Social Impact Assessment (SIA) by iiw15426

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									                             Social Impact Assessment (SIA)




                         ERM Social Strategies (November 5th, 2003)


Delivering sustainable solutions in a more competitive world
        Agenda




              • Brief Introduction to ERM and our work
              • Drivers
              • What is an SIA?
              • SIA Challenges




Delivering sustainable solutions in a more competitive world
        ERM Social Strategies
              • Mary Arnesen and Sarah Selby
              • Social Focused team within the ERM Corporate
                  Advisory Services Group
              • Environmental Resources Management (ERM) – a
                  global environmental and social consulting group
              • Key Business Areas:
                     • International SIAs primarily in Oil and Gas Sector.
                     • Social Performance – working with corporate level and
                       business unit level to implement social objectives
                     • Social Auditing
                     • Social Assurance



Delivering sustainable solutions in a more competitive world
        Consider some recent headlines ….

              Oil company – June 2001
                                                               • International human rights NGO files lawsuit
                                                                 against oil giant, accusing it of actively
                                                                 abetting human rights abuses in Indonesia
                                                               • Oil company suspended its LNG operation
                                                                 due to security reasons
                                                               • Government losing $ millions per month in
                                                                 revenues



             In a country with historical human rights abuses, companies must
               be part of the solution. If not, they will be viewed as part of the
             problem. A social assessment can identify these risks at an early
              stage and provide strategic measures to protect your investment


Delivering sustainable solutions in a more competitive world
              Power company –
               November 2001
                                                               • Company exits project after Govt
                                                                 authorities delay payments saying
                                                                 power tariff was too high.
                                                               • Company had signed a power purchase
                                                                 agreement, under which a 2000
                                                                 Megawatt power plant was to be
                                                                 commissioned.
                                                               • But the project ran into trouble nearly
                                                                 two years ago with the authorities
                                                                 beginning to delay payments saying the
      Could a socio-economic impact                              power tariff was too high.
      assessment have identified the                           • Company faces US0.5 billion loss as
      disjunct between the “deal” and                            national companies offer only half the
      what people were willing to pay?                           estimated $1 bn investment already
                                                                 made




Delivering sustainable solutions in a more competitive world
      A Dam in the middle East – Nov 2001


                                                               • Company pulls out of US$1billion dam
                                                                 project over social and environmental
                                                                 concerns
                                                               • “Company believes the project could only
                                                                 proceed with substantial extra work and
                                                                 expense and with considerable further
                                                                 delay.”
         The project could affect 60,000 people, reports say


        The extensive environmental and social impact assessment required by financiers
         of the dam identified risks considered unacceptable to the contracting firm. The
        information allowed the company to make a business decision not to continue as
                                  the main contractor on the project



Delivering sustainable solutions in a more competitive world
        Drivers for Conducting an SIA
              • Access to finance/investment
                     • Social performance is a key requirements of international finance institutions (eg IFC)
                     • SRI Investors ….the need to demonstrate high quality relationships
              • Regulatory approval & license to operate
              • Reduces project costs
                     • Prevents community disturbance during construction
                     • Restrains necessary compensation payments
              • Demonstrably better relationships with stakeholders
                     • Identifies potential project blocks eg community protests
                     • Engenders a spirit of co-operation and problem solving
                     • Reduces “NGO spotlight”
              • Protects and enhances reputation
                     • Delivers on corporate objectives
                     • Provides reassurance to employees & investors
              • Foundation of social performance throughout the project lifetime



Delivering sustainable solutions in a more competitive world
        Key Questions for Multinationals with Major
        Projects in Developing Countries
              • Will the project have impacts on the community and
                  wider society? What will they be?
              • Can the community and wider society affect the
                  project? In what way?
              • Who are the winners? Who are the losers?
              • What expectations and concerns do communities and
                  other stakeholders have about the project?
              • What are the potential risk implications of these
                  answers on the project?



Delivering sustainable solutions in a more competitive world
        So What is a Social Impact Assessment?




                  Process whereby the potential impacts of a new
                  development are predicted and evaluated via the use
                  of data gathering, analysis and stakeholder
                  consultation culminating in the development of
                  mitigation strategies.




