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Managing risk and maintaining license to operate:

Participatory planning and monitoring in the extractive in the extractive

industries

A training module

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Training module overview

Session 1: Participatory approaches to corporate-community relations in the extractive industries: context, concepts, benefits and risks

Session 2: Participatory planning and monitoring tools and mechanisms for the project cycle

Session 3: Key focus areas, challenges and success factors

Session 4: Understanding diverse perspectives

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Participatory planning and monitoring

Session 1

Participatory approaches to corporate-community relations in the

extractive industries:

context, concepts, benefits and risks

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Key concepts for a shared vocabulary

What do the following terms mean to you?

• Participation• Engagement• Accountability• Social license to operate

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The natural resource context

Groups Questions for discussion

Community representatives

What are common problems for communities?

What kinds of changes tend to occur in communities around extractive operations?

Company representatives

Other stakeholders

(eg donors, INGOs)

What are common social, political and environmental characteristics of localities where extractive companies have operations?

Government

(local and national)

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Common characteristics of the local context

• Weak local governance

• Legacy of conflict

• Struggles over distribution of the benefits of extractive development

• Uncertain land tenure

• Perceived lack of legitimacy of the laws and regulations which govern MNC activity

• Varied institutions of culture and history in isolated areas

• Complicated network of relationships within communities

• Population migration into economic zone of opportunity

• Companies as de facto governance and/or service providers

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Implications for companies, communities and governments

Participatory approaches mean a shift in:

• Corporate culture and roles

• Strategic thinking

• Business practices and communication

To achieve:

• Jointly defined problem and solution

• Shared resources and responsibilities

• Leveraged cash, expertise, systems and networks

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Features of participatory approaches

• Source of expertise• Time scale of parties• Accommodates changing conditions, changing

needs, priorities and changing expectations.• Actions and implementation are collaborative;

responsibility is shared• Long term process, but indicators of progress

and co-monitoring can demonstrate achievements.

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Spectrum of Community-Company Engagement

• Create linkages with different actors to open information flows

• Naming, shaming and faming

• Stakeholders are co-decision makers

• Industrial sabotage, hostage taking

• Company ignoring local knowledge

• Civil society organization

• Register complaints with local authorities

Nonparticipation Co-planning and monitoring

• No shared understanding• Lack of legitimacy• No power sharing

Shared-understanding

Legitimacy Power-sharingTrust

Shared-understanding

Legitimacy Power-sharingTrust

No action Inform Consult Involve Collaborate EmpowerNo action Inform Consult Involve Collaborate Empower

Increasing levels of participation and community impact

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Participatory approaches

How might a participatory approach help you in your work?

How might a participatory approach hinder you in your work?

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Benefits and risks

What potential benefits and risks can you see from taking a participatory approach:

- From a company perspective?- From a community perspective?

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Potential benefits for companies• Improve / maintain local social license to operate• Enhance employee morale, satisfaction, motivation and retention

• Reduce risk of conflict and delays / ensure stable operating environment

• Prospect of faster permitting and approvals

• Reduce risk of global criticism and reputational damage

• Help obtain project financing

• Ensure more effective use of corporate resources

• Help meet regulatory requirements for local benefit from extraction

• Local knowledge can complement and enhance technical expertise

• Increase productivity

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Potential benefits for communities

• Greater voice in planning and decision-making.

• More likely that development outcomes meet the needs and aspirations of local communities.

• Sustainability and increased self reliance, and strengthened local institutions over time.

• Access to resources, including new ideas, technology, skills.

• Potentially stronger economic base, which could contribute to rural capital formation.

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Risks and challengesFor companies

• Building shared understanding requires significant investment of time and resources

• Relinquishing control over how resources are allocated can be counter-intuitive and uncomfortable

• Higher cost outlays which may not be recoverable

• Obligation schedules and procurement concerns

• Different expectations and language

• Requires skills and capacity for working across cultures and with communities

For communities • Building shared understanding and trust

requires significant investment of time

• Expected benefits are not clear, and are usually only realized after many social and economic costs have already been borne by communities

• Risk of being ‘co-opted’ into appearing to support something they do not

• Changing power relationships

• Losing independence and ability to criticise

• Different expectations and language

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Participatory planning and monitoring

Session 2

Participatory planning and monitoring tools and mechanisms

for the project cycle

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The project cycle

E n g a g e m e n t

Feasibilit

y

Constructio

n

Explora

tion Opera

tions

Expansion

Divestment

Legacy

Concessions n

egotiatio

ns

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Range of participatory tools and mechanisms

• Participatory planning • Community forums • Good neighbor agreement • Community suggestion boxes • Participatory budgeting • Community scorecards • Citizen report cards • Community monitoring

Training and capacity building, access to information, and mutually agreed-upon metrics for monitoring are integral to each of the tools.

