Resource Curse or… Opportunity for Shared Value A practitioners perspective

Toby Radcliffe, Article 13

Good afternoon, and a brief introduction

Article 13 is a specialist change agent. We take plans and strategies that aren’t working - or

haven’t worked – in the social, environmental and ethical arenas and make things happen to

drive positive change and create shared – and new - value for your organisation and your

stakeholders.

We work globally with organisations (public and private) around issues which are controversial,

complex and highly scrutinised; for example:

•African mining company: Engaging local communities (including artisanal miners)

•Global pharmaceutical company: Scaling up response to HIV/Aids in sub-Saharan Africa

•UK NDA: Building a geological disposal facility for nuclear waste

•Middle Eastern shipping company: Developing an ethical response to maritime piracy

Client include

www.article13.com © 2

Today’s presentation Resource Curse or… Opportunity for Shared Value

Some context

The future trends which will shape our world (resource, transparency and expectations)

Botswana and coal, the opportunity and the challenges

Stakeholders and what really matters

Identifying your stakeholders

Understanding the material issues (what matters most)

Building trust and creating shared value

Communicating complex terms (to build trust and informed consent)

Moving from ‘being good neighbours to creating shared value’

www.article13.com © 3

Increasing expectations

Declining resources

Radical Transparency

Value

Cu

sto

mer

s

Energy

Metals and Minerals

Climate

Air

Species

Forest

Food

Water

Social equity

Soil

Stak

eho

lder

s

Reso

urces

The three trends shaping the world

Context is key

• Growing energy demands – nationally

ESKOM, pressed by growing power

demands in South Africa, is already

cutting back on electricity generation to

Botswana,

• And globally… Demand for seaborne

thermal coal grew from 250 Mt in 1995

to 650 Mt by 2010, an annual growth

rate of nearly 6.7%. And is expected to

continue, with demand reaching nearly

1,100 Mt by 2025.

www.article13.com © 5

Source: World Energy Council

• Diamond revenues, account for approximately 41% of government’s revenue and 32.3% of

GDP, however diamond revenues are expected to dip significantly around the year 2022

• Africa’s electricity consumption is expected to grow at a rate of 3.4 % per year over the

period between 1999 and 2020.

A solution… coal?

• Botswana has extensive, and largely unexploited, coal resources which when developed can form part of the Government’s effort to diversify the economy.

• Known coal resources in Botswana are of the order of 202 billion tonnes

• Coal currently supplies 30.3% of primary energy and 41% of electricity generation.

• Coal use is forecast to rise over 50% to 2030, with developing countries responsible for 97% of this increase, primarily to meet electrification rates.

Professor Abubakar Sambo, the World Energy Council’s Vice-Chair for Africa, said:

“Our continent’s immense resources have strong potential to boost energy access and improve the lives of our people. The opportunities are huge: in renewables and energy

efficiency, our hydrocarbon reserves, and our huge gas reserves. But in order to capitalise on these, there needs to be improved regional interconnection and more concerted efforts across

national borders.”

However, this brings new challenges….

Infrastructure: The challenge of moving coal to the ports, requiring new infrastructure and considerable regional investment

Environmental impact: Coal Deposits / Methane occurrence in Botswana is / are found in the same rock units that constitutes Botswana’s major aquifer (Karoo).

Local communities: Grassroots protests against the Phulbari Coal Project in northwest Bangladesh, which would displace as many as 220,000 people, led the UN to call for an immediate stop to plans to excavate this vast open pit coal mine

Equitable wealth distribution: In 2012, protest march in South Africa to demand that a multinational mining company share more wealth. “They are making millions here, but the community around is getting nothing”

Climate change: Coal fired power plants are the biggest source of man made CO2 emissions. This makes coal energy the single greatest threat facing our climate.

An answer? / An emerging approach?

• Understand who your stakeholders are

– Early involvement to develop trust in process and actors

– Consider the ‘missing stakeholders’

• Understanding the issues which matter most to your stakeholders

– Listen to all concerns (even if they seem trivial)

– What are the quick wins, and longer term priorities

• Work with your stakeholder to create shared (societal and business) value

– Operate in partnership with stakeholders

– Development of community benefits and mitigation

Who are your stakeholders? Which ones do you have direct access to?

Those who affect the organisation

Those affected by the organisation

Those core to mission and values

Those most interacted with

Company

Shareholders Suppliers

Government

Employees Consumers

Social media?

