Creating Business Value through Community Engagement & How to Do it!
Creating Business Value Through Community Engagement and How to Do It
Dr Chris Anderson & Andrew Buchman Senior Consultant, Acorn International LLC
Solar Farms. Meatpacking Facilities. Offshore Oil Projects. Copper Mines. Gas Pipelines. Offshore Wind Project… What do all these have in common?
All of the above enterprises have people or groups that they consider to be their ‘local stakeholders’—those that have an interest in, or an ability to influence how their business activities will proceed. How local? How interested? Influential according to whom? Answers obviously depend on the kind of business activity.
‘Local’ might be a commercial fisherman (or fleet) that will cross paths with an offshore supply vessel. ‘Interested’ – a rancher who believes renewable energy is only worth supporting if it occupies land not fit for grazing or agriculture. ‘Influential’ often extends well beyond the elected official; we pay attention to those that we know can help us or who might get in our way.
Some years ago, it was common for executives and managers of large companies to assert that there was no such thing as ‘stakeholders’. Shareholders were the only ones seen as important and a dereliction of duty to focus otherwise. Despite the now demonstrable problems with this viewpoint it still persists to some extent, reinforced by bounded nature (physical, legal, social, economic) of most large commercial or industrial entities. Many organizations deploy a binary distinction of stakeholders, internal versus external (‘Visitors need to stay outside the fence.’). This view would have what happens internally staying internal, and, per regulation, outside impacts minimized, mitigated, or compensated.
Clinging to this narrow view of stakeholder engagement poses, in our estimation, a threat to businesses. People now believe they have, or should have, a voice about what happens to them, what affects them, and, most particularly, what kinds of activities are acceptable in their backyards and social spheres... their neighborhoods. Hence the emergence of ‘stakeholders’ and the need for companies to know, understand, communicate, and engage with them. This requires authentic action that extends beyond philanthropy. Engaging in continuous dialogue with multiple interested parties (internal and external) is the critical key to success and can be the difference between thriving and surviving.
Too many companies still pursue what might be called an outcome-focused approach to engagement, usually looking for a “Yes”:
“Yes” – we will host your company here; we don’t mind if you build it near us.
“Yes” – we will tolerate your noise, dust, traffic, guest workforce, use of water, etc.
“Yes” –we will accept the changes that your company brings.
“Yes” is the outcome, explicit or implied, that often drives company interest in engagement.
Yet, even though we might measure our performance by outcomes, to unlock the full value in community stakeholder engagement companies must also focus on process rather than just “getting to yes.”
Stakeholder engagement has evolved since the ‘70’s. The most effective companies have changed their approaches. They moved from solely internal focusing and nothing outside the fence, to compliance with applicable laws, to now seeing the business value of enduring relationships.
Outcome-focused engagement can produce not just permission to act, and sometimes even a means to do better. Adding a focus on process, measurably increasing understanding of stakeholder needs and gets to the foundation of critical issues. Process-focused engagement allows stakeholders to learn about your business, while you create opportunity for two-way listening the building of trust. This can be a valuable commodity in a crisis (this pandemic, for example) where stakeholders who have been effectively engaged can vouch for you and help support your reputation.
For any business sector, communities as major stakeholders can have significant impacts on your activities: they can at the very least, complain to regulators, civil authorities, financiers and media and at worst delay permitting, instigate litigation or even stage protests. However, even stakeholders who might oppose, for instance, an expansion of a business, are tempered by creation of shared value, which brings greater certainty for both stakeholders and businesses. A reputation as a good engager and a transparent organization creates civic pride, can increase customers and attract good suppliers, also creating smoother relations with governments, regulators, inspectors and the media
We offer here eight actions to improve social stakeholder engagement:
1. Stakeholders are here to stay—for most businesses, in most sectors. Make it part of the operating business to get to know them on a long-term basis.
2. Remember that the engagement process is as important as the outcome.
3. Stakeholder identification and strategy is about having good relations with the public, but it is not PR!
4. If anything, prioritize your local neighbors over government and regulators wherever possible.
5. Listen, listen, listen. Then talk, communicate, and inform, using multiple formats and media. Keep key locals consistently and regularly informed.
6. Be serious in dealing with issues of local concern. Be prepared to listen even if you might discount the issue. Be prepared to do something about those concerns.
7. Maximize local economic business opportunities. Hire local, use local people and local services; be prepared to assist in developing other local enterprises.
