Measuring community dividends for oil and gas projects—an emerging approach

Abstract

The development of Australia’s CSG resources brings into sharp focus the realities of achieving a social licence to operate. It often hinges on balancing strong stakeholder interests with hotly contested issues such as land access rights. A disciplined, stakeholder-centric approach for measuring shared value can demonstrate the merits of arrangements agreed between stakeholder groups and could ultimately form part of the solution to what will be one of the defining social licence to operate issues in Australia this decade. Resource companies are making substantial investments to earn, maintain, and enhance local and wider communities as part of establishing their social licences to operate. Understanding and measuring the value created by community investments (part of the wider investments made by companies through areas such as taxes, royalties, development, and employment) drives more transparent and effective outcomes for companies, communities, and other stakeholders.

• While there is an expectation that community investments deliver value for money, this is difficult to demonstrate without measuring both financial and non-financial impacts.

• Companies that can measure the value of their community investments can make better investment decisions for the benefit of all stakeholders.

• Measuring the value of direct corporate investments in local communities draws on social evaluation and engagement methodologies as well as economic-valuation techniques.

• Considerations include on-the-ground engagement, understanding perceptions of value, understanding the major contributors to value, and alignment with community sentiment.

• With a knowledge of the value created by particular investments, companies can undertake an analysis to help optimise future investments.

• There are measurement challenges in this process; however, measuring value can bring about profound insights that strengthen company and community relations.

Advantages include:

1. yielding robust data on the costs and shared value of the arrangements by stakeholder group;

2. identifying and quantifying value in all its various forms, such as value protected (through risk mitigation investments) as well as value created;

3. providing a basis for communicating shared value to stakeholders in the common language of dollars;

4. promoting an understanding of how the relevant investments drive value for stakeholders and using this information to encourage community buy-in; and,

5. creating a framework and a process for bridging the divide between stakeholder groups with diverse and opposing views.