finance experienced increasingly from the 1990s by Noranda and other mining companies.

In addition to the problem of weak capacity and/or non-existent environmental protections in developing countries, mining companies encountered corruption. Noranda contended with this problem when it considered investing in Zambia’s copper industry in the mid-1990s (Executive 1, December 9, 2011). Noranda ultimately walked away because environmental assessments revealed that millions would have to be spent in order to clean up the operations, and billions more would be needed to invest in new equipment (Executive 2, August 26, 2008; McNeil Reference McNeil1998: 1). A tailings spill that occurred during one of Noranda’s visits resulted in no remedial action being taken, even though local people were using water from a stream that in all likelihood had been contaminated by the spill (Executive 4, August 28, 2008).

The experience with corruption in Zambia was a factor influencing Noranda’s decision to adopt a Code of Ethics in 1999 (Noranda 1999b: 25). The Code of Ethics was an explicit response to Noranda’s strategic decision to expand its operations globally, and recognition of the need for ethical principles to guide Noranda’s operations around the world (Noranda 1999b: 12).

As criticism of the mining industry intensified in the 1990s, Noranda executives came to recognize that a new strategy was needed to manage negative public perceptions about mining. As Noranda COO, David Goldman noted, “while the industry was responding to criticism with facts and figures, the public was seeing big holes, altered landscapes and huge smelters” (McGovern Reference McGovern1998: F3). Growing roadblocks to new projects led Noranda to recognize that environmental and social issues are interdependent, and that a new approach was needed to address this reality.

The path to sustainable development

As Noranda’s EHS policies evolved over the 1980s, developments happening outside of Canada came to have growing salience. Sustainable development first appeared on Noranda’s radar screen in the late 1980s, after the publication of the Brundtland Commission Report in 1988. The lead-up to the 1992 Rio Conference on Environment and Development, and the conference itself, was an important influence on Noranda. Frantisak led the Canadian business delegation that sought to address the implications of sustainable development for industry. Noranda realized that it needed to enlarge its understanding of its responsibility towards society, and to look at issues from a global perspective, not just from the perspective of local plants (Executive 4, August 28, 2008).

Noranda’s first reference to sustainable development came early on, in its 1991 environmental report (Noranda 1992). In that report, the work of the Brundtland Commission in developing the concept is acknowledged. Indeed, the publication of the WCED’s Our Common Future (1987) marked Noranda’s first exposure to the concept (Executive 1, February 16, 2006). Frantisak spoke of the impression made upon him of meeting Gro Brundtland at the NGO conference held in Vancouver in 1990. After the release of the report, Canadian Prime Minister, Brian Mulroney convened a taskforce to decide on next steps, on which the CEO of Noranda sat. The taskforce identified sustainable development as an important Canadian objective, and recommended the launch of the National Round Table on the Environment and Economy. Noranda’s involvement in this process reinforced the importance of sustainable development, an objective to be pursued at the highest level of the Canadian government (Executive 1, December 9, 2011).

The growing awareness of the concept coincided with the expansion of Noranda’s global operations. Slowly, over the course of the 1990s, Noranda sought to come to terms with the concept in a manner that made sense to its operations. Having learned through its experiences in northern Canada the importance of factoring economic, environmental, and social considerations into its mining operations, Noranda encountered this reality anew as it moved to significantly expand its operations around the globe.

Sustainable development fit with the conviction of Noranda’s senior management that business should be a catalyst for the promotion of environmental responsibility and achieving sustainable development (Executive 1, August 20, 2008). Senior executives were convinced that governments acting on their own would not be able to solve the global-scale political and social problems presented by environmental devastation. There was a felt need for companies such as Noranda to take a lead in promoting environmental responsibility and sustainable development. Understood in this context, sustainable development fit with Noranda’s perception that it needed to look at the bigger picture beyond its own corporation (Executive 4, August 28, 2008).

Consistent with Noranda’s approach to environmental performance, the promotion of sustainable development was seen to be in Noranda’s best interest. As Trevor Eyton, Senior Chairman, EdperBrascan, put it in an address in 1997: “I don’t want to put too much of a moral tone to this [sustainable development], . . . Noranda’s performance is really a matter of obligation”(Eyton Reference Eyton1997: 6). Eyton went on to say: “As the world chemical industry has demonstrated convincingly since the disaster at Bhopal, environmental obligation is commensurate with environmental imposition” (ibid.: 7). In order to flourish in global markets, business would have to contribute to the sort of stable political, economic, and social conditions that would allow business to survive.

