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Copyright © 2002 IIED and WBCSD. All rights reservedMining, Minerals andSustainable Development isa project of the InternationalInstitute for Environmentand Development (IIED).The project was madepossible by the support of  the World
 
Business Councilfor Sustainable Development(WBCSD). IIED is a company limited by  guarantee and incorporatedin
 
England. Reg. No.2188452. VAT Reg. No. GB440 4948 50.
 
RegisteredCharity No. 800066
 
Mining, Minerals andSustainable Development
No. 43March 2002
Sustainability Indicators andSustainability PerformanceManagement
Professor A. WarhurstMining and Energy Research Network, Warwick Business School,University of Warwick, UK 
This report was commissioned by the MMSD project of IIED. It remains the soleresponsibility of the author(s) and does not necessarily reflect the views of the MMSD project, Assurance Group or Sponsors Group, or those of IIED or WBCSD.
 
Sustainability Indicators and Sustainability Performance Management
2
 Professor Alyson WarhurstChair of Strategy & International DevelopmentDirector, Mining and Energy Research Network Director, Corporate Citizenship UnitCorporate Citizenship Unit Warwick Business SchoolUniversity of Warwick Coventry CV4 7AL UNITED KINGDOMTel: +44 (0)24 7657 3130Fax: +44 (0)24 Email:alyson.warhurst@warwick.ac.uk   Website: www.wbs.warwick.ac.uk/ccu/  
The author wishes to acknowledge the entire MERN team and associates, past and present, in thedevelopment of some of the research ideas and findings presented in this paper. They include: Dr Paul Mitchell, who has made substantive inputs to Chapter 2, Dr Magnus Macfarlane, Nick Dale, Camilla Maclean, Kevin Franklin, Deborah Webb, Cristina Echavarria, Ligia Noronha, Omaira Mindiola and Dr Gavin Bridge. In addition it also builds on work undertaken by the author in collaboration with Richard Jones of Premier Oil & First & 42
nd
and also EQ Management to develop social performanceindicators and management tools for Premier Oil. Much of this paper has been written through a grant from the MMSD programme. The backgroundresearch has been undertaken principally with funding from the Environment Research Programme of the Department for International Development (UK) and an industry club of sponsors. The author alsorecognises the importance of a research project entitled: ‘Environmental and Social Performance Indicators and Sustainability Markers in Minerals Development: Reporting Progress Towards Improved Ecosystem Health & Human Wellbeing’ sponsored by the International Development Research Centre, Canada;TERI, India; the University of Antioquia, Colombia and the University of Warwick. Alyson Warhurst is Professor of Strategy and International Development at Warwick Business School.She also Director the Corporate Citizenship Unit at Warwick Business School and is the founding Director of the international Mining and Energy Research Network (MERN). She has been researching and teaching on the subject of the extractive sectors and sustainable development for over two decades.
 
Promoting Corporate Citizenship andSustainable Develoment
 
Sustainability Indicators and Sustainability Performance Management
3
Executive Summary 
This paper is about the development and use of Sustainability Performance Indicators (alsoreferred to as Sustainability Indicators) to communicate to the internal and externalstakeholders of mining companies the extent to which their mining activities arecontributing to, or detracting from, sustainable development goals. In particular, ithighlights the potential of such indicators to promote sustainable sound investmentdecisions. The paper also places Sustainability Performance Indicators in the wider contextof Sustainability Performance Management Systems, and briefly reviews the other toolsavailable for the development of these systems. It emphasises that indicators can assist in theactual assessment, management and monitoring of impacts of mining on sustainabledevelopment goals, as well as the reporting of performance, if they are developed within anoverall Sustainability Performance Management System. For this reason, the paper arguesthat tailor made approaches to developing indicators, that address specific stakeholderconcerns and that inform mainstream corporate strategy and support companies’ futureapproaches to managing sustainable development issues, are more likely to contribute tosound investment decision processes than approaches which prioritise reporting againstgeneric ‘off the shelf’ indicators. Notwithstanding, it is suggested that the latter can informthe former; and, that there are merits to developing combined ‘top-down’ - ‘expert derived’and ‘bottom up’ - ‘stakeholder scoped’ approaches to sustainability performancemanagement.It is argued that those indicator systems that have been developed to date have been mostly about the impact of operations, principally environmental impacts and to a lesser extentabout social impacts and rarely economic impacts. Some claim to be Sustainability Indicators but are often little more than combined sets of environmental, economic andsocial performance indicators, not indicators that are capable of truly describing the extent to which a mining project is contributing or detracting from sustainable development goalsover time from an inter-generational equity perspective. Furthermore, few indicatorsystems have been developed that are capable of describing performance from differentstakeholder perspectives, especially the perspectives of local communities that are affected by a project and less still from the perspective of indigenous communities. There are also few indicators systems that are capable of demonstrating changes in performance with respect totwo other key areas of sustainable development. First, product use and the extent to which aproduct is contributing to quality of life, health and well being over time, and second,business practice and the extent to which a project is being managed according to practicesthat will contribute to sustainable development goals. It is argued, that business practiceindicators would be one of the most effective systems for financial investors to use to assistin the evaluation of whether an operation is likely to represent a sound investment from theperspective of sustainability. A business practice indicator system could be quite simple andeasy to use. It might involve simply indicators of a proficient Sustainability PerformanceManagement System and indicators pertaining to its verification.Over the past 5 years, MERN has undertaken research on the development of Sustainability Performance Indicators and management systems for the mining, metals and energy sectors, working in partnership with major mining and oil companies, and a wide range of NGOs,government departments and leading academic institutions. The paper draws on this
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