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A Case Study of Yara Suomi Oy, Siilinjärvi Site

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A Case Study of Yara Suomi Oy, Siilinjärvi Site SOCIAL LICENSE TO OPERATE REINFORCING CONTINUITY OF BUSINESS: WILL STONES TURN INTO BREAD FOR YEARS TO COME? – A CASE STUDY OF YARA SUOMI OY, SIILINJÄRVI SITE Jyväskylä University School of Business and Economics Master’s thesis 2019 Author: Fenia Niemitz Corporate Environmental Management Supervisor: Tiina Onkila, Senior Researcher ABSTRACT Author Fenia Niemitz Title Social license to operate reinforcing continuity of business: Will stones turn into bread for years to come? – A case study of Yara Suomi Oy, Siilinjärvi site Subject Type of work Corporate Environmental Management Master’s Thesis Date Number of pages 31.5.2019 83 pp + appendices 19 pp Abstract Obtaining and maintaining a social license to operate (SLO) has become essential for re- source-extractive industries as key stakeholders are increasingly expecting the industry to contribute positively to the surrounding society and environment, communicate openly and engage the local communities in their decision-making (Moffat & Zhang, 2014). Not obtaining acceptance from relevant stakeholders is related with financial (Franks et al., 2014) and reputational backlashes (Prno & Slocombe, 2014) setting the company under unnecessary risks. This quantitative case study is the first attempt to comprehensively portray Yara’s image as perceived by the residents of Siilinjärvi, where the site of Yara Suomi Oy produces fertilizers for agriculture, feed and forest industry and soil improvements. Operating in the immediate vicinity of the municipality of Siilinjärvi, maintaining acceptance of local community is essential while exploring the prospects for future. Hence, this research aims to evaluate the level of the current SLO and examine the potential differentiation in attitudes between socio-demographic factors along with the residents’ relation to Yara. To address these tasks, the perceptions of 146 members of the local community were empirically examined. A simple random sampling was applied to generate a sample with respect to the socio-demographic structure of the municipality. The results indicate that Yara is broadly accepted by the local community. Furthermore the data suggest that socio-demographic attributes and the current relationship with Yara poorly predict the attitudes towards Yara Siilinjärvi. The outcomes of the study clearly demonstrate the development areas to be tackled while striving to build a trust- worthy connection with the local community to further explore the mutual path towards a sustainable future. This research then also calls for a follow-up study to explore the evolution of the site's SLO. Key words Social license to operate, Sustainability, Community acceptance, Resource-extractive in- dustry Location Jyväskylä University Library TIIVISTELMÄ Tekijä Fenia Niemitz Työn nimi Sosiaalinen toimilupa vahvistamassa liiketoiminnan jatkuvuutta: Muuttuvatko kivet lei- väksi myös tulevina vuosina? –Yara Suomi Oy, Siilinjärven toimipisteen tapaustutkimus Oppiaine Työn laji Corporate Environmental Management Pro Gradu -tutkielma Päivämäärä Sivumäärä 31.5.2019 83 s + liitteet 19 s Tiivistelmä Sosiaalisen toimiluvan saavuttaminen ja ylläpitäminen on tullut välttämättömäksi kai- vannaisteollisuudelle, sillä keskeiset sidosryhmät odottavat teollisuudelta yhä enemmän myötävaikutusta ympäröivään yhteiskuntaan ja ympäristöön, avointa kommunikaatiota sekä paikallisten päätöksentekoon osallistuminen mahdollistamista (Moffat & Zhang, 2014). Hyväksynnän puuttuminen on yhteydessä taloudellisiin (Franks et al., 2014) ja imagollisiin (Prno & Slocombe, 2014) haasteisiin asettaen yritykselle tarpeettomia riske- jä. Tämä kvantitatiivinen tapaustutkimus on ensimmäinen yritys kuvata kokonaisvaltaises- ti Yaran imagoa Siilinjärven asukkaiden näkökulmasta. Yara Suomi Oy:n tuotantolaitos tuottaa lannoitteita maataloudelle, rehu- ja metsäteollisuudelle sekä maaperän paranta- miseen. Siilinjärven kunnan välittömässä läheisyydessä toimivalle toimipaikalle paikal- lisyhteisön hyväksyntä on tärkeää samalla kun tarkastellaan toiminnan tulevaisuuden- näkymiä. Näin ollen tämän tutkimuksen tavoitteena on arvioida nykyisen sosiaalisen toimiluvan tasoa sekä tutkia sosio-demografisten tekijöiden sekä asukkaiden ja Yaran suhteiden mahdollista vaikutusta asenteisiin. Tutkimuksessa tarkasteltiin yhteensä 146 paikallisyhteisön jäsenen käsitystä Yarasta. Otos muodostettiin yksinkertaisella satun- naisotannalla huomioiden kunnan sosio-demografinen rakenne. Tulokset osoittavat, että paikallinen yhteisö on laajalti hyväksynyt Yaran. Lisäksi tulok- set viittaavat siihen, että sosio-demografiset ominaisuudet ja asukkaiden suhde Yaraan ennustavat huonosti paikallisyhteisön asenteita. Tutkimus osoittaa myös selvästi kehi- tysalueet, joihin on puututtava, samalla kun pyritään rakentamaan luotettava yhteys paikalliseen yhteisöön ja pyritään edelleen löytämään yhteinen polku kohti kestävää tu- levaisuutta. Mahdollinen jatkotutkimus tukisi toimipaikan sosiaalisen toimiluvan kehit- tymisen seuraamista. Asiasanat Sosiaalinen toimilupa, Kestävä kehitys, Yhteisön hyväksyntä, Kaivannaisteollisuus Säilytyspaikka Jyväskylän Yliopiston Kirjasto 3 CONTENTS ABSTRACT ................................................................................................................................ 