Noranda executives understood that taking a business-as-usual approach, without concern for sustainability, would damage business interests in the long run. Frantisak likened the consequences of the business-as-usual approach to the reaction of a frog placed in hot water. If the water is hot, the frog will leap out of danger, but if it is placed in a pot of cold water that is gradually heated, the frog is boiled to death. Frantisak predicted that businesses that ignored sustainability issues would face the fate of the frog that discovers too late that it is in hot water (Frantisak Reference Frantisak1998: 14). Instead, Frantisak argued for the need for sustainable growth that factors in environmental and social issues.

Sustainable development was consistent with Noranda’s win–win approach to environmental improvement, as reflected in its investment in technologies to promote energy efficiency and reduce sulfur dioxide emissions through sulfur fixation. With environmental regulations becoming more stringent, Noranda saw the advantage of investing in environmentally smart technology to avoid having to reinvest at far greater cost in the future. Noranda had also responded to pressure from its customers, who were increasingly looking for assurance that Noranda’s metals and forest products were being produced in a sustainable manner (Eyton Reference Eyton1997: 32).

Yet, although philosophically Noranda executives were prepared to adapt to the growing momentum behind sustainable development, Noranda had trouble grappling with sustainable development on the operational side. Noranda was initially not keen on the term, as it was considered to have no substance (Executive 1, February 16, 2006). Since Noranda had a very broad definition of the environment, it felt that the company was already practicing many elements of sustainable development. For example, executives felt that Noranda’s recycling business contributed to sustainable development, by reducing waste disposal, providing energy savings, and extending the use of valuable commodities. Noranda was already anticipating future environmental requirements and building them into its operations. Noranda had been promoting environmentally cleaner and more energy-efficient technologies, which were seen to be good both for the environment, and the bottom line. For example, Noranda had invested in technologies that convert sulfur dioxide at its smelters. So in many respects, sustainable development was seen to be a good fit with Noranda’s existing EHS policies and practices.

While Noranda had a good grasp of the economic and environmental side of sustainable development, learning on addressing the social side proved challenging. This did not appear to be due to a lack of appreciation of the social side; Frantisak had long understood the need to address this aspect of CSR. As Frantisak noted in a 2008 interview with Dr Blair Feltmate (Ontario Power Generation):

Other senior executives also seemed to appreciate the social implications of sustainable development, as the following comments by Eyton suggest:

An early example of Noranda’s attempt to deal with the social side of sustainable development came in the early 1980s, when Noranda organized a series of press conferences across the country. The CEO was present, and people were invited to ask him questions on any issue of concern to them, including acid rain, which was a topical issue at the time. Although press conferences are not a sufficient way of dealing with image issues, it was justified by management on the grounds that the company was seeking to be open and transparent about what it was trying to do (Executive 1, December 9, 2011).

The first sign that Noranda was prepared to seriously embrace the concept was the announcement in its 1995 report of six sustainable development principles for the company. At that time, very few companies had stepped forward to give meaning to sustainable development. These principles were the result of a task force that was struck in 1995. Environmental managers from all the various business units (copper, zinc, etc.) were consulted and invited to comment on drafts of the sustainable development principles (Executive 4, August 28, 2008). Two outside consultants were hired for expert advice, and external stakeholders were also consulted. The principles included a commitment to:

Learning and sustainable development

The experience of mining was an important influence on the evolution of Noranda’s CSR policies and practices, and on the eventual adoption of sustainable development. As one executive put it, Noranda had learned some “difficult lessons,” which it sought to apply to its new investments, many of which were in the developing world (Executive 2, April 22, 2003). It was in the context of its global operations that the social side of sustainable development became important, since Noranda had invested heavily in developing countries such as Chile and Peru. Noranda sought to apply the difficult lessons it had learned to new investments in Chile and Peru, with mixed results.