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Tools and mechanisms on the spectrum of participation

• Create linkages with different actors to open information flows

• Naming, shaming and faming

• Stakeholders are co-decision makers

• Industrial sabotage, hostage taking

• Company ignoring local knowledge

• Civil society organization

• Register complaints with local authorities

• Training/ hiring/ sourcing strategies

• Information sharing

• Community suggestion boxes

• Co-planning committees and partnerships

• Community forums• Co-budgeting • Co-evaluation• Co-monitoring

• Heightened security

• Third party facilitation stakeholder engagement

• Community monitoring

• Community scorecards

• Citizen report cards

• Good Neighbor Agreements

Des

crip

tio

nT

oo

ls

Nonparticipation Co-planning and monitoring

•No shared understanding•Lack of legitimacy•No power sharing

Shared-understanding

Legitimacy Power-sharingTrust

No action Inform Consult Involve Collaborate Empower

Increasing levels of participation and community impact

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Tools and mechanisms in the project cycle

Expansion

Exploration• Information meetings • Co-monitoring• Contract negotiations

Feasibility•ESIA•Sourcing

• Co-identification of issues and indicators• Co-target setting: hiring, sourcing, training• Roles responsibilities agreements• Closure planning• Information sharing• Local skills training programs• Contract and concessions negotiations

Construction •Employment and training•Sourcing and procurement•Infrastructure access

• Community monitoring• Community reviews• Good neighbor agreements• Suggestion box• Interest group committees and forums• Community scorecard

Operations•Employment and training•Sourcing and procurement

• Co-budgeting• Support community forums• Company scorecard• Evaluation• Citizen report card

Legacy•Company responsibility for unforeseen consequences• Advocacy tools, accountability tools, and community capacity to hold company accountable for unforeseen consequences

Divestment

• Participatory sustainability planning and budgeting

• Citizen report card

•Environmental restoration•Sustainable livelihoods•Transfer of assets

Co-monitoring, measurement and verification

Partner of choice

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Applying tools to case examples

• What is the priority?

• Which tool or tools would best address the priority?

• How would it work?

• At which points in the project cycle might it be useful?

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Discussion questions

• Which tools / mechanisms might be useful in your context?

• At which stages in the project cycle?

• What are the benefits and risks at each stage?

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Participatory planning and monitoring

Session 3

Key focus areas, challenges and success factors

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Critical focus areas

1. Employment / hiring locally and training

2. Sourcing and procurement / supply chain

3. Intra-household dynamics and the family

4. Access to infrastructure

5. Environment

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Case example exercise

• What factors might promote success or limit impact?

• How viable might this mechanism be in your context?

• What might the benefits and risks be in your context?

• How could it be modified / adapted to better fit your context?

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Challenges and success factors

• Understanding the many actors

• Multiple realities

• Power relations and equity participation

• Bias towards science

• Trust

• Style of communication

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Possible diagnostic questions

• What stage of the cycle is the project in?• How robust are local governance institutions?• How organised is civil society?• How cohesive is the local community?• How high is standard of living in local community?

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Exercise

1. Conduct preliminary diagnostic for particular district or region

2. Select candidate PPM mechanism

3. Design basic strategy for introducing mechanism

4. Assess risks

5. Develop key performance indicators

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Participatory planning and monitoring

Session 4

Understanding diverse perspectives

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Multiple actors in the extractives context

Community peopleInternatl

Stake-holders

Donor Community

Operating company

Economic

EnvironmentSociety

Financing institutions

Partner CorporationsState

company

Federal Ministry

Local NGOs

Local businesses

Local government

Other -individuals

Intl media, bloggers

Local-Global Interactions

Local Media, internet