3 LIST OF TABLES AND FIGURES ................................................................................................. 4 1 INTRODUCTION ............................................................................................................................... 5 1.1 Background ........................................................................................................................... 5 1.2 Research task ...................................................................................................................... 10 2 SETTING OF THE CASE STUDY ................................................................................................... 12 2.1 Background and current position .................................................................................... 12 2.2 The relationship of Yara Siilinjärvi and the local community ..................................... 16 3 THEORETICAL FRAMEWORK ..................................................................................................... 19 3.1 The role of business in society .......................................................................................... 19 3.1.1 Focus from shareholders to more widely on stakeholders ...................................... 19 3.1.2 The emergence of corporate social responsibility ...................................................... 21 3.2 The concept of social license to operate .......................................................................... 22 3.2.1 Whose voice matter? ...................................................................................................... 25 3.2.2 Components of a social license to operate .................................................................. 26 3.2.2.1 Acceptance on macro-scale as a prerequisite ............................................................. 26 3.2.2.2 Social contribution .......................................................................................................... 27 3.2.2.3 Communication and interaction .................................................................................. 28 3.2.2.4 Involvement in decision-making ................................................................................. 28 3.2.3 Mapping out the strength of a social license to operate ........................................... 30 3.3 Mining and its social acceptability in Finland ............................................................... 32 3.3.1 Background and current measures of mining in Finland ......................................... 32 3.3.2 Confidence in Finnish governance .............................................................................. 34 3.3.3 Perceived social contribution and involvement in decision-making ...................... 35 3.3.4 Social acceptance of mining in Finland ....................................................................... 36 4 DATA AND RESEARCH METHODOLOGY ............................................................................... 38 4.1 Research strategy and design ........................................................................................... 38 4.2 Data collection .................................................................................................................... 39 4.3 Data analysis ....................................................................................................................... 43 5 RESEARCH FINDINGS ................................................................................................................... 48 5.1 Background information ................................................................................................... 48 5.2 The strength of Yara’s social license to operate ............................................................. 49 5.2.1 Social contribution .......................................................................................................... 52 5.2.2 Communication and interaction .................................................................................. 53 5.2.3 Involvement in decision-making ................................................................................. 54 5.2.4 Trust .............................................................................................................................
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