One example of a reasonably successful application of sustainable development was at the Altonorte smelter. In 1998, Noranda acquired the Altonorte copper smelter in Antofagasta, Chile, and sought permission to expand the facility. At the time, the Chilean government was still developing its environmental policies, which were being modeled after the US EPA. Noranda agreed to conduct an environmental impact study, and sought public input before finalizing it. It was recognized that it was crucial to build and maintain community support (Manager 1, April 3, 2003).

As part of its public consultations, Noranda contracted local universities to provide input. It also held public meetings and talked to neighborhood associations close to the smelter. Although there was some NGO opposition, Noranda was able to establish that the level of public concern was low. The public consultations provided Noranda with a means of gauging the degree of public support before submitting the EIS, increasing the chances that it would be approved. As the Managing Director for Altonorte explained, Noranda took the lessons it had learned from the Yellowstone experience, and sought to apply them in Chile (Manager 1, April 3, 2003).

Noranda took further steps to help maintain public support. It suggested that a Citizens’ Oversight Committee be established to monitor the smelter’s environmental impact. Noranda agreed to give the Committee water samples that could be analyzed by independent labs. With respect to the biggest issue, air quality, the Committee was provided with ongoing air-quality data, and an independent agency was contracted to interpret the results. Noranda provided social assistance to the local community by providing internship training and funding teacher training.

Two other new projects, the Alumysa aluminum smelter in Chile, and the Antamina copper mine in Peru, met with considerably less success in terms of obtaining a social license to operate. These two projects reveal several reasons for problems in implementing Noranda’s sustainable development strategies. One factor identified by executives is that Noranda lacked early mover advantages in Chile. For example, Noranda divested from Chile in the 1970s after Pinochet came to power, under pressure from church groups, which had begun to regularly attend annual board meetings (Executive 2, August 26, 2008). Noranda reinvested in Chile in the early 1990s, after the return to democracy. The decision to divest from Chile was seen as a mistake from a business point of view, because Noranda lost important contacts, and it came back in too late, after other companies had already invested (Executive 2, August 26, 2008). The loss of early mover advantages and key contacts was relevant for the failure of the Alumysa project to get off the ground.

The second reason for the failure of these projects from the social side is due to Noranda’s decentralized organizational structure, which made it challenging for corporate office to exert control over the separate divisions. The third reason is that the managers hired to move these projects forward had a mining mindset/geology background, and were not sufficiently sensitive to and/or did not care about, the social side (Executive 1, December 9, 2011).

The proposed Alumysa aluminum smelter was a major new project to be located in Chacabuco Bay in the Aysen region of southern Chile. In contrast to Altonorte, the outcome with Alumysa was targeting by large NGOs, very bad publicity, and the ultimate abandonment of the project, in a manner reminiscent of the New World mine. In fact, although the Chilean government at the time had not acted to protect the Aysen region, it was similar to Yellowstone in terms of its beauty and attraction as an ecotourism destination, and its ecological significance.

The Alumysa project required the construction of a large dam, which by the mid-1990s had become a bit of a red flag for environmental groups. Although Frantisak was involved with the project from the early 1990s when it was first proposed, the project had been put on the back burner for most of the 1990s due to financial considerations. Although Chilean environmental laws did not come into force until 1997, Noranda nevertheless went ahead and hired Canadian consultants to conduct an extensive EIA.

According to the General Manager of the Alumysa project, the majority of people living in the near-by communities of Coihaique and Aisen supported the project, as they stood to benefit from the electricity generation (Manager 2, April 1, 2003). Noranda proposed to sell electricity from the project for rates lower than were currently available. Noranda was prepared to support training programs and curriculum development in schools, recreation, and the construction of new schools and housing.

However, there was some opposition to the project from the local salmon industry. Salmon farming is an important source of income in the region (and is an important Chilean export), and farmers would have had to be relocated from Chacabuco Bay to make way for the smelter and the attendant traffic. In addition to the Salmon and Trout Producers Association, there were a number of other small associations opposed to the project (Manager 2, April 1, 2003). Roughly twenty environmental, community, and law groups formed the Aysen Life Reserve Alliance to protest the project. They were joined by the tourism chambers of Coihaique and Puyuhuapi (Halifax Initiative 2003: 6).

