More than a checklist — the role of meaningful community engagement

By Chelsie Klassen | June 16, 2021

There’s increased interest and a rising trend of businesses starting to prioritize environmental, social, and governance (ESG) issues around the globe. Companies involved in the metals and mining, energy, and infrastructure industries in particular have the potential to improve environmental risk, advance community development, and generate revenue in the areas in which they operate. More importantly, they have the social responsibility to do so.

The growth in interest is perhaps most evident in relation to climate and diversity, but there is a marked shift in the importance of sustainable business strategies and the impact on society. What was once looked upon as a philanthropic effort is now being recognized as a core component of a strong business model. The challenge is that environmental and governance measures are well articulated in the industry, while social measures—that is, a company’s ability to manage their relationship with all stakeholders—remain harder to define.

The “S” in ESG

Risk and success factors for environmental and governance matters are not only quantifiable, there are resources for that evaluation, such as impact assessments and company audits. In contrast, there’s no blueprint for examining the social component of ESG.

By definition, stakeholder engagement is the process by which an organization involves those who may be affected by the decisions it makes through a process of analysis, planning, communication, and implementation. But there’s a difference between stakeholder engagement and meaningful stakeholder engagement and the consequent magnitude of responsible business conduct.

The business case

More than ever, investors are looking at ESG ratings as a risk reduction metric. Improving environmental and social risks can achieve better growth and cost savings, improve brand reputation, and perhaps most importantly, strengthen long-term stakeholder relations. Conversely, if a project comes up against any type of community confrontation or lack of support, it can significantly affect your delivery risk.

There have been projects that have garnered media attention and faced mass opposition, especially concerning Indigenous land and disputed territory. There have also been projects that have suffered financial loss due to a lack of community consent. Ultimately, investors want to know that they are putting their money into companies that know how to successfully govern and mitigate risk.

Engagement is not a checkbox. Perhaps we have grown accustomed to looking at regulations, but as we move forward into the future, we need to look at it as a relationship. —Chelsie Klassen

Above and beyond

We have seen the establishment of international frameworks that measure sustainable business efforts: the International Finance Corporatation (IFC) Performance Standards on Environmental and Social Sustainability, the Paris Agreement on climate change efforts, the United Nations (UN) Declaration on the Rights of Indigenous Peoples, and the UN Sustainable Development Goals are a few examples. These international benchmarks all offer guidance for businesses to deliver and implement sustainability efforts into governance, operating structures, and beyond.

The catch? There’s no blueprint for how to do it. When looking at these international standards, you must keep in mind that every community you encounter will be different. It’s not as simple as taking a percentage of capital expenditure and putting it towards social acceptability programs. It’s about proactively consulting communities and going beyond bare regulatory standards. It’s about paying attention to what the stakeholder needs—each solution should be customized towards the respective community. It’s a relatively small investment at the beginning that pays off big in the end.

Together and towards success

Regulatory requirements often, if not always, include a community consultation process: What are people thinking? What do they care about? Are there any trigger points? What does the community really need? What’s the best way to engage? How do community members want to provide feedback? The issue arises when a consultation activity is done but no action follows.

Engagement is not a checkbox. Perhaps we have grown accustomed to looking at regulations, but as we move forward into the future, we need to look at it as a relationship. The development of BC Hydro’s Ruskin Dam is an excellent example of strengthening relationships with an Indigenous community. While upgrading the existing dam and powerhouse, BC Hydro discovered a 9,000 year-old archaeological site and immediately stopped construction to ask for the Indigenous community’s input regarding next steps. Subsequently, the design of the planned right bank upgrades was revised to accommodate the site and allow it to remain intact according to the wish of the Kwantlen First Nation. The dam upgrades included the installation of six new steel artistic pier panels designed by a local Kwantlen artist that depict the Kwantlen people’s history in the community.

Beyond social due diligence and cultivating relationships, it fundamentally comes down to three questions your business needs to ask and decisions your business needs to make: 1) Can you manage the project properly based on the resources and risk tolerance to do so? 2) Can you modify your project if need be? and 3) Can or should you move on if the risk is too high and the reward isn’t there?

The way forward

While face-to-face interactions and spending time in the community have paved the way over the last sixty-five years, COVID-19 is certainly shifting how we interact within our communities and we’ll have to find more creative approaches in the next era. Actions taken during and post this unprecedented time will redefine your organization, but it’s imperative to nonetheless remain accountable to the social commitments that have been made pre- or during COVID-19, even if that means looking at a solution through a different lens.

While community engagement is an ever-evolving concept for which there is no blueprint, companies can leverage their experiences to ensure social engagement and commitment to the community are weaved throughout a project’s entire life cycle. Attention and care in cultivating relationships will be the ultimate driver of success. Through respect, understanding, and cooperation, business leaders and stakeholders can build mutually beneficial socioeconomic partnerships, affecting positive change in the communities we live and work in.