When a project team arrives, stakes ground, and begins developing a project it can be assumed that the project also comes with a model of development based on economic growth, a western idea of development, capitalism, market economies, efficiency and round-the-clock operations with shift work. But the question remains, are these ideas of regional development and project development wanted or chosen by the local stakeholders? The process of designing and constructing major projects can impose a model of development that is based profit maximization. Although this model supports the corporation’s immediate financial goals it may not be aligned with the parties who have a vested interest in the project, such as local government, nearby communities and businesses, local Indigenous groups, and project employees or contractors. These interested parties are called stakeholders because they have a vested interest or a ‘stake’ in how this project is developed and whether it will be a success or a failure.
If the project is a success then local suppliers, service providers and employees from the local communities would share in that success. If the project fails, then these stakeholders also share in the financial disappointment. So it is in the mutual interest of the corporation and the stakeholders to seek understanding of each other’s goals, intentions and hopes in relation to the pending major project. Bringing in cheap labor and housing them onsite may support the bottom line. But, if the hopes and expectations of local communities is to enjoy full employment with skills development and benefits, then these two objectives are out of sync and could result in tension or distrust between the project and local communities.
Connecting is about getting to know your stakeholders by learning what their hopes and fears are, what makes them happy and why. And in order to make sincere connections with stakeholders, engagement must be a two-way dialogue of sharing information and experiences. This helps build trusting relationships that are built on being mutually respectful and mutually beneficial.
Stakeholder engagement is an ongoing and continuous process of communication and consultation between a project team and the key stakeholders who may be affected by the company’s decisions and in return, can affect project decisions. Stakeholder engagement is not a milestone achievement, as the term ‘social license to operate’ might imply. Stakeholders should be engaged as early as possible, continuously and regularly, and should span the life of the project, operations, and after closure. Engagement can take many different forms and combinations of methods including public meetings, focus groups that address one or two issues associated with the project, and individual meetings. They can be formal and include PowerPoint presentations, flip charts, and the handing out of company informational brochures, and site tours. Or they can be as informal home visits or coffee shop connections. Either way, all stakeholder engagement activities and results should recorded be and tracked – more on this in another piece.
An environmental and social management system (ESMS) for project development really should be created with inputs from key stakeholders such as local indigenous groups, members of the local communities and businesses, because they will have the most knowledge about the social and environmental contexts and they will experience the most impacts during project development. So it is critical to engage stakeholders in a dialogue that results in project development plans that are mutually considerate of all stakeholders – with the understanding that there is a give-and-take, as in any relationship.
What you stand to gain from a stakeholder engagement strategy
And these are just a few…
Individuals or groups of people who live and/or work in the area would be the most appropriate resource to best understand the local context in which you are planning to construct and operate your project. By engaging local stakeholders, you will quickly get an idea about local regulatory requirements, potential social and environmental impacts and opportunities of your project plan, and even get a sense of whether your project would be accepted or not as is. And if not, stakeholders would help you learn why your project plan could be rejected, and could help your team generate ideas of where design changes are possible. Engaging stakeholders early can help in the long-run in terms of finalizing design and project planning.
When engagement efforts are sincere, a project team can improve relations with its stakeholders and build the trust between each other. Since efforts including follow through on commitments, responding in a timely manner, be realistic of what your company can offer and contribute, and being honest about it. Trust between a project team and its stakeholders is the project’s main support line when it comes to permit renewals, expansion, land access and so forth.
Consistent and ongoing engagement with stakeholders helps to create a more stable environment in which there are no surprises. And if or when an unexpected decision must be made, the strong relationship that was established and nurtured by sincere engagement strategies will help the operating environment and reveal critical information that is important for company decision-making. Strategic stakeholder engagement will help avoid conflicts with stakeholders, minimizes the chances for stakeholder protests, blockades, theft, or sabotage, thereby reducing costs and helping to create a safer and more secure project/operational site. Lost productivity is the greatest, most frequently overlook cost to a major project or operation, whether it is due to unsatisfied employees, high turnover, or community blockades that shut entire projects down. And don’t forget to sincerely engage with your employees, also known as your internal stakeholders. Workers at all levels will have ideas on how the operation can become more efficient. When workers and employees are engaged and valued as a key stakeholder group, they tend to have high morale and high support for their employer.
Stakeholder engagement helps a company improve its visibility and therefore its reputation. Even a project that may be considered contentious, maintaining sincere stakeholder engagement strategy is key to managing relationships. It assures stakeholders that the project team is open to dialogue, will listen, and will seek resolutions that are of mutual benefit. In the end, you want your company to be the company of choice. And when you are, when broader stakeholder groups such as international NGOs or media seek to challenge your project or operational choices, it is your key stakeholders who will become the first line of defense and protect their interest in your project.
Ongoing and consistent engagement means the lines of communication between you and your stakeholders are open. When parties are able to communicate, the relationship is stronger and this can lead to a more stable operating environment. Internally, a stronger relationship with your employees leads to a more stable working environment. Both contributing to better overall risk management.
Strong relationships with stakeholders can increase your ability to pursue projects and/or opportunities for expansion or sale of your project. Strong stakeholder relationships can also attract ‘impact investors’, the newer breed of investment company and investors who are looking to generate social or environmental impacts that provide measureable benefits alongside financial returns. And when your parent company is seeking to expand into other global regions, the possibility of success is higher when your reputation as a corporate citizen is positive.
Stakeholder engagement is not just about keeping your stakeholders ‘happy’ and ensuring they will continuously like and support your project/operations. These strong relationships can be leveraged to increase your understanding of the local or regional context and how your project fits within that context. Stakeholders can help you to identify new business opportunities and markets. When you have secured a positive and strong relationship with your key stakeholders, your issues easily become your stakeholders’ issues. Issues such as climate change, supply chain management or maximizing local content and ensuring diversity are issues that go beyond the boundaries of the project site. Stakeholders can be tapped for their passion, concern and expertise on these issues.
And let’s not forget about how all this feeds into a strengthened share price and reduce litigation risk. Establishing an ample (not stingy) budget for a comprehensive stakeholder engagement strategy up front will give long-term cost savings and contribute significantly to project success.
Let SDC help your project to succeed. We’d love to partner with you to develop your own stakeholder engagement strategies. Contact us at firstname.lastname@example.org or +1 416 669 8436.