Regulators Local

community

Media?

EXPLORE

REMOVE

PROCESS

ACCESS

REFINE

REHABILITATE

Impact on restricted areas – biodiversity

Interaction with artisanal and small-scale miners (ASM)

Land disturbance

Regional health threats

Grievance mechanisms

Employment practices and development skills

Human rights

Health and safety

Management of cyanide

Use of resources

Post closure monitoring

Post closure planning

Engaging with communities

Emissions, effluents and waste

Indigenous rights

Emissions to air

Resettlement

Material stewardship

What are the issues…

Regulators

Media

National government

Local governments

NGOs

International government The

community

Trade unions

The public

Industry and the supply chain

Staff

What are the issues that MATTER MOST

Academia

How do I know I can trust the

actors? How is it regulated?

It will destroy my business or local

tourism etc.

We should not be following this path

we need green energy

What are the benefits to me (jobs, sharing wealth, taxes)

Is it safe?

How much is it going to

cost?

What are the mis-conceptions

Opportunities for creating shared value?

Which issues matter most?

How to prioritise them In

crea

sin

g si

gnif

ican

ce t

o s

take

ho

lder

s

Increasing significance to your organisation

Human rights Biodiversity

Land disturbance

Health and safety Emissions, effluents and waste

Emissions to air

Resettlement

Post closure plans

Climate change

Water use

Regional development

Community engagement

Wealth distribution

Quick wins… addressing mis-truths and communicating risk

KEY TIPS

• Define the goal

• Identify and understand the audience

• Target/engage audiences when most likely to be receptive:

• Ensure message and messenger create trust

• Pilot messages first

• Use plain language

• Graphical presentation of uncertainty produces higher comprehensibility ratings, but lower trustworthiness ratings

• Ensure communication - including with the media - is timely and proactive.

Risk = Hazard x Outrage

Not easy to establish, Very easy to lose.

“Trust comes on foot and goes on horseback”

Trust

Risk

Lack of knowledge OR Uncertainty about the potential impact or extent of hazard.

Experts use quantitative risk attributes (e.g. probabilities) The public use qualitative risk attributes, such as voluntariness of exposure

Uncertainty

Engagement

Communication

Consultation

It is typically one-way – in this instance from the mining company to the miners. But you can add value to it....

You support people to answer questions such as – what do you want to want and what are you worried about

This is all about having a two-way conversation. True engagement is when you are prepared to share the agenda

Engagement, going beyond communication

Moving towards creating shared value

“The competitiveness of a organisation and the health of the communities around it are

mutually dependent.

Understanding the issues which matter to your stakeholders also provides an

opportunity to create shared value and build trust within the community

Creating Shared Value

The principle of shared value - creating economic value in a way that also creates value for society by addressing its

needs and challenges

”Businesses must reconnect company success with social progress. Shared value is not social responsibility,

philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what

companies do but at the center.”

Porter 2011

Opportunities to move from ‘good neighbours’ to creating shared value

Cash incentives STAKEHOLDER

CONCERN MOVING TOWARDS CREATING SHARED

VALUE

• Dangerous to local health • More medical centres (health monitoring, better screening)

• Link with health enhancement / public health

• There will be more traffic / road accidents

• Build infrastructure which benefits the local community – routes to market

• It will destroy my business

• Providing training and regional skills centre to enable local jobs for local people

• No one will ask me • Establish a local partnership to oversee the project - allowing community to learn about the issues and take part

Emerging thoughts / lessons for the future

WHAT THIS MEANS FOR MINING & ENERGY IN SOUTHERN AFRICA

•There is not necessarily one single approach – communication with stakeholders is

nation and culture specific.

•Early involvement to develop trust In process and actors.

•Proper identification of stakeholders and their interests/concerns/aspirations is the

key to success. Effective dialogue needs time and money (it may lead to delays in your

project).

•Listen to your stakeholders by establishing a two way process and gain trust.

•Be transparent and open in process development.

•Listen to all concerns (even if they seem trivial).

•Operate in partnership with stakeholders.

•Develop community benefits which the community actually want.

•Allow sufficient time (it takes as long as it takes).

Thank you for your time

For more information, contact Jane Fiona Cumming T: +44 208 840 4450 M: +44 7979 606986

E: janefiona@article13.com www.article13.com

Article 13: We create value with a conscience. Our expertise is innovative, our solutions drive behavioural change and our recommendations can be implemented immediately.