Six Ways for the Extractives Sector to Improve Stakeholder Engagement

July 29, 2013
  • Peter Nestor

    Former Director, BSR

  • Nate Springer

    Former Manager, BSR

It’s often said that the hardest part about opening a new mine isn’t getting the raw materials out of the ground, it’s managing the complex relationship with the communities living above the ground near the mine.

Proactively understanding and managing the concerns of a project’s stakeholders is no small task, and the costs of poorly managed stakeholder engagement have been well-documented. Ineffective stakeholder engagement can lead to severe damage to a company’s reputation and cause delays in permitting or mine closure, costing several millions of dollars per day.

On the flip side, there are many benefits to proactive and effective stakeholder engagement: It can enhance the efficiency of legally required public consultation and permitting processes, secure the social license to operate from host communities, contribute substantive insights to project development, and provide communication channels for stakeholders to raise concerns early so that problems can be resolved quickly, before they escalate into lawsuits.

Given the benefits, most global extractives companies no longer view stakeholder engagement as a “nice to have,” but rather as a core part of their business-planning strategy and operations at the corporate and asset level.

Yet achieving these benefits is difficult. Many well-intentioned efforts are derailed due to the absence of clearly defined objectives during the planning phase, lack of accountability, poorly managed expectations, or failure to meet commitments.

As companies and stakeholder groups struggle to get it right, several examples from leading extractives companies (see sidebar) demonstrate that properly planned and implemented stakeholder engagement can provide significant value to companies and host communities.

Through BSR’s work over the past 20 years and based on our recent research analyzing best practices in stakeholder engagement, we have identified six principles that can guide company managers in planning and implementing stakeholder engagements, whether for corporate strategy purposes or for tactical engagements in the field.

To be sure, there is no one-size-fits-all approach, and constant prioritization against longer-term objectives is important. But we have found that incorporating these six principles into stakeholder-engagement planning will go a long way toward achieving mutually beneficial, productive engagements.

  1. Define the value for both parties: Stakeholder engagement is always intended to be mutually beneficial, and taking time to explain exactly how the engagement will benefit everyone can help all parties maintain their commitments over the long term. This will also focus everyone on achieving goals that are tangible and beneficial for all parties.
  2. Clearly define engagement objectives: Engagements are more successful when the objectives are clearly articulated at the outset. These should be concrete and, ideally, tied to measurable results to ensure accountability on all sides. It’s also helpful to define who is responsible for meeting the objectives, to provide a common reference point for all parties.
  3. Establish a formal engagement process: To establish trust between the company and the stakeholders, it’s important to create a clear process for how all parties will interact. Consider outlining the structure and frequency of meetings, how meetings and action items will be documented, and how much information will be shared with the public.
  4. Make sure engagements are relevant and contextualized: In many cases, stakeholders may not be familiar with business terminology or modern business customs, while business may not understand the language and culture of stakeholder groups. It is incumbent upon all parties to identify and work through these potential barriers to ensure that the engagement is respectful and productive.
  5. Integrate insights into company decisions: Stakeholders will provide insights on a number of issues, ranging from reactions to how company decisions are being received in the community to how the project could be substantively improved. Stakeholders willing to work with companies should be viewed as allies who can help identify and communicate issues on the horizon. By integrating these insights into project decisions, the company can benefit, and it can signal to stakeholders that their suggestions are being taken seriously.
  6. Build trust: Properly executed stakeholder engagements will build trust among the parties involved and beyond. While this takes time and investments from both sides, solid trust between the company and stakeholders will last throughout the lifetime of the mine.

Ensuring that the engagement process and objectives are well-defined and that mechanisms are in place to hold all parties accountable should be the starting point for almost every type of stakeholder engagement activity.

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