Across the globe and across industries, companies increasingly face public scrutiny of their business activities. But also without public activism, companies acknowledge corporate responsibility makes good business sense.
In what it says is a response to companies demanding support, Community Wisdom Partners (CWP) has recently introduced its “Social License to Operate” training and coaching program.
“Company staff from all industries increasingly interact with societal actors. Whether they like it or not, the daily reality of dealing with non-technical, social or environmental risks, is increasingly on the agenda of business managers. To support companies, CWP, together with staff in the field, have developed a training, assessment and coaching program called Your Social License to Operate,” CWP said recently in a statement introducing the service.
Offshore Energy Today has decided to learn more and dig deeper into what the service entails, and what vision CWP takes into consideration when supporting companies. For this, we’ve interviewed Katinka van Cranenburgh, one of CWP’s founding partners.
OET: Ms. Van Cranenburgh, thank you for accepting this interview. Can you first tell us about CWP and corporate responsibility trends in the offshore and extractive sector, before we go into the new service?
Community Wisdom Partners brings together expertise from controversial industries such as mining, oil and gas and the alcohol beverage sector. These industries are controversial because of the nature of their business. Next to having legal licenses to operate they very much need the approval of communities, NGOs, social investors and the wider public. This is what is called the social license to operate.
In comparison with for example an alcohol beverage industry, where companies produce and sell their own products, the extractive industry has an additional challenge: extractives come from land that is populated with people whilst contracts are signed with governments. Populations are becoming increasingly active in demanding their rights of “their” precious oil and gas.
With the fast-changing society and the role of the social media, this social license has become increasingly important for the bottom line. Companies cannot get away anymore with just informing the people and paying compensation for damages made. Nowadays, companies are expected to become partners in development on a continuous and structural basis. The classic stakeholder model whereby companies identify which stakeholder has most influence and most impact on the company is not fit to deal with this increasingly complex society.
So to ensure project managers, country or plant managers, community liaison officers, risk compliance staff, CSR/sustainability managers, external affairs managers, and technical managers are prepared to deal with this complex society, we have set up a training and coaching service.
OET: You mention the fast-changing society and the role of social media as a reason for changing the business model. Can you give an example?
Social media is an accelerator. Take for example the growing societal demands for businesses to ensure human rights are protected in the supply chain and in community engagement. International cooperation between governments and NGOs of companies´ home countries and NGOs operating in the host countries where companies extract minerals has increased rapidly in recent years. This leads to a growing awareness and connectivity between local affected communities and internationally operating authorities and institutions.
With social media, audio, video and written data is collected easily, stalled in international databanks, studied by academic institutions and shared with influential parties such as shareholders, governments, classic media, and the wider public. Rather than unsuccessfully knocking on the door of the local government, local communities now have straight access to international companies´ headquarter front doors.
OET: Are you talking social-investment? Is that not again a legal requirement for companies?
Social investment is definitely part of corporate responsibility, as well as ensuring a company meets local content requirements of host country governments. But following these requirements does unfortunately not automatically imply wider public support. In other words: legality does not buy legitimacy. Showing communities that you have a legal permit in place, that you have done due diligence or that you have asked an external consultant to do a social and environmental impact assessment is not sufficient anymore.
What the public asks is for the company to move away from “tell me” and “show me” what you are doing to “join me” in developing things together.
From Stakeholder thinking to Societal thinking
OET: So if the stakeholder relations model does not prevent companies from getting into trouble, what do you suggest?
The problem with the stakeholder engagement strategies found in many companies is that it is company-centered. It places the company in the center of the universe and perceives stakeholders as stakeholders of the company. It results in several people within a company having dialogue with several stakeholders on issues and stakes that already exist.
For example, if an NGO attacks us, we dispute them by showing proof. If a community member complains, we investigate and respond. If an investor threatens to divest, we engage with them. And if a lawmaker plans to change a law we start to lobby. It is reactive and takes up a lot of resources within the company.
We train company staff to develop a society-centered approach: at the center are the societal development needs, surrounded by stakeholders of society, not stakeholders of the company. All societal stakeholders, including the company, work together on a continuous and structural basis. This ensures the company is part of society rather than dealing with society. It is pro-active and has insights in potentially troubling issues and stakeholders even before they hit the company.
OET: It actually sounds logical, but has it been tested?
This society-centered thinking has become the starting point for several mining companies. Take Anglo American, it´s CEO Mark Cutifani wants to change the industry “from an extractive industry to a partner in development”. That is a huge shift in thinking and places societal development at the center of the strategy.
We also see forms and shapes of it in the energy transition debate: the Heat roundabout South-Holland is an example where industry, community, government and experts work together to ensure their activities added up lead to energy efficiency.
Oil and gas companies operating in the Niger Delta have developed, together with other societal stakeholders, global memoranda of understanding for societal development. The strategy is a joint effort and the evaluation is done by all actors of society.