Business 601: Business Environment, Ethics, & Strategy

Assignment: Ethics, Stakeholder, & CSR Project Memorandum

Length: 1750 words/7 pages (12 pt font; double line spacing, standard margins); MS
Word document; Cover page, List of References page required but not
counted as part of the word count. Citation required including in-text
citation (APA).

Value: 20% of Final Grade, Penalty for Late Memos apply, Penalty for exceeding the
word limit applies (5/100 per additional 500 words)

Due Dates: Sunday, February 20, 2022, at 2300 Hours Pacific Time

Jack Smith is the majority owner and CEO of Aventura Mining Inc., a third-generation family
business that made its fortune in aggregate mining. Unfortunately, Jack can see the available
supplies of aggregate dwindling and wishes to diversify Aventura Mining Inc. operations into a
full-scale mining company. He had some exploration done and a prospectus completed on the
potential of mining various minerals from Mt. Richards and Mt. Sicker, which are near the City
of Duncan on Vancouver Island. There were considerable reserves of copper in the mountains
and some of the minerals that could be extracted were precious metals in high demand
currently. It also helped that world prices for these minerals was at an all-time high. And
fortunately, the family already owned the mineral rights to those areas. He proposed to
conduct open pit mining as it is the most cost-effective method of mineral extraction.

Jack called the family together for a dinner at his estate on Salt Spring Island where Jack
announced his ambitious plans. The younger family members (all millennials) cautioned him
about mining without consideration for the environment and for the potential impacts on the
local communities, including the Indigenous communities that are in proximity and within
whose traditional territory the first mining operation would be located according to the
proposal. Jaqueline, his daughter, alerted him to a slide show highlighting two stakeholder
approaches that she saw at the last mining convention that she attended. Jack’s wife, Mrs.
Jolene Smith also cautioned Jack on the potential for financial loss to the company and to the
family legacy if he failed to mitigate risk. And his son Joe, a lawyer, advised him that any
number of stakeholders could influence his plans. Furthermore, Joe indicated that there would
be several issues that should be contemplated and that the Green Coalition Group would be a
problem for the project. Jack’s other son, Jaxon said that the whole stakeholder thing was
overrated and that all the stakeholders would see the benefits of the mine, including jobs and
training and economic growth for all stakeholders, and most importantly, profits for the
shareholders. It is our right he said - we own the mineral rights and business would benefit
everyone.

Jack had become successful in part by listening to his shareholders, and the Smith family
members were his nearest and dearest shareholders. But he was also a businessman who was
used to getting things done on a handshake and by consulting his network of business
associates whom he often met locally at the Chamber of Commerce Social Club. He knew that
the local Member of the Legislative Assembly (MLA) of British Columbia was also the Minister of
Mines and Resources, and the Minister could likely help Jack to manage the Indigenous
stakeholders and to obtain the necessary permits. Jack also heard that the Chief and Council of
the closest Indigenous community were looking for funds to build a new school. Perhaps a
donation would be helpful.

At work on Monday Jack consulted with Jacqueline about these thoughts and the slide show
she mentioned at the dinner. Jacqueline was taken aback by Mr. Smiths “old school” intentions
and cautiously advised a more professional and expert approach. And after discussing the
contents of the slide show she convinced Jack that the most critical stakeholders to deal with
were the local Hul’qumi’num people, who comprised 5 individual First Nations that
collaborated collectively under one Nation for the purpose of negotiating over large-scale
project proposals that had the potential of adversely impacting their Aboriginal rights and titles
in their traditional territories.

Jack succumbed and wanted to do the right thing socially and to mitigate financial risk of the
enterprise. But he had never had to worry about the social impact of his aggregate operations.
He instructed senior management of Aventura Mining Inc. to retain you, the consultant, to draft
a 7-page memorandum analysing the two approaches taken by the mining companies in the
slide presentation and the issues at stake in his proposal. Jack heard that you were a recent
graduate specializing in strategic planning with a focus on CSR, and an up-and-coming superstar
in the field. Jack was conscious of price and wanted to hire you before you became too famous
and unaffordable. He wanted to know who the stakeholders would be and whether he should
deal with all of them or have some sort of priority management system. He wanted to know
whether he was correct in focussing on the Indigenous stakeholders. Specifically, Jack wanted
to know what approach he should take in engaging with the local Indigenous communities and
why. And whether the approach Jacqueline witnessed in the slide show at the conference
could be used in all stakeholder dealings. And finally, he wanted to know how to be prepared if
issues did arise. Given his family’s admonitions he wondered if he should set up a separate
department to deal with these new ethical, social, and legal obligations, and if so how - i.e.,
whether to have just an ethics department or a more fulsome CSR department. He thought
maybe he would put Jaxon, his son in charge of the new department. Or his daughter
Jacqueline. Or perhaps someone else - you? And lastly, should he even proceed with the
project, and if so, what would be the best approach to solve all the stakeholders’ concerns?

Using ONLY the slide show and your textbooks and class notes as resources you feel that you
can answer Aventura’s questions within budget. What will be your advice to Mr. Smith?
You have made yourself a partial list of guiding questions:

1. Which of the two approaches would work best for Aventura Mining Inc. in dealing with
its stakeholders? Why?
2. What stakeholder, ethical, and CSR issues can you foresee in this scenario?
3. Should Aventura Mining Inc establish an ethics/CSR department with a mandate to deal
with ethical and shareholder and CSR issues? If so, how should it look? What
approaches would you recommend? And should Jack hire Jaxon, his son, or his
daughter Jacqueline to lead such a department? Or someone else - you? This would go
a long way toward advancing your budding career.
4. Based upon the above analysis would you recommend Aventura Mining Inc. proceed
with the proposal? You envision plenty of challenges but is there a way out? Your
career may depend on your answer.

The slide presentation referred to is open in Moodle.

An assessment rubric for this project follows and will be deposited in the Moodle course
management system.