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Creating shared value

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

Mary Lou Lauria

by Mary Lou Lauria

Vice President, Environment & Society, and Geoscience

21 August 2017
arial view oil and gas plant

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 realizing 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
 

Topics

Mary Lou Lauria

Mary Lou Lauria

Vice President, Environment & Society, and Geoscience

Dr. Lauria is an environmental consultant with over 20 years' experience, specializing in strategic planning, business development, and building teams. She has extensive experience in managing large environmental and social project teams for industrial sectors. In addition to terrestrial studies, she has managed numerous offshore environmental surveys and has designed and implemented monitoring programs and management plans for facilities worldwide. Dr. Lauria has experience facilitating workshops, including coastal zone management, NGO training, risk assessment, and presenting technical papers at conferences. She has recent experience in Canada and the US working with regulators to navigate the permitting and approvals process for major projects.

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