February 2015, Vol. 242, No. 2

Features

Stakeholder Engagement In Age Of Radical Transparency

We live in an age of radical transparency, bringing with it significant challenges for energy companies in trying to engage constructively with stakeholders. Are there radical solutions to this challenge?

In the Internet age, large and complex organizations have been left with nowhere to hide. Privacy is almost extinct with the ability of people to source, investigate and share information quickly and easily. From WikiLeaks to leaked internal corporate memos to viral video scandals, there are many examples of the reduced ability to control the flow of information. There is an appetite for information, and an army of bloggers, journalists and activists willing to search for and share data.

Almost everything is online, and groups can “crowd source” huge numbers of people to analyze large volumes of data and then share the results widely and instantly. Social media magnifies this and adds an element of endorsement to it, just like a trusted brand or person can add weight to information.

This is especially relevant to energy companies, managing multiyear, multibillion-dollar initiatives that sometimes hinge on the cooperation of a small group of stakeholders, such as landowners, local businesses, politicians or First Nations groups.

For a pipeline project this complexity can be magnified by the added need to engage effectively with stakeholder groups spread across multiple geographical areas. It is part of a broader cultural shift, as we encounter a generation of people who have grown up with the ability to conduct large parts of their lives online. Information can’t be controlled and engagement campaigns can’t be managed the way they were in the past.

A single Google search term can do more to affect a brand, positively or negatively, than a multimillion-dollar advertising campaign. For example, the Google search “BP” still generates links to stories about the Deepwater Horizon oil spill that occurred in April 2010.

For organizations needing to interact with a broad range of stakeholders to advance a major capital project, such as a shale gas exploration effort or new pipeline development, this brings a new range of challenges.

Stakeholders Want You Naked
Stakeholder groups are influenced by this burgeoning level of transparency. This exposes any major capital project to risks that can lead to project delays and cost escalations. Radical transparency has magnified the sensitivity, and therefore, the potential impact, of all key stakeholder groups.

Governments, including politicians and officials, are increasingly sensitive to major capital projects, such as pipeline builds, particularly those that have an environmental effect. They don’t want to be surprised by projects that could have a negative effect. There are not many jurisdictions where the requirement to clearly communicate the effects of a project are not part of the regulatory process.

Community groups have been incredibly empowered in this age of the Internet. These organizations are able to share knowledge and “best practice” with like-minded groups around the world, to earn funds online and mobilize people quickly and effectively. (This leads to major stakeholder engagement challenges for any significant capital project.)

Investors, labor unions, supply chain partners, employees and consumers are all stakeholder groups that are exposed to much more information about major projects in this age of radical transparency. Because the balance of power has shifted to these stakeholders groups, there is a greater imperative to engage with all of them effectively.

Engaging Radically
Radical transparency requires a radical approach. Organizations required to engage with stakeholders as part of a large and complex development can’t afford to leave a void in the information flow. These gaps are filled by rumor and emotion, fueling media interest and debate.

The best practice is to engage as early as possible before specific projects have been identified. Typically there are three stages to major capital projects.

First is the overall driving strategy, or “the big picture.” For example, an energy company might develop a new natural gas resource that will ultimately require a new pipeline to transfer the product safely and efficiently to customers.

Radical communication needs to start at this point; being able to convey the overall strategy and the complex technical, operational and financial data behind it to key audiences like boards of directors, and political and other leaders. This can make an enormous difference to the ongoing effectiveness of the project. Key influencers who understand the big picture driving the individual projects are then less likely to oppose them.

Second is “the approach” which entails explaining why a project might be developed in a certain area and in a specific way. For stakeholders immediately affected, radical communication requires that this be put in context and that complex data be explained effectively.

Third is “the impact” or conveying what a project will look like and mapping out the potential effects. This occurs when groups on both sides of an issue can be tempted to manipulate the results. That doesn’t work in the age of radical transparency. Your ability to be as accurate as possible – building a track record of transparency – is critical to the progression of the projects.

Fighting Emotion

In this age of transparency, the best way to combat conjecture and emotion is with facts and logic. Communicate the complexities of a major project and its effects in simple and compelling ways to overcome emotional reactions. This requires stakeholder engagement tools with three key elements:

• Clarity: being able to summarize complex scientific, technical, engineering, financial and legal data in clear and accessible ways.
• Context: designing solutions tailored to the audience. For example, recognizing the fundamentally different information needs of a mining engineer from a First Nation’s group vs. a labor union.
• Channel: tailor these tools to the medium, reflecting the different needs of whether you are engaging a board member in a one-on-one chat through to managing a major town hall event with multiple stakeholder groups in a high state of anticipation.

Often this defaults to visual tools which are the best way to communicate complex data in a clear, compelling manner. People from all stakeholder groups are used to consuming information visually, instantly and often with the ability to share easily with people in their networks. You must be able to meet their communication needs.

Avoiding Mistakes: A Pipeline Example
On occasion a developer on a large-scale pipeline project will offer a “preferred route” and “alternate route” with minimal explanation on the criteria used. Without broader context, the reaction of many stakeholders is simply “not in my backyard.”

Effective engagement means expressing the complexity of such decisions in an accessible way. For example, the developer wants to build a pipeline from point A to point B, and there are many constraints that will ultimately determine the final alignment that aren’t immediately obvious to people unfamiliar with pipeline-siting protocol.

These constraints could include proximity to populated areas, understanding areas of historical significance, ecological significance, significant wildlife, the geology (e.g., hard rock formations may affect construction costs), the length of alignment vs. construction cost.

A developer will assess these when determining the merits of a particular pipeline alignment, but often they are either not really communicated, or contained within an 8,000-page environmental assessment document that requires a Ph.D. to comprehend. The ability to clearly and succinctly communicate constraints (using plain language and powerful visuals) that define a particular alignment to a non-technical audience creates immense value for both the developer and stakeholders. It often becomes blatantly obvious why one alignment is preferred over another when the constraints are clearly set out.

Do you want to review the way you engage in this era of radical transparency? Best practice increasingly involves three core elements:

• Acknowledging the reality that any organization is an open book in an age of radical transparency.
• Communicating as early as possible with key stakeholders, before specific projects even emerge.
• Using communication tools that deliver clarity, context and are channeled correctly.

Author: Tony Coggan leads the business development operations for Truescape in New Zealand, Australia, Canada and the United States in the areas of energy. mining, oil and gas, and infrastructure. For further information, visit www.truescape.com.