Good Morning. I would like to recognise that we are on the traditional territory of the Coast Tsimshian. My name is Michele Gilbert, and I fulfil the role of Society & Engagement Practice Lead for Advisian. As you can hear, I am originally from South Africa where I was privileged to work in economic development of indigenous people through the delivery of large projects. I have been in Canada for over 3 years now and have participated in similar work with Aboriginal people. For those of you who are unfamiliar with Advisian, the company is the consulting arm of WorleyParsons. In Advisian we have combined our management, strategic and technical consulting capabilities so that we can offer holistic solutions to projects. Our expertise includes technical competence, operational effectiveness and analysis providing solutions that result in cost reduction and operational efficiencies. Our team have practical experience in the oil and gas and many other industries in construction and operational projects. And so we work with clients to think differently and open up opportunities for economic benefits for local communities through project delivery. I would like to share with you today, some of these ideas and experiences.

So, looking at the situation here in British Columbia, interest in LNG development has created a paradox – people want investment in their communities however there is uncertainty around long term environmental and social effects. To manage the uncertainties created by this paradox, there are several formal processes in place which include the Environmental Assessment (EA) process and other permitting requirements. It is also becoming standard practice for Impact Benefit Agreements (IBAs) to be negotiated to meet capacity and resourcing needs, through community investment. The EA process starts with an Environmental Impact Assessment or EIA. Historically the EIA covered the assessment of only environmental impacts. However, today this view has become an integrated Environmental, Social, Economic, Heritage and Health effects assessment that allows proponents to gain more than just a regulatory approval. The overall goal will be to understand these effects and develop positive relationships with Aboriginal groups and other communities to collaborate on how to overcome these impacts.

The path to project approval has often been thought of as a linear path over time. The reality is that the engagement, EA and permitting processes are more like a web. The project evolves based on a wide range of factors as more data becomes available. In addition, regulations change, and other projects come and go that all have an effect. The reality is there will be times when it feels like backward steps and U-turns have to be made. I am sure that those of you here today that have been involved with these processes can relate to that. The web is further created by the internal feedback loops within a project between the teams working on the Environmental Application, community engagement and engineering design. In addition, the web becomes more complex as there are many parallel processes, that all require engagement with communities. This puts significant pressure on community resources and it is important that proponents and government work together to untangle this web. For community engagement, the EA process on its own is not enough. It is about building relationships based on trust. This takes time and sometimes the necessary amount of time is not available during regulatory processes.

So what is the role of Impact Benefit Agreements? In my research on this topic and reading several papers that have been written, I would like to quote a couple of relevant statements:

• From Fidler and Hitch 2007: “Although not compulsory, IBAs are becoming part of a standard package of agreements negotiated between a proponent and an Aboriginal organisation”

• From Courtney, Riley and Fidler November 2008: “Whilst the EA is legislated and informed by the Crown, IBAs operate in the realm of private contract law. The two are ostensibly part of a parallel process that connects the Aboriginal groups, government and the proponent.”

• “IBAs commonly include preferential employment and business contracts and can act as an affirmative action plan to initiate partnership development.

A summary of the research shows that typically project proponents; use IBAs as a tool to initiate partnership development, and offer employment and business opportunities to communities. Whilst Aboriginal communities typically use the IBA process to address their concerns through a contractual framework to address economic development

Therefore, IBAs play a role in creating access to opportunities for economic development within communities.

But are these processes delivering on their expectations? Moving forward with large projects is not just about Environmental Assessment Certificates, Permits and Approvals and Agreements for Economic Benefits. Communities expect participation in the project and economic development for the community members and businesses. As this slide show, the sustainable success of any project is based on the trust and relationships built between the people and the teams involved. These relationships need to include crucial components such as sincere communication, mutual respect, trust and an understanding of community and proponent priorities by both parties.