8. Employees are part of your stakeholder communities. Ensure that they ‘walk the talk’ around your business’ efforts at getting ‘outside the fence’
Partnerships and agreements: A trend in mining of opposing sides coming together
From the Writers Series: Part I, Dr. Chris Anderson on the Extractives Sector “This is the first article in Mediators Beyond Borders’ six-part series answering, “What would your company/industry/field, and region, look like if adversarial decision-making systems were replaced by collaborative ones?” Link - https://mediatorsbeyondborders.org/writersseries-collaboration-part/
Nelson Mandela once commented: “If you want to make peace with your enemy, you have to work with your enemy. Then he becomes your partner.” This has been never more true than in the relationships of mining companies to ‘the other side’ of civil society and communities.
Twenty years ago, all around the world, mining companies and civil society organizations (NGOs) were definitely not friends. Suspicion and hostility were deep and rife on both sides. That feeling lingers on in some quarters today. However, many people on both sides slowly realized that there often existed overlapping agendas, particularly around environmental protection and community development. In fact, now, an entire body of practice has emerged around ‘partnerships’.
In a similar vein, miners and communities were very often at odds over projects, at times implacably so. Multi-million dollar mining projects have been stymied, delayed or cancelled due to local social issues. Often, too, NGOs would line up with communities against miners; construction stalemates ensued, production inhibited and at time, violence occurred.
I paint a picture of an almost binary, black and white opposition from some years back (and, I have to admit, that this is still the case with some companies and some activist organizations and communities). There are, however, glimmers of optimism here and there that things can be different for mutual benefit.
My experience of almost thirty years working at the interface between companies and the world ‘outside the mine fence’, convinces me that there has been a growing convergence of approaches, especially around community engagement and development. Partnerships between entities that previously were at each other’s’ throats, often very publicly, now abound both at global and local levels. Examples include: Anglo American and Fauna & Flora International on global biodiversity; and with Care International on HIV/AIDS at a local level in Zimbabwe; Barrick Mining and the White Ribbon NGO on gender-based violence prevention in Papua New Guinea; Newmont and Project C.U.R.E on medical supplies and health training in Ghana, Peru, Indonesia and Suriname. Newmont’s Ahafo Operations in Ghana provides what is almost a textbook case of this partnership trend: the company has worked with, among many others, Opportunities Industrialization Centers International; Guards of the Earth and the Vulnerable; Conservation International; International SOS; Nature Conservation Research Centre; Earthwatch; as well as joint projects with government at local and national levels (Ministry of Social Welfare, Ministry of Agriculture, Ghana health Service and others).
These partnering projects were not ‘greenwash’ or philanthropy. They all addressed a problem and the partners brought funds, skills, experience and labor to bear on them. Such things were made possible not really by any kind of mediation at all, but rather through a slow process of communication, relationship and trust-building and the bonds that developed between key individuals in each organization.
Some of the widely accepted requirements for successful partners between what could be seen as ‘strange bedfellows’ include: good preparation; the creation of a shared vision; open and transparent understanding and communication between partners, and particularly between key individuals on both sides; being clear on risks and rewards; having an open and rational decision-making process; transparent communication, monitoring and reporting; leadership, adequate resources; and building trust as a core value.
Modern mining has also seen another trend that brings previously opposed bodies together: the growing practice of company-community agreement-making. Australia is a particularly apt case. The Agreements, Treaties and Negotiated Settlements database (ATNS - http://www.atns.net.au) at the University of Melbourne provides details on, among other things, hundreds of agreements between extractive companies and Indigenous communities. The detailed analyses done by Professor Ciaran O'Faircheallaigh in many studies (see for example at: http://caepr.anu.edu.au/Authors/CiaranO%E2%80%99Faircheallaigh) reveals the extent of this movement. Agreement-making has now become common in other parts of the mining world too: Newmont in Ghana (e.g. see http://www.sdsg.org/wp-content/uploads/2011/06/Ahafo-Social-Responsibility-Agreement.pdf) and Rio Tinto in Mongolia ( see http://ot.mn/oyu-tolgoi-signs-cooperation-agreement-withumnugobi-communities/). Rio Tinto has even produced a major publication, ‘Why Agreements Matter’, (http://www.riotinto.com/documents/Rio_Tinto_Why_Agreements_Matter.pdf), driven by senior corporate leadership including Bruce Harvey and his team.
These agreements are not just about money and payment benefits, though that may be included. More generally and more importantly, they are about a process of coming together and building trust such that the agreement is an outcome of the relationship, not a legal document prescribing or dictating one. Formal mediation has sometimes been an important part of the processes ending up in these agreements, but building a relationship cannot be outsourced. It requires hard work, good communication and good will on both sides. It is perhaps, surprising, that the extractive sector should be leading the way in previous ‘enemies’ coming together for broader social good!