Stakeholder Relations

As energy development increases in remote areas around the world, international companies face new challenges in completing large-scale oil, gas and power projects. From the smallest villages to world capitals, a broad range of “stakeholders” – including environmental and human rights groups, community organizations and federations, and other nongovernmental organizations (NGOs) – have begun to demand a role in reviewing or commenting on such projects before they are even off the drawing boards.

To meet these challenges, international companies are beginning to recognize that they must build broad support for their projects among moderate NGOs and other potential allies before the inevitable opposition and criticism begins. Without this support, project opponents will quickly dominate public discussion about your venture – and may cause additional delays, increased costs and unnecessary controversy.

In part, rising stakeholder expectations reflect a trend that has been set by major development institutions including the World Bank, USAID, and other international agencies. Over the past ten years, such agencies have adopted far-reaching policies on public participation, consultation and transparency – policies that usually exceed by a wide margin the requirements imposed by national laws. In effect, these policies now provide a standard against which all important projects – public and private alike – are increasingly judged.

The first step is a detailed stakeholder analysis. Once you understand who the key stakeholders are and what they will be concerned about, develop a detailed stakeholder relations plan – essentially, the business plan for your outreach efforts. Although each company and each project is different, here are four basic principles to keep in mind:

Be first. Companies must become the first and best source of information about their projects. Otherwise, the void will probably be filled by project opponents. At that point, company representatives must spend their time denying misinformation.

Be transparent. “Transparency” has become a buzzword among NGOs throughout the developing world. Essentially, it means providing reasonable and consistent access to project information – such as environmental impact studies – even though local regulations or policy may not require (or in some cases may actually discourage) their disclosure. By taking the initiative to inform NGOs and other stakeholders, international companies show that they have nothing to hide and are willing to engage potential critics. Such openness goes a long way toward winning respect and support.

Develop strategic alliances. Many companies are surprised to find that moderate environmental groups, human rights organizations and other NGOs are willing to accept major new energy projects and, in some cases, participate in them. The same thing is true with local or regional community groups, farmers associations, and self-improvement organizations. Developing strategic alliances with these groups may be an essential step in building support for potentially controversial projects.

Involve independent experts. Often, international companies lack the credibility to assure a skeptical public that they maintain high environmental standards, are using the most appropriate technology, or have addressed community needs. In such cases, it is extremely useful to call upon respected academic scientists and researchers who are familiar with the project and are willing to provide independent validation. Sometimes, social scientists with field experience can help if a community or group of communities refuses to meet with company representatives or to negotiate access to their land. All companies working in sensitive environments should develop a network of such specialists long before potential opposition arises.

Above all, effective stakeholder relations programs – like other winning game plans – don’t just happen; they require careful planning and first-rate execution. The Terra Group assists our corporate clients in designing specific game plans and tailoring them to meet their needs around the world. As part of this effort, we help in recruiting appropriate third-party specialists and experts with direct local experience and credibility. And we will work with you to implement your program successfully from start to finish at every stage throughout your project’s life cycle.

The Terra Group has designed or implemented stakeholder relations programs for:

Amoco (Ecuador)

Anadarko Petroleum Corporation (Peru)

ARCO (Ecuador)

BP (Bolivia, Indonesia)

Burlington Resources International (Ecuador)

Chevron (Angola, Kazakhstan, Mexico, Nigeria)

Government of Chile, National Environmental Council

GTZ (German Technical Assistance Agency, Chile)

Occidental Oil and Gas Corporation (Worldwide)

In addition, TG has conducted stakeholder evaluations for:

Shell Exploration and Production Company (U.S.)

BP (U.S.)