Noranda did try to engage with the Salmon Association to work out a way to compensate those farmers who would be affected. However, momentum was lost when the whole project was put on the back burner for a number of years. There was inadequate effort made to sustain relations with the salmon farmers. Failure to maintain relations with the local community during this time led to the souring of relations (Executive 2, December 2, 2011).

When Noranda was ready to reactivate the project in the early 2000s, local NGOs built links with international NGOs. Chilean activists also sought to build “solidarity” with Canadian unions representing Noranda workers (Mining Watch Canada 2003: 1). In 2003–4, Noranda became the target of a sustained attack from Greenpeace over Alumysa, which formed an alliance with the salmon farmers (although fish farming is itself a polluting industry). Citing evidence from the World Commission on Dams, Greenpeace argued that the project would result in the flooding of rainforests and threaten the survival of rare and endemic species (Greenpeace Reference Greenpeace2003: 7–10). In December, 2003, Greenpeace staged a demonstration outside Noranda’s headquarters in Toronto.

On August 1, 2003, the then Chilean President, Ricardo Lagos Escobar, publicly stated that the project should be relocated to another site in Chile, while also noting the benefits to the region of reducing the high energy costs. This led Noranda to announce on August 19, 2003 that the project would be temporarily suspended.

The decentralized structure of Noranda, and the lack of sensitivity to community concerns on the part of senior management responsible for the project, were major factors in explaining why NGOs gained the upper hand. The Alumysa project was left to the senior management of Noranda Aluminum, and due to a shortage of senior management, Noranda Aluminum hired someone from Alcoa (Executive 1, December 9, 2011). The management failed to understand the need for full and ongoing community engagement. As one executive put it, Noranda “blew it,” in that it never really managed to get the community onside, and not enough was spent on community relations (Executive 2, April 22, 2003; August 26, 2008).

At the Antamina copper project, the problem was less to do with senior management, as the CEO set the tone on environment and safety (Executive 2, August 26, 2008). However, he left the management of the project to Peruvians, who did not share the same culture of commitment to community engagement (Executive 1, December 9, 2011). The Peruvian management had no real attachment to the community (Executive 2, August 26, 2008). The company had built what was in effect a gated community near the mine, for managerial staff and their families, complete with an international school for those who could afford it. Yet, the staff did not want to live there, preferring to live in Lima. This complicated the ability of the company to keep lines of communication open with people in surrounding communities, and it did not take long for community resentment to surface over issues of compensation for displaced families and environmental concerns (Greenpeace Reference Greenpeace2003: 25).

This situation, and allegations of environmental degradation, led to growing distrust on the part of the local community. Problems in the port area where the metal concentrate is piped proved to be especially serious. Community relations got off to a rocky (literally) start, when during the construction of the port, nearby homes were damaged. In order to accommodate ships arriving to take on the concentrate, a huge jetty was constructed, which interfered with fishermen in the nearby fishing village, who had to boat around it. There was inadequate consultation with the local communities, setting the stage for poor relations and mistrust. In 2005, the Federation of Peruvian Fishermen and the organization Life and Environmental Impacts, lodged a complaint with the Compliance Advisor/Ombudsman (CAO), an independent recourse mechanism for projects funded by the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) (CAO 2006).

In the final report prepared by the CAO, the legacy of negative interactions between large-scale mining projects (not just Antamina), and how this has poisoned mine-community relations, was noted (CAO 2006: 4). The level of mistrust was found to be affecting communications between the mine and communities, as well as the credibility of Antamina’s environmental monitoring and reporting (CAO 2006: 9–12).

While poor community relations cannot be entirely attributed to Noranda (Noranda was not responsible for managing Antamina), the overall pattern of Noranda’s experiences in Chile and Peru point to ongoing difficulties in seeing the social side of sustainable development implemented at the operational level. When Falconbridge and Noranda merged their business functions in 2002, best practices from their combined operations were identified in the subsequent development of sustainable development policies (Noranda on the environment side, and Falconbridge on the social side). The acquisition by Xstrata of Falconbridge in 2006 meant that there was insufficient time for these efforts to be realized at the operational level.