Delivering sustainable solutions in a more competitive world
        Characteristics of an SIA
              • Most importantly, it is a process that integrates social issues into
                  project decision making
                     • Identifies „red flag‟ social issues that can make or break a project
                     • Reduces negative social impacts through changes to location,
                       design or project management
                     • Identifies opportunities to optimise positive benefits of the project
                       thereby generating good stakeholder relationships and securing a
                       „licence-to-operate‟ from communities and NGOs
                     • Provides a foundation for managing social issues throughout the
                       lifetime of the project, eg employment strategy, ongoing community
                       relations, social investment etc
              • It is also a report that communicates social impacts and benefits
                  to decision makers and other stakeholders



Delivering sustainable solutions in a more competitive world
        Social issues vary widely, some are under the
        control of the company, many others are not
          Control           eg:                                                  Project -
                            • Land acquisition, displacement and                   level
                                compensation                                      social
                                                                                 impacts
                            •   Impacts on infrastructure (roads etc)
                            •   Employment
       Level of             •   Supply of goods and services
       influence
                            •   Behaviour of construction workers
                            •   Secondary migration of people to the project
                                site
    Project can             • Secondary development                              Strategic
influence but not           • Use of revenues                                  level impacts
      control


Delivering sustainable solutions in a more competitive world
      SIA: How is it done?
                                                    Screening
                                                                                 C
      Data                                                                       O
                                                                Scoping
                                                                                 N
                                                   Baseline                      S
                                                     Data                        U
                                                   Collection
                                                                                 L
                                                                Identification   T
                                                                 & Analysis
             +                                                    of Impacts
                                                                                 A
                                                                                 T
                                                  Mitigation                     I
                                                  Strategies                     O
                                                                                 N
                                                                 Draft SIA
                                             Final SIA and
                                             Management
                                                 Plan



Delivering sustainable solutions in a more competitive world
       Integrated Environmental and Social
       Assessment         Strategic IA
                                                      Secondary           Government
                                                     Development           Revenues
                                             EIA                                     SIA
                                                                Fishing
                                                                                   Employment
                                       Biodiversity
                                                                Hunting              Indigenous    Stakeholder
       Stakeholder               Emissions
                                                               Land use                groups      Engagement
       Engagement                      Land take
                                                           Noise
                                               Environmental                         Livelihoods
                                                 pollution                Malnutrition
                                                               HIV/AIDS

                                                                 HIA




Delivering sustainable solutions in a more competitive world
       Understanding the issues + maintaining good
       relationships = successful project



                                                   Consultation and       Full SIA
                       Desk Based SIA              Primary Surveys




                                                                         Data gathering
                                       Company commitment:                and analysis
                                 Policy, responsibilities, leadership


                               No SIA                                   Consultation



                                                    Cursory



Delivering sustainable solutions in a more competitive world
        Importance of stakeholder engagement in SIA


                                                               Participation
                                                               •Shared decision
                             Time                                  making
                           Resources
                                                                                     Requirement of national
                                                           Consultation
                                                    • Views are taken into account      and international
                                                    •Decisions taken by company          organisations

                                                   Information exchange
                                                   •eg discussions, workshops


                                                One-way information flow
                                                     •eg survey, presentation




Delivering sustainable solutions in a more competitive world
        Challenges



              • Working within a Consortium
              • Implementation
              • Consultation: project level and NGO engagement
              • Integration of E, S and H into an ESHIA




Delivering sustainable solutions in a more competitive world
        Working in a Consortium: ‘Too many cooks’



              • Most major development projects now involve a
                  consortium of organisations
              • Conflicting policies and levels of commitment to SIA
              • Difficult to get budget to work effectively
              • International Standards vs local operating company
                  standards, particularly for consultation




Delivering sustainable solutions in a more competitive world
        Implementation is the key


              • Gaining buy-in of wider team (engineers, PR,
                  purchasing departments, HR, etc)
              • Working with contractors with less capacity and little
                  incentive
              • Social impacts are difficult to define and likely to be re-
                  assessed as project develops – mitigation must be
                  flexible




Delivering sustainable solutions in a more competitive world

								
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