"Impact Assessment, Transparency and Accountability

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"Impact Assessment, Transparency and
Accountability three keys to building
sustainable partnerships between Business and its
Stakeholders by Donal A. ONeill Lansdowne
Consulting Resource Advisors Group
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Lets talk about Impact ...

• ... Using the example of the
• Extractive Industries
• Oil, Gas and Mining

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Impacts of Industry Positive and Negative
Revenue Enhancement
Environmental
Dutch Disease
Boom Town Effects - Local Inflation
- Prostitution - HIV/AIDS
- Drugs
Employment Opportunities
Conflict over Revenues - National / Regional
/Local
Changing Individuals Expectations
Catalyst for Industrial Commercial
Growth
Social Change
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Business can only - Manage some
impacts 100 - Influence others
to some extent - Is powerless
alone as regards many more
A Clash of Cultures between the Private and
Public Sectors
But without Understanding what the impacts are,
Business cannot even start addressing them
Why does Business so often seem to find it hard
to gain this Understanding, when well-proven
tools are available to assist the process?
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An Investment Decision for Oil, Gas or
Mining is complex...

• Technical
• Commercial
• (i.e. Company Economics)
• Environmental
• Social
• Economic
• (i.e. Host Govt Economics)
• Political

In-house Feasibility Concern
In-house Viability Concern
Major External Concern
Potentially Massive External Impacts
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Non-Company Players call many of the shots...
Company Influence

• Technical
• Commercial
• Environmental
• Social
• Economic
• Political

Third Party Influence
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The consequences of wrong decisions are serious
... and not only for
Business
Oxys Piper Alpha Platform 1988
Company may lose lives, money,
reputation and opportunities Yet in context of
overall company portfolio
loss may not be terminal

• Technical
• Commercial
• Environmental
• Social
• Economic
• Political

• Host nation may face serious loss and
• disruption over decades due to
• - Impact on, and of, Revenues
• - Social Change and Upheaval
• - Distortion of Economy
• - (Unintended) Environmental Impact
• - Internal Tensions and Rivalries

Iran 1951 79 Biafra 1967-70
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But where is most time and effort often spent?
Long-term, responsible success is dependent on
ability to operate effectively in this zone!
Hard Disciplines Logical Cerebral Linear
Comfort Zone Business feels in Control It
recruits people qualified and with aptitude for
this zone 90-95 of effort is spent here

• Technical
• Commercial
• Environmental
• Social
• Economic
• Political

Licence to Develop, Operate and Grow
Zone Stakeholder Consent Critical (and ideally
also Stakeholder Alliances)
Soft Disciplines Emotive Chaotic Organic
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Company Influence

• Technical
• Commercial
• Environmental
• Social
• Economic
• Political

Third Party Influence
Result of increased knowledge and insight into
host society
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This takes time!! It must be planned into the
schedule
The Impact Assessment Process
Base Line Assessment
Identify Stakeholders
Development concept
Commitment to this process is the ACID TEST of a
companys CSR

• Go back and
• reassess options
• re-engineer
• re-cost
• re-schedule

Stakeholder Input
Evaluate Environmental Socio-Economic Impact
Impact Acceptable ?
Stakeholder Reaction
No
Yes
Proceed with Construction
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Implications of the Impact Assessment Process
Potential Project Delay
Contracting Strategy IA not easily compatible
with EPC
Temptation to Buy Short-Term Peace
- Unsustainable Community Development Projects
- Acting as Government Surrogate a vicious
spiral
Need to access expertise outside Core Business
skills
Recognise as an integral and basic Business
Management
tool - not as a bolt on
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Tripartite Partnerships the Way Ahead
Ideally the total input of each party is roughly
equivalent and matched
Host Community
Labour Commitment
Third Parties
Company
Expertise Funding Links Fulfilling
Obligations
Funding Contracting in Expertise Long-Term
View Commitment
Including Government
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Blockers
and Enablers
Shoot the Messenger Ethos
From Anger to Acceptance
Fudging the results are not as serious as they
seem
Cultural change on the Safety Management model
End C.P.Snows Two Cultures
in education
Clash of Hard/Soft
Disciplines
Expatriate Working
Cultures
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and Postscript
Whos accountable for the overall impact of e.g.
Gambling ?
Mass Tourism ?
Alcohol ?
Entertainment ?
Credit Cards ?
TV Advertising ?