Integrating Social Factors into Asset Valuations

2019

Carolyn Burns, NetPositive; Jane Church, NetPositive

Companies, lenders and communities use a common project valuations process to value extractive assets. Using this process, they consider the financial impact of social factors in different ways. However, there is no commonly understood best practice to systematically integrate both the social risks and opportunities inherent to a mining asset. Systematically integrating social factors into project valuations will have two outcomes. Programs to manage social factors will be properly resourced and implemented. Investment decisions will be based on a rigorous understanding of how social factors can influence the project valuation. This in turn will increase the likelihood that local communities will see sustained positive outcomes from extractive development. This session will explore the collaborative research project Valuing Social Factors. In phase 1, NetPositive interviewed 30 stakeholders to understand the current practice for valuing social factors. The major findings from Phase 1 were:  Social factors related to mining matter from many perspectives, both the financial impact on a project (time and cost) and the social impact on a community (managing impacts and sharing benefits) There is no common best practice for valuing social factors related to mining Some organizations are including the costs associated with managing social impacts/risks into valuations in order to de-risk the project No one has determine a quantifiable way to understand the impact on time/project timeline There is no common best practice for communities to quantify the benefits and risks During phase 2 NetPositive will convene focus groups to validate the findings from phase 1 and brain storm appropriate methods for valuing social factors. Phase 2 will result in a public report and webinar outlining the findings from the project.
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