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

23-02-17

This uncertainty - if not managed properly - can stop a project in its tracks

The Environmental Assessment process has been developed for projects above a certain size to reduce uncertainty and identify and predict both positive and negative effects on the environment and society. These effects can result from the core activities of a project, activities outside the footprint, and interaction with other projects (cumulative effects). 

What’s the fuss?

A study of the Top 190 oil and gas projects around the world revealed that there was an average delay of 12 months for non-producing fields - 73% of these project delays were attributed to non-technical issues, including political or stakeholder related issues.1

What’s more, community tension and conflict can be costly. It can result in up to 20 million per week by the time a project gets to operations2

 

Community Engagement

Moving forward with large developments is no longer just about obtaining an Environmental Assessment Certificate or a tick in the permits and approvals box. Project developers now need to manage expectations at the early stages of project development and proceed with open engagement. 

In addition to the legal requirements for consultation with Aboriginal and community stakeholder groups within the Environmental Assessment process, there are approaches that can be taken in parallel, allowing proponents to engage meaningfully with the communities they will become part of over the next 25 to 50 years. 

In particular, there should be meaningful engagement with communities when:

  • Setting terms of reference
  • Considering project alternatives
  • Identifying early and long-term job opportunities

Showing that a community is heard, and that they have stake in the project, allows them opportunities to input into the development. This may result in fundamental changes to the site or layout to avoid existing or traditional activities, and sensitive or valued receptors, however, hearing first-hand the views of communities early could significantly increase the likelihood of success and reduce risk for all. 

An Environmental Impact Assessment alone is not enough to obtain social license – but it can form a strong foundation of trust.

Creating Shared Value

Communities are more likely to support projects if there is a solid base of trust. To build this, project developers must look at how they can create economic value in a way that also creates value for the community. 

Shared value can be defined as policies and activities that measurably improve socio-economic outcomes and improve related core business performance3. In this context, it’s about realising that obtaining a social license is about creating value for the future.




References

  1. 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.
  2. www.csrm.uq.edu.au/conflict-costs
  3. Kramer and Porter, Harvard Business Review 2011

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For more information, contact: Mary Lou Lauria, marylou.lauria@advisian.com