1. 1 "Impact Assessment, Transparency and Accountability – three keys to building sustainable partnerships between Business and its Stakeholders” by Donal A. O’Neill Donal A. O’Neill Lansdowne Consulting – Resource Advisors Group

2. 2 Lets talk about Impact...... Using the example of the Extractive Industries: Oil, Gas and Mining Oil, Gas and Mining

3. 3 Impacts of Industry: Positive and Negative Revenue Enhancement Boom Town Effects - Local Inflation - Local Inflation - Prostitution - Prostitution - HIV/AIDS - HIV/AIDS - Drugs - Drugs Environmental “Dutch Disease” Social Change Conflict over Revenues - National / Regional /Local - National / Regional /Local Changing Individuals’ Expectations Employment Opportunities Catalyst for Industrial & Commercial Growth & Commercial Growth

4. 4 Business can only: - Manage some impacts 100% - Manage some impacts 100% - Influence others to some extent - Influence others to some extent - Is powerless alone as regards many more - Is powerless alone as regards many more But without Understanding what the impacts are, Business cannot even start addressing them Why does Business so often seem to find it hard to gain this Understanding, when well-proven tools are available to assist the process? A Clash of Cultures between the Private and Public Sectors

5. 5 An Investment Decision for Oil, Gas or Mining is complex... -Technical - Commercial (i.e. Company Economics) (i.e. Company Economics) - Environmental - Social - Economic (i.e. Host Gov’t Economics) (i.e. Host Gov’t Economics) - Political In-house Feasibility Concern In-house Viability Concern Potentially Massive External Impacts Major External Concern

6. 6 Non-Company Players call many of the shots... Company Influence - Technical - Commercial - Environmental - Social - Economic - Political Third Party Influence

7. 7 - Technical - Commercial - Environmental - Social - Economic - Political The consequences of wrong decisions are serious... and not only for Business and not only for Business Company may lose lives, money, reputation and opportunities – reputation and opportunities – Yet in context of overall company portfolio loss may not be terminal loss may not be terminal Host nation may face serious loss and disruption over decades due to: - Impact on, and of, Revenues - Impact on, and of, Revenues - Social Change and Upheaval - Social Change and Upheaval - Distortion of Economy - Distortion of Economy - (Unintended) Environmental Impact - (Unintended) Environmental Impact - Internal Tensions and Rivalries - Internal Tensions and Rivalries Oxy’s Piper Alpha Platform 1988 Iran 1951 & 79 Biafra 1967-70

8. 8 - Technical - Commercial - Environmental - Social - Economic - Political But where is most time and effort often spent? Comfort Zone Business feels in Control It recruits people qualified and with aptitude for this zone 90-95% of effort is spent here Licence to Develop, Operate and Grow Zone Stakeholder Consent Critical (and ideally also Stakeholder Alliances) Long-term, responsible success is dependent on ability to operate effectively in this zone! “Hard Disciplines” LogicalCerebralLinear “Soft Disciplines” EmotiveChaoticOrganic

9. - Technical - Commercial - Environmental - Social - Economic - Political Company Influence Third Party Influence Result of increased knowledge and insight into host society

10. 10 The Impact Assessment Process Development concept Evaluate Environmental & Socio-Economic Impact Impact Acceptable ? Proceed with Construction Yes No Stakeholder Reaction Stakeholder Input Base Line Assessment Go back and reassess options - re-engineer - re-cost - re-schedule Identify Stakeholders Commitment to this process is the ACID TEST of a company’s CSR This takes time!! It must be planned into the schedule

11. 11 Implications of the Impact Assessment Process Potential Project Delay Contracting Strategy – IA not easily compatible with EPC Need to access expertise outside Core Business skills Temptation to Buy Short-Term Peace - Unsustainable “Community Development” Projects - Acting as Government Surrogate – a vicious spiral Recognise as an integral and basic Business Management tool - not as a “bolt on” tool - not as a “bolt on”

12. 12 Host Community Company Third Parties * LabourCommitment Funding Contracting in Expertise Long-Term View Commitment ExpertiseFundingLinksFulfilling Obligations Obligations Ideally the total input of each party is roughly equivalent and matched * Including Government Tripartite Partnerships – the Way Ahead

13. 13 Blockers … …and Enablers Shoot the Messenger Ethos Fudging: “the results are not as serious as they seem” Clash of Hard/Soft Disciplines Disciplines Expatriate Working Cultures Cultures From Anger to Acceptance Cultural change – on the Safety Management model End C.P.Snow’s Two Cultures in education

14. 14 … and Postscript Mass Tourism ? Alcohol ? Gambling ? Entertainment ? TV Advertising ? Who’s accountable for the overall impact of e.g. Credit Cards ?