These relationships built in the early stages of the project need to be carried through project planning and sustained through project delivery and operation. Longevity of projects relies heavily on the relationships established at the early stages at community level. As projects are developed in the community, project proponents become part of that community, therefore like everyone living and working in a community, there is a need to get along. Where successful relationships are not established the construction and operation of the project will be impacted. In addition, where IBAs are agreed and projects do not go forward, expectations are left unfulfilled. It is important that expectations are managed on both sides and that promises made are kept during project delivery to gain, and keep the trust of the community So, IBAs need to deliver on promises and translate into actual economic benefit for communities.

So are IBAs delivering?

Let me share with you some examples that I came across in searching for the answer to this question In 2010 Prno, Bradshaw and Lapierre conducted a study of 14 IBAs from the diamond mining sector. Secondary socio-economic data and the key informant interviews painted a complimentary picture of performance of these IBAs. However, the community level focus painted a different picture. It was clear that both viewpoints were correct. These IBAs had delivered benefits to local communities; relieved some capacity strains; and; enabled some post- project approval follow-up; all in a way never achieved before through regulatory processes like EA. However, a closer look revealed that some of the benefits were problematic and/or simply insufficient. Capacity issues remained. And the influence that communities held when they sought to follow up with companies was less than expected or hoped for. That was 2010, so have things improved since then? In 2013, Bradshaw and Wright conducted a gap analysis of IBAs in mineral development. Concerns had been raised by communities and the following gaps were identified:

• IBA benefits are focused primarily on mining –oriented tasks and community members not involved in mining activities do not benefit proportionally

• Only non-management employment opportunities are available to Aboriginal workers

• Benefits received by Aboriginal communities are not commensurate with mining company profits

• A wider distribution of benefits is required

• Aboriginal employment targets at some mines had not been met It is therefore clear that IBAs alone are not enough; and often economic benefits are not realised. This is due to a fundamental principle of economic development which is that: the creation of opportunity and provision of access to opportunity does not on its own deliver economic benefit.

However, there are success stories to be told and we can learn much from these examples. The Government of Canada in 2009 published a snapshot of recent projects included in the First Nations Forestry Program. This program supported capacity building for First Nations to participate in; and benefit from sustainable forestry management. There were some amazing achievements. Over 9500 First Nations workers and 200 First Nations businesses benefited from the program through employment, specialized training, business development and contracting successes. The key principles that supported this success are detailed on this slide and include: • Programs that lead to economic self-sufficiency and an end to dependency on

social assistance • Self-government by First Nations • Respect for Elders and traditional practices • Economic development linked to social development • Connection between economic and business development and community

development objectives

• Providing effective and responsible leadership with a particular focus on ensuring that community based long term economic development intended to provide members a good standard of living

• Providing and encouraging education, training and wellness programs • Direct involvement in economic development through business capacity building

initiatives as individual Nations and in partnership with others • Protection of the environment Similar success was achieved in a Coastal Context in Alert Bay, BC in 2002. Kelly Vodden conducted a case study of Sustainable Community Economic Development (SCED) and identified sixteen strategies that lead to the successful development of this fishing community. These strategies included addressing the gaps previously identified and included key success factors common with the forestry program of 2009.

So what is the difference between these success stories and the gaps identified in the previous examples; and how do we move forward to success? It is clear from these case studies that historically, access to opportunity (including through IBAs) does not necessarily translate into economic benefit.

There are many reasons for this that includes: • A lack of the key success factors just discussed • Social problems that hinder achievement in opportunities provided. • Not pairing access to opportunity with capacity building I would like to focus some of our discussion today on capacity building for the same reason that Kelly Vodden sited in the Alert Bay case study, and I quote: “Common pitfalls include overlooking the capacity of an community to undertake projects.” We need to provide access to opportunity paired with capacity building. There are many different models that can be used on which to design capacity building programs. It is important to select and implement the right delivery models as the same case study discovers, and I quote: “a flawed process can destroy a community’s chances of success in working towards a sustainable future.”

So where do we start as we move forward to success?

