As stakeholder engagement and dispute resolution experts in the corporate social performance and extractive space, we typically reflect on the work we do – and how we do it – in the context of specific projects, rather than the broader field. Yet, our individual efforts contribute to an overall collective impact, with a mix of positive and negative results. We therefore took a few moments to think about what we are learning about the effects of extractives projects on climate change and the disproportionate burden (and risk) they may be placing on communities.
Large-scale international projects hold promise for local community development through jobs, contracting, educational opportunities, and economic catalyzation. When companies consult with communities about developing a project, they tend to highlight how it will enhance their lives and the positive outcomes the project will deliver. Indeed, there are examples of such positive effects. Yet sometimes the promise of development falls flat, and communities are left worse off than before – whether it be through population influx, environmental changes, human rights and security concerns, or livelihood changes.
Compounding some of these negative impacts, particularly in oil and gas (OG)/extractive projects, is climate change. Scientific data suggests that hydrocarbons – emitted by OG companies into the atmosphere – are almost certainly playing a significant role in changing weather patterns that are affecting the livelihoods of many traditional, rural, and agrarian communities.
We believe that the leaders of large-scale projects – especially of OG companies, and other extractives – have a responsibility to discuss how their activities will affect local communities and how climate change heightens those impacts.
Climate issues are seldom talked about with communities in project contexts. Rather, discussions typically focus almost entirely on project design, wealth and job creation, and the local, direct social and environmental impacts a project may have. The many unknowns of climate change and the subsequent threat it presents to livelihoods and culture are often left unsaid.
For example, when companies discuss how operational water usage and related activities for a project may impact a community, those who will be affected understandably wonder: “Will there still be enough water for us?" Typically, project plans take into consideration historical weather patterns. What is often not discussed is how changing climate patterns may result in less – or more – rainfall in the future for a region.
While both the company and community are impacted by future rainfall levels, communities are disproportionally affected. In their agreements with government officials, companies obtain commitments about the amount of water that they can use in the project. Operations are the priority, and the community gets what’s left over. Such a process may work if climate data is stable and unchanging, but weather patterns are shifting, resulting in extended droughts that could lead to famine in many parts of the world and increased rainfall in other areas, causing flooding, erosion, and lost livelihoods.
The lack of disclosure of projected climate effects is particularly problematic for communities that rely on agricultural livelihoods as climate change threatens their very existence and way of life. Ignoring climate impacts during community consultation and engagement presents a major risk to extraction companies as documented in Mongolia by the World Bank Compliance Advisor/Ombudsman. It’s easier to address climate concerns and potential consequences for communities during the design phase rather than being forced to address them without a plan while trying to operate. Climate changes and their implications can be better modeled, explained, and mitigated before a project starts – using joint fact finding and other joint data gathering and analysis techniques.
At present, several structural factors create limits for meaningful consultation and engagement with communities on impacts, including the effects of climate change.
First, communities typically don’t invite companies to develop projects in their region, especially oil and gas projects – governments do. While national governments might want a project to succeed for “development of the nation,” communities and families directly impacted by a project are highly discounted in favor of the “greater good.” For governments, the aim is a revenue stream that a project can provide, so the bar is somewhat low in terms of consultation requirements (as we’ve seen in our own work in West Africa, Tanzania, Madagascar, Saudi Arabia, and elsewhere). As a result, most community members have little idea of what a project will entail in terms of actual number of jobs, how it might impact their lives, and how it might change the region in which they live. Livelihood programs, agreements, and other benefits are at best weak and well meaning – and at worst irresponsible, backwards-looking, unfair, and primitive, leaving some communities further marginalized and handicapped from entering the global economy.
Second, during consultation and throughout engagement, companies tend to set the agenda, leaving communities at a distinct disadvantage and power imbalance due to an asymmetrical process. Communities don’t have the equal means to bring in their own experts to understand impacts (and data) and make well-informed decisions. Their lens of understanding is necessarily limited, and therefore their agency.
Finally, what communities want, in addition to prosperity, is to live their lives, maintain their culture, and be treated respectfully and fairly. Few communities get excited about development that involves a company taking their land or changing the environment. These are deeply painful, traumatic experiences. For many traditional people the land is “of their ancestors” and central to their lives and existence. While most give up their land, they have no choice in the matter. Worse yet, mitigations to address the loss of land and shifts in their livelihoods are often further dependent on volatile weather patterns and unknown micro-climates, while coping mechanisms (that have evolved over generations in response to local conditions and geographies) may no longer be relevant.
There is a need to better engage communities in understanding projects and their effects (especially how climate change could compound a project’s local impacts), using expert and local knowledge), and using dialogue and negotiation to determine whether and how projects should proceed. While joint fact finding and participatory engagement processes present several pathways to doing this, the art of meaningful, objective, and fact-based consultation must continue to deepen.
It’s clear that the effects of climate change will burden communities even more seriously in the coming years. It seems important to address this before it is too late.
Stepping back, we see several questions for consideration and to spur discussion, hopefully leading to better practice that improves lives for impacted communities and reduces preventable social risks to companies:
It’s our hope that these reflections can help those working on corporate-community engagement in the extractives industry come together to address climate impacts – for our children and their families, and those of future generations.
Merrick Hoben is a CBI Senior Mediator and leads CBI's Corporate-Community Engagement Practice. Larry Dixon is a Senior Consultant for Triple R Alliance and a leader in the field of corporate social responsibility and stakeholder engagement.