‘Q&A’ – A Strategic Approach to Early Stakeholder Engagement

Released by the International Finance Corporation (IFC) in 2014, ‘A Strategic Approach to Early Stakeholder Engagement: A Good Practice Handbook for Junior Companies in the Extractive Industries’ forms part of the IFC’s range of handbooks. These seek to take popular business and mining concepts around strategic community investment and stakeholder engagement and make them accessible.

In recent years the IFC has increased its investment to junior miners in the extractive industry; specifically those in the fields of oil, natural gas and mineral extraction. As part of its own risk

Darryll Kilian partner and Lysette Rothmann-Guest senior stakeholder engagement specialist of SRK Consulting (SA)

Darryll Kilian partner and Lysette Rothmann-Guest senior stakeholder engagement specialist of SRK Consulting (SA)

mitigation strategy, the IFC is keen to share its wealth of knowledge and experience to guide these operations across areas such as environmental and social risk assessments, avoidance, risk mitigation and management systems. To this end, the Good Practice Handbook, which was prepared by the IFC’s Adriana Eftimie, Rebecca Darling and Ted Pollett, offers a pragmatic and practical guide which applies to both junior miners, majors, governments, stakeholders and academics. Darryll Kilian, Partner and Lysette Rothmann-Guest, Senior Stakeholder Engagement Specialist; SRK Consulting (SA) , recently outlined some of the key messages, tools and takeaways from the handbook, many of which were highlighted during the 2015 Mining Indaba as being central to the business success of mining operations.

Why is the IFC focusing on junior miners?

Darryll Kilian: “The majors have their procedures and they are generally strongly aligned with good international industry practice, but the juniors don’t have the capacity and the resources. So the handbook has been brought out to give guidance to the junior miners.”

Lysette Rothmann-Guest: “The IFC has distilled a wealth of Early Strategic Stakeholder Engagement information into a very practical, pragmatic and realistic guide for junior companies. The reason they did that was because junior companies have constraints and the main constraints are when they start out, often with limited resources. And they also have risks; in that they don’t know if a project can go forward. When you go into a community you immediately create expectations, so the guide is structured to help those junior companies starting an engagement process. Even though it’s focused on exploration and early project development, the guide covers all the project phases – from pre-feasibility, to construction, to operation and closure.”

As with all stakeholder engagement, the focus must be on trust and managing expectations…

Lysette Rothmann-Guest: “Certainly. The authors stress that stakeholder engagement is very much like a relationship. You cannot build trust if you don’t honour the people and consider their traditions and their cultural practices; this is particularly true in the extractive industry.”

There is also a focus on business principles.

Lysette Rothmann-Guest: “The guide mentions that this is based on good practice and international principles. But it is an evolving field and there is currently a trend towards business care and viewing stakeholder engagement and community investment through the lens of risk and opportunity. Again, this comes back to shared value. The company wants to reduce risk and communities want to benefit. Unless something makes business sense, it is not sustainable.”

How do you determine that business case?

Lysette Rothmann-Guest: “The guide gives very practical tools in terms of how to assess what the authors call strategic investments. This involves looking at both groups’ objectives. It really is strategic, planned and tested. The guide gives an overview of the good practice approaches, such as early engagement, with a strong emphasis on human rights and performance standards. There is a section on social licence to operate and what it really means.”

How important is the language used in the handbook?

Darryll Kilian: “Mining companies are familiar with terms such as sustainable development and stakeholder engagement. But they may not understand how to achieve these and what the implications are if you don’t. Once again, comparing majors to juniors, the majors might have a depth of knowledge from their various operations around the world. But juniors don’t necessarily have that to fall back on. Hence this guideline seems to be addressing what the term stakeholder engagement means and how you practically go about doing it.”

Lysette Rothmann-Guest: “When it comes to nebulous terms such as sustainable development, many don’t know what it means. But the authors put the case forward for saying it is just good business practice and it is a method of risk management. So it makes absolute business sense.”

We’re talking about the risks facing miners, but is this handbook also a form of risk mitigation for the IFC?

Darryll Kilian: “That’s probably one of the motivations. It’s not that you won’t get funding upfront but in all likelihood you will have to invest money yourself. If you get the principles right and if you establish the foundations, then you can design your plans and programmes to meet the requirements in the area. This will place a proponent on a better footing when it comes to the feasibility study. I believe this is where the IFC is going with the handbook.”

Obviously the guide focuses on partnerships, how key are these in Africa?

Darryll Kilian: “Critically important. There is a strong focus on the fact that you cannot expect mines to provide everything for communities. They may not have the core competence to implement outreach programmes while, similarly, governments seldom have the means to realise all development needs. Hence, partnerships between key stakeholders are essential. It’s about understanding who the implementers and/or influencers are in an area and who you really need to work with. That includes the likes of NGOs, especially in Africa.”

These days we also have to consider the impact of social media, surely?

Lysette Rothmann-Guest: “Whether you are in Africa or another developing world region, a large number of people can access a cellphone. People have the ability to instantly communicate with one another and put their grievances on an SMS and send it through. Now, more than ever, there are many reasons to understand the use and potential of technology and social media in the stakeholder engagement arena.”

So, in this day and age, transparency – thanks to digital and mobile – must be more vital?

Lysette Rothmann-Guest: “One of the key themes of the handbook is to take responsibility. The junior companies must take responsibility for their relationships with their stakeholders. It’s not about legal compliance. It’s about building trust and mitigating risk – being transparent is key when building trust.”

Overall, what is your assessment of the handbook?

Lysette Rothmann-Guest: “As quoted in the handbook, Albert Einstein once said: ‘Everything should be made as simple as possible, but not simpler.’ They’ve got that right with this guide – it was well done and SRK Consulting is impressed as it highlights many of the insights we have gained during our project work, especially when engaging stakeholders in socially complex environments. It’s useful for all proponents of mining projects.”

And, finally, where to from here?

Darryll Kilian: “We see a need for training in this field, to raise awareness about the importance of proactive stakeholder engagement.  The emphasis will be on pre- and post- EIA processes, as host country EIA requirements and international standards are very clear about the need to engage with stakeholders. There is a tendency for proponents to under-estimate the importance of ongoing stakeholder relations during the life of mine; after environmental authorisation has been obtained.”

IFC: A Good Practice Handbook for Junior Companies in the Extractive Industries

About SRK Consulting www.srk.co.za 

SRK Consulting is a leader in natural resource and development solutions, providing independent technical advice and services through over 50 offices in 22 countries, on six continents. With an African presence in Angola and Cameroon, and practices in the Democratic Republic of Congo, Ghana, South Africa and Zimbabwe, the global group employs more than 1,500 staff in a range of engineering, scientific, environmental and social disciplines.


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