The thinking on economic development of Aboriginal people through project delivery has evolved since the 2002 development of a fishing community and the 2009 Forestry Programs. Porter and Kramer in the Harvard Business Review article of 2011 titled “Creating Shared Value” propose some exciting new concepts. In the article they state that companies could bring business and society back together if they redefined their purpose. This becoming a purpose to create shared value. This means generating economic value in a way that also produces value for society by addressing its challenges. The concept of shared value shifts thinking from protecting a social licence and mitigating impacts, to proactively creating business and societal value simultaneously. This slide provides some preliminary concepts on creating shared value which include: • Project proponents having the necessary policies in place to engage in activities

and programs that measurably improve socio-economic outcomes for communities • Include in these programs, improvements that relate to core business performance • Instead of “giving back” shifting thinking to expand the total pool of economic and

social value As these may be unfamiliar concepts to implement, we will talk through some examples later on in our discussion.

But first a little more on the concept of creating shared value and what it means for industry. The traditional approach to projects has been, companies make money, and then support employment and income, and come up with ways to ‘give back’ to the community. The emerging view supports a different approach, one in which companies work on enhancing the competitiveness (and profitability) of the company, in order to advance socio-economic conditions simultaneously. In this way sustainable economic benefit is created in the local area whilst the project proponent improves profitability. The Shared Value Initiative focuses on a long term view of economic development and is founded on the key success principles previously discussed. It incorporates economic development through a diverse range of activities within the community. This model also addresses the gaps identified by Bradshaw and Wright as previously discussed

What does shared value mean in business functions? This table of “Shared Value Levels” provides some guidance in 3 distinct focus areas. It is taken from a report of the oil and gas and mining and minerals sectors. This report entitled: “Extracting with Purpose as part of the Shared Value Initiative”, highlights how companies in these sectors can create shared value. Creating shared value is achieved by pursuing opportunities that tie business success to the prosperity of host communities and countries. It often involves working in collaboration with governments, multilateral institutions, non-profit organizations, and even competitors. And now for some examples (Column 1) Re-conceiving products and Markets This involves using intermediate or by products to create a local market. For example a project that is developed near a community that has no potable water, could expand water treatment plants required for an LNG facility to produce an excess to operational needs. This excess could be sold to local communities and municipalities. This can be implemented with across different utilities to meet community needs.

(Column 2) Re-defining Productivity in the Value Chain: • Where local workforce capabilities are improved through training, This deceases the

number of workers that need to be brought in from elsewhere. Thereby decreasing accommodation and infrastructure needs and the associated costs.

• Strengthening competitiveness in supply chain can be achieved by developing suppliers through business capacity building

• The development of facilities requires an increase in local emergency response capabilities. If this is developed locally through capacity building and training in the local community, rather than bringing in large service providers from elsewhere, costs are reduced and reliability of local supply is established

• Training and capacity building in supply and delivery of utilities to reduces utilization of these resources used in operations, can also reduce costs

• All of these factors work together to reduce costs in the supply chain, making projects more financially viable and increasing productivity through operations.

(Column 3) Creating and enabling local environment: • The examples cited in redefining productivity in the supply chain included the creation

of an enabling local environment, however, some further examples are now provided. • An example of local clusters would be to develop local capacity through growing local

businesses that can provide routine maintenance services and parts for proponent operations

• Examples of shared value in infrastructure include investing in improved roads, airports and marine ports for both the project and community use which will generate income to offset capital costs

• Examples of broad-based economic and community development could be investment in social programs to support communities in dealing with social issues whilst at the same time, securing a reliable workforce and meeting health and safety goals

• Capacity building to support local governance capability, will lead to a efficiencies working with this interface for the project proponent which results in a time cost saving.