Conclusion

This chapter has demonstrated that strong and supportive leadership is an essential part of the explanation for Noranda’s early mover status in CSR adoption. Whereas many mining companies chose a defensive and reactive approach to environmental challenges, senior management recognized early on the need to maintain social acceptance and the potential opportunities in strengthening environmental performance. Early major developments, such as the Mississauga train derailment, the Bhopal chemical disaster, and the Exxon Valdez chemical spill sensitized management to potential vulnerabilities for the company. These developments prompted Noranda to be an early mover in establishing CSR policies and management systems in response to growing public awareness and concerns about environmental issues.

Senior management might have avoided its environmental responsibilities, or denied the implications of serious environmental disasters. Rather, with support from the Board, senior management sought to instill a values-based approach to EHS policies, and later to sustainable development. Through leadership, organizational change, extensive external engagement, a willingness to learn, and employee incentives, Noranda exhibited a culture of commitment to CSR. Senior management adopted a proactive stance to environmental improvement, moving beyond a compliance-based approach to one focused on long-term value. Management also sought to position the company in such a way that the considerable investments in green technology and processes would result in a “win–win” outcome for Noranda, in the form of greater efficiency, decreased energy costs, and a stronger competitive position.

Early experiences of mining in northern Canada were also identified by senior management to have been critical in influencing Noranda’s approach to the environment and community engagement. Lessons learned from dealing with the Cree in northern Quebec in the early years, together with the New World mine, and experiences with mining in countries such as Peru and Chile in later years, shaped management’s approach to CSR. Institutional context in Canada, the US, and developing countries clearly influenced CSR adoption. The examples cited in this chapter illustrate the growing barriers to access to land, finance, and markets which Noranda and other mining companies were facing. As an early mover, management adopted a leadership role in terms of its own CSR practices, as well as in terms of promoting global industry collaboration (see also Chapter 7).

Noranda was clearly motivated by potential early mover advantages, as evidenced in its investment in technological innovation, its decision to grow its recycling business, its adoption of standards that other companies would then feel pressured to adopt, and its efforts to anticipate future government regulation by setting the standard for best practices. Noranda sought to engage with its external critics as well as government, and institutionalized means for doing so through the New Directions Group and the Friday Group. By instituting its own CSR practices on a voluntary basis, Noranda demonstrated to government that command-and-control-style regulation was not necessarily the best path to improved environmental performance.

Noranda was influenced by global normative developments, but also was active in shaping global public policy affecting mining and minerals. Relevant developments included the strengthening of global environmental regulation through such treaties as the Basel Convention on the Transboundary Transport of Hazardous Wastes, the rise of management systems through global organizations such as the ISO, and participation in milestone events such as the 1992 Rio Conference, which entrenched sustainable development as the normative framework for environmental protection.

Participation in national and international industry associations was found to be an important influence on Noranda, but management also saw participation as an opportunity to show leadership in improving industry practices. Membership in the CCPA because of the chemical side of Noranda’s business was an important early influence because it gave Noranda a taste of public outreach and management systems for EHS, especially in the aftermath of the Bhopal tragedy. Membership in many international metals associations, such as the International Copper Association (ICA) and the International Zinc Association (IZA), promoted learning as they were all confronting increasing regulation and scrutiny. Later, Noranda’s membership in the WBCSD from its founding influenced Noranda’s receptiveness to the appropriateness of framing its CSR in terms of sustainable development.

In responding to the growing significance of the norm of sustainable development, Noranda sought to reconcile the concept with its existing EHS practices. Although professional background (the mining mindset) was not found to be of huge significance, management did find the concept to be ill-defined. To make sustainable development meaningful to the mine managers who would have to implement it at the operational level, Noranda demonstrated leadership in developing measurable sustainable development indicators. The negative experience of the New World mine served to strengthen the determination of management to overcome doubts about what sustainable development means in the context of mining.

The actual implementation of the social side of sustainable development proved difficult, as the examples from Peru and Chile illustrate, a reflection of the mining mindset in one instance, but also of the highly decentralized organizational structure of Noranda. Although senior management was able to maintain strong support at the highest levels of the organization in the corporate office for CSR, it was less effective in overcoming the strong independent culture of the many separate business units (Executive 2, December 2, 2011). Reaching down to the operational level was less of a problem with long-established mines and smelters, but proved more of a challenge with new projects (Executive 1, December 9, 2011). Leadership from the top, while very important, nevertheless brushed up against structural determinants in the implementation of CSR at the operational level.