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Social LicenseHow people can stop projects

Mary-Lou LauriaJune 2016

Large resource developments have created a paradox – people want investment in their communities, however, there is uncertainty around long-term environmental and social effects.

Uncertainty can stop a project in its tracks

The Environmental Assessment (EA) process was developed to identify and predict effects on

environment and society to reduce uncertainty.

Effects can result from the core activities of a project, activities outside the footprint, and

interaction with other projects (cumulative effects).

So, what’s the fuss?

Non-technical(e.g. political or stakeholder related)

Commercial(e.g. cost or contract related)

Technical

A study of the Top 190 oil and gas projects around the world revealed there was an average delay of 12 months for non-producing fields.

Source: From Shell presentation “Managing Non-Technical Risk at the Project Level” at Social and Environmental Risk Management Conference, 2011; adapted from Goldman Sachs Investment Research “The Top 190 Projects to Change the World”, 2008.

Reporting frequency by Type of Delay (%)

Type

of D

elay

Rep

orte

d

73% of sample Top 190

63% of sample Top 190

21% of sample Top 190

Community tension and conflict can be costly…

$10,000 per dayduring initial exploration

$50,000 per dayduring advanced exploration

$20 million per weekduring operations

Source: www.csrm.uq.edu.au/conflict-costs

The cost of conflict in the extractive sector can result in up to…

As a result, project developers need to manage expectations and proceed

with open engagement

Root causes of community tension can be because of:

Environmental and community health and safetyCompetition for resources and prevention of traditional

lifewaysConsent and land accessDistribution of benefits

LabourConsultation and communication

The community response to a development can be:

Lobby groups and coordinated grass roots movementsNetworking and developing alliances

Organizing media campaignsGaining high-profile support

Scientific knowledge and methodologies to better assess effects

Environmental Impact Assessment (EIA)

It’s not just a tick in the box

An EIA includes:Project descriptionValued components – what is important to all stakeholdersGood scienceEffects assessmentMitigation and managementConsultation

All the components of an EIA have the opportunity for interaction with

communities

There should be meaningful engagement when:

Setting terms of referenceConsidering project alternatives

Identifying early and long-term job opportunities

An EIA alone is not enough to obtain social license – but it can form a strong

foundation of trust

The path to approval and social license isn’t systematic or straight forward

Approval

Stakeholders

First Nations

Cumulative

Effects

Permits

EIA

Chan

ging

Regu

latio

n

It takes time…

It has to be embedded into the project lifecycle at the early stages

What can we do to obtain community

acceptance?

Realize that obtaining social license is about realizing value for the future

Shared ValueShared Value is defined as policies and activities that measurably improve socio-economic outcomes and improve related core business performance (Kramer and Porter, Harvard Business Review 2011).

OLD VIEW EMERGING VIEW

Business makes profits

Supports employment

Provides wages / income

Taxes / royalties

Enhance business competitiveness

Simultaneously advance socio-economic conditions

Local cluster development - Establishing an enabling environment for your project.

Sharing technologyAdvice, support Fair prices / paymentLocal contracting arrangements

Logistical efficiencyFlexibilityInnovation Reliable workforceCommunity relationshipsImproved land access

Shared Value

Company Grows

Jobs createdNew companies

seededDemand for ancillary

services rise

Inputs Outputs

Creating economic value in a way that ALSO creates value for society.

Communities are more likely to support projects if there is a solid base of trust.

Shared Value

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