So how do we implement this new thinking? The Shared Value Initiative provides a great model that can be adapted for the compilation and implementation of IBAs that focuses on a long term view of economic development. Aspects of these principles can be translated into successful project delivery through the following: • Development and capacity building within supply chain • Distribution of economic activities throughout community • Capacity building\Economic development where the community participation in

planning and governance • Focus on long term independence • Building workforce through education • Building community infrastructure • Partnerships with community, government and industry

The Shared Value Initiative showcases many instances of successful implementation of these principles in the oil and gas industry. From BP in Azerbaijan with a business capacity building that achieved some fantastic results that included: • Developing more than 120 local hydrocarbon sector companies • In 2012 signing 61 long term contracts with participating companies totalling $1.1

billion; ToH..

HHPacific Rubiales Energy in Columbia whose business capacity building program created a local company to manage its water treatment process, reducing reinjection costs by more than 20 percent. These 2 examples showcase different shared value levels. BP re-defining productivity in the supply chain by developing competitiveness whilst increasing local business capacity And Pacific Rubiales Energy re-conceiving products and markets whilst also creating an enabling local market With some creative thinking, shared value creation can be implemented in innovative ways to deliver sustainable economic benefit in the local area whilst the project proponent improves profitability. This is how we expand the total pool of economic & social value.

So I know some of you have got to be thinking about the price tag for this. Correctly implemented, creating shared value does not have to come with a large budget. In many of the case studies researched, the benefits and reduction in costs financed the development aspects on the programs. There are many ways for industry proponents, such as LNG, to reduce costs of capacity building through leveraging opportunities inherent within their supply chain driven through the procurement process. In this way suppliers become partners in building local capacity and contributing to shared value creation. In the South African project delivery program, we designed a model and delivered a program that was virtually self-funding with very little direct cost. This program was implemented in the year 2003 in the construction sector throughout the country. This program is still in use in as the recognised industry program 13 years later and has facilitated the development of many indigenous people owned businesses into fully fledged independent contracting companies.

To take a more in-depth look at this case study, I would like to start by sketching out the political landscape. In South Africa, in 1998 the SA Truth & Reconciliation Commission delivered its report to President Nelson Mandela. The Commission set up to address the human rights violations during the apartheid era. The Commission provided several recommendations. I would like to read to you recommendation section 43 as relevant to today’s discussion: “The Commission recommends that business give priority to the development and implementation of skills training and mentoring programmes, to ensure well-planned corrective action with regard to employment practices.” In 2003, the Broad Based Black Economic Empowerment Act was promulgated. The purpose of this Act was, and I quote, “ to promote the achievement of the constitutional right to equality, increase broad-based and effective participation of black people (indigenous people) in the economy and promote a higher growth rate, increased employment and more equitable income distribution; and establish a national policy on broad-based black economic empowerment so as to promote the economic unity of the nationH”

This Act catered for the development of Codes of Good Practice which were legislated in 2007. These codes included scorecards to measure performance of industry and government towards economic empowerment and included the following sections: • Ownership of businesses by indigenous people • Employment of indigenous people in senior management and company board of

directors • Employment at all levels of the organisation • Skills development and training • Preference in procurement from businesses owned by indigenous people • Enterprise development which is called business capacity building in this part of the

world • Socio- economic development which we know as community investment These Codes of Good Practice provided a framework for industries to get together to establish industry charters and scorecards to address economic development of indigenous people specific to each industry. I was honoured to participate in the development of the construction industry charter. I served on the technical committee for preferential procurement and enterprise development and I co-authored the section on enterprise development / business capacity building that is part of the construction industry charter which was legislated in 2009. Against this political background of transformation and economic empowerment of indigenous people, an industry business capacity building program was born. At the South African Federation of Civil Engineering Contractors, the South African equivalent of the BC Contractors Association, we developed and implemented an industry sector business capacity building program as part of the sector commitment to economic development. Canada has embarked on a similar process and has referenced aspects of the South African process identifying similar capacity indicators such as those found in The Canadian Aboriginal Economic Progress Report of 2015 compiled by The National Aboriginal Economic Development Board. This report uses core indicators that are “aligned with the vision of the Federal Framework for Aboriginal Economic Development, released in June 2009. The report benchmarks and tracks the most important measures of economic benefits and participation. It has identified three Core Indicators that are central to measuring the true economic progress of First Nations, Inuit, and Métis in Canada. These indicators include: 1. Employment 2. Income 3. Wealth and Well-Being

