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Given their size, scale, and footprint, extractives companies have tremendous opportunity to generate societal benefits. Yet the huge economic output of the extractives sector, valued at $3.5 trillion in 2012, has not always translated into improved societal outcomes for host countries and communities. At the same time, companies are losing billions of dollars a year to community strife. This report points towards a better future through shared value.
Top Takeaways
- Companies in the sectors already are pursuing shared value opportunities, and in doing so creating millions of dollars of value. For example, BHP Billiton has saved $121M by investing in local suppliers in Chile, and Pacific Rubiales is saving $400M by repurposing water used in its processes for agricultural use.
- To identify and execute shared value strategies consistently, however, a deeper intentionality within each company—and a roadmap to help prioritize investments—is needed.
- Four challenges to broader shared value adoption exist: inadequate organizational structures and behaviors, incomplete measurement of costs and benefits, low motivation for collaboration, and lack of alignment with government. Yet as technical expertise becomes less and less of a differentiator, companies must overcome those challenges to create shared value and seize the next competitive advantage.
Aligning the business interests of extractives companies with community needs and priorities is the only real solution for companies and communities alike.
