The Power of Trust: Advancing Projects with your Stakeholders

March 15, 2014

(photo source: www.ledcor.com)

 

As a moderator for the Canadian Institute of Mining’s (CIM) Stakeholder Dialogue Series, I’ve facilitated a number of discussions, most recently on the margins of the 2014 PDAC conference in Toronto. Whatever the specific topic; be it concerns over the construction of a pipeline, or artisanal miners on a concession, if it involves engaging stakeholders the goal was always to move the relationship towards a state of trust and then maintaining it. So what does earning trust involve and why is it so critical?

 

What’s the starting point for engagement? There a numerous variables affecting the ability to earn trust, first of these are existing perceptions towards the project or activity. A company’s success potential will be much higher if stakeholders have had a positive previous experience with resource exploration or extraction. The time and resources required to earn trust become significantly higher if there is no previous experience - and exponentially more so if social legacy issues exist. The wider political discourse on foreign investment in the extractive sector is also a major factor.

 

Once the starting point is understood, how should a company begin to engage? Well, it should start by getting to know the community or stakeholder. Rather than say ‘hello we’ve got the right to work here and we’ll be starting soon’, it might take the approach that ‘we’ve applied for/received a license to work here, but before doing anything we want to get to know you first (and let you get to know us)’. Learn what’s important to the stakeholder and what its values are. Identifying common values will always provide a basis for dialogue because people can always agree on things like honesty, transparency, a healthy environment, and opportunities. Make the effort to listen actively to what stakeholders are saying. For it is only by being truly listened to, that people feel understood. And, it is only by feeling understood that people give trust.

 

Why is getting to a state of trust so key? Most stakeholders have no way of truly understanding what the benefits and impacts of a major extractive project are, and how effectively these will be managed. All the conflicting information, legacy issues, and viewpoints on the sustainable benefit of extractive activities further complicate matters. If you are attempting to earn the trust of a rural community that relies on land and water resources for its livelihoods, that much more is at stake for it. And, stakeholder interests are intertwined. If you can’t get the rural agricultural sector on side, you will have a tougher time convincing the politicians that rely on its votes and who’s fortunes are tied to public opinion.

 

What are some of the main things that affect trust between a company and its stakeholders? A major factor is the management of expectations. I’ve come across companies that thought they could earn a social license by promising a lot of things that they were far from able to deliver in a timely fashion. A community’s perception on time and probability is often quite different from the company’s for example. The message that “If there’s a mine we will get paved roads and good clinics” may often be interpreted as “we will pave the roads and build good clinics”. Time horizons between communities, companies and investors rarely align and this is a major source of stress. This can lead to trust being repealed, brash actions (by either party), and relationships destroyed.

 

Furthermore, the loss of trust on one issue is not limited to that issue.  If a company compromises trust by not fulfilling an expectation then that trust is weakened across the board. The community may question its likelihood of delivering on other areas of trust such as reliability to protect the groundwater. 

 

The areas in a company-community relationship where trust is at risk are innumerable. Most of these have nothing to do with the intentions of the parties, but are a result of forces over which they have limited or no control; change of market conditions, investment decisions, government policies, accidents, personality clashes, etc.

 

So what is the best way to bolster the durability of trust given the inherent uncertainties of a project? Building the capacity to understand each other is critical. When difficult decisions that affect the other party are taken, acceptance of those decisions are far easier to come by if the reasons behind them are understood. It is in the company’s vested interest to build the capacity of its stakeholders to understand its business.

 

Scheduling structured meetings with authorities and development stakeholders, and conducting workshops in local communities is the way to achieve this. These sessions should be well tailored to the existing knowledge and capacity to take-in information of the stakeholder. The major phases and activities of a project need to be explained and the basics of business risk and cost structure understood. Even developing communities can understand cost and risk if capacity building is done appropriately - there are few riskier activities than small-scale agriculture. Capacity building is not a one-time exercise. It should continue to happen periodically over the life of a project, especially during transition points of key people or phases.

 

Companies that are at the top of their class know this. They have the right people, policies, and programs in place to ensure that capacity is built well and stakeholder engagement is robust. They know the importance of relationships and the value of trust.

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