The report also uses underlying indicators to track the factors that have a direct impact on the ability of Aboriginal people to improve the core indicators. The underlying indicators include: 1. Education – high school, post secondary and tertiary 2. Entrepreneurship and Business Development 3. Governance 4. Lands and Resources 5. Infrastructure So, what are the opportunities for the industry to contribute to Aboriginal economic development as we move from project planning into project delivery and who should be involved in this process?

As we have seen in the shared value case studies, efforts are most successful when industry, government and Aboriginal communities work together in the planning and implementation of economic development programs. From the SA case study, industry, the Indigenous community and government as the clients for projects worked together to implement the business capacity building

program. Moving on from this, many parties participated in the construction industry charter and scorecard process and the final 16 signatories included Indigenous People, Indigenous business organisations, employer organisations, government and trade unions. However, it was industry, through the employers’ organisation SAFCEC that took the lead and ownership for this process. SAFCEC still operates this program today and I quote from their website “SAFCEC offers a unique programme for Enterprise Development (ED) in the construction industry. It is a company-to-company mentoring program based on the ED requirements as described in the Construction Codes. The objective of this programme is to transfer knowledge and skills to the Business owner and personnel of a sub-contractor or JV Partner, via mentoring, coaching and training.”

The program achieves its objectives by including some key principles in the program design and delivery. The program implements building capacity within the community owned or Aboriginal owned business – the beneficiary business. The focus for the program is on developing

systems and processes within the beneficiary business. This ensures that the beneficiary business is more sustainable and more employees within the business benefit from the capacity building. It also ensures that the success of the business stands is not dependant on the potential of the business owner alone. � SAFCEC provided a framework for the program � Assists businesses participating to identify and develop systems & processes

needed in beneficiary business � Leverage participants within existing supply chain � Use procurement mechanism to promote through projects � Low cost and external input � Business development supported by training

The model for this program leverages existing relationships that exist on a construction project. A large contractor is appointed for a particular scope of work and subcontracts portions of the work package out to subcontractors. The program can also be implemented when a larger contractor joint ventures with an Aboriginal business. Where the larger contractor is an Aboriginal business, this program could be implemented to

support smaller Aboriginal businesses thereby enabling successful Aboriginal businesses to also “pay it forward” to community development. If we were to apply this case study to the LNG industry, through the procurement mechanism, the proponent can require the large contracting businesses to participate in this program as part of the project local content and Aboriginal or community development requirements and commitments. The larger contractor then participates in building capacity within the joint venture partner or subcontract beneficiary business through mentoring. In the SFCEC program, the business capacity building specialist is employed by the Contractors Association as an impartial third party to provide the framework and necessary systems and documentation for the program and facilitate the start-up of implementation. This specialist also trains a company employee using a “train the trainer concept”. This builds capability within the industry to grow the program on all project sites and with other contractors. Both the large contracting entity and the beneficiary business are supported in this role through training on the implementation of the program and training for mentors and protégés participating. Mentors are generally Contractor site personnel providing mentoring through their usual interaction within a subcontracting relationship. This ensures that participating in the program is not a costly or time consuming activity for Contractors to implement. The longevity of this program is a testament to the success of the program model and key principles.

As we move forward in the development of LNG, we have a great opportunity to pave the way for economic development. By going beyond the regulatory processes, we can work together as industry, government and the Aboriginal community to create shared value. We have a unique opportunity going forward from today to learn from the gaps and successes of the past and apply the key success factors to our programs. We do this by matching access to opportunity with capacity building and then implementing the right programs through project delivery and operation. What an exciting time we live in, where we can set the trends that will shape our future. I, with you, look forward to being part of that change. Thank you.