Social Research_A

APPEA 2017 Conference and Exhibition Speech: Managing social licence in a time of chaos

May 17 2017

Hugo Hodge


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Futureye Managing Director Katherine Teh-White gave this speech at the APPEA 2017 Conference and Exhibition in Perth on Thursday 17 May 2017.

I remember talking to the head of coal seam gas development for an energy company seven years ago in NSW about why I thought its approach to development would fail.

He believed that they would be able to fight the activists and win either immediately or after the energy security risks came home to roost. “Just one brown out”, he would say. Then those politicians would turn to the gas industry and give it open slather for development.

It struck me then, as it strikes me now, that this is a high risk strategy.

It’s worth noting that my old client was wrong because as we all know well now at the peak of the energy security debate after South Australia’s blackout, the government didn’t turn to the gas industry for new development publicly despite vast gas reserves. Whilst, I am sure it has privately assured the industry that you will have all its political and financial support, I am differentiating between its public and private communications. What is said publicly is a political judgement about what the public will like. And what it said publicly was that it would invest in renewables for energy security investment with major public announcements on the Snowy and Tasmanian hydro. It’s biggest gas announcement was a punitive measure to use its powers to force the Queensland coal seam gas companies to deliver domestic gas reservation.

You may ask why this was foreseeable?

My old client assumed there’s only one logical energy solution and worse he was failing to connect the real dilemma with the real solution.

In my 24 years in major project approvals, I can prove beyond doubt that when projects don’t address the underlying problems it leads to opposition against a project which either costs the company at the approval stage, operations stage or closure stage. Moreover if it doesn’t deal with how this crash or crash through ethos operates, it adds up to a social licence issue for the industry, where society ponders whether the industry’s values meet the societal values of today and tomorrow.

So today the oil and gas industry faces activist risk at the project level onshore and offshore, east coast and west coast and moreover you all face the issue of the role of gas in today’s and tomorrows energy mix.

At an individual level the limbic system is triggered when risks are outside of our control. Fear or outrage is felt and it then triggers the reptilian brain which tells us to either fight or flight. Also, stress experts have recently added the ‘freeze’ reaction to this natural response, which gets activated when we have a feeling there is no hope. Every person is likely to have a different reaction to perceived risks unless trained to be counter-intuitive.

The problem this creates for an industry under threat is that without a formal process to create a shift to an effective counter-intuitive response is that responds in all those ways at once which is likely to be highly ineffective.

I started working on industry transformation processes to treat the political and regulatory threats driven by activists in 1995 when I sat on the steering committee for the mining industry which was being threatened by extra territorial regulation due to the activist campaigns on our environmental performance. We were able to head off the regulation by building a tri-partite solution that government, industry and the activists were satisfied with.

Since then I have worked on 20 different industry transformation processes from the future-proofing work we’ve been doing for the live exporters for the past five years, to current work we are doing for the dairy and sugar industries.

To work, my view is that the process of transformation first has to build in super human capacities to respond to risk.

The ability to respond effectively requires the industry to resolve the underlying risks taking today and for the future at the same time. Simply put, it requires an industry seeing the dilemma for what it really is and creating a solution that really fixes it.

The trouble is getting an industry to see the dilemma in a real way is difficult because there are so many in-built traditional government and media relations skills, structures, systems and processes that create internal barriers and only lag indicators.

We’re in a world of monitory democracy where people want transparency, accountability and real engagement continuously. This means the backroom power of political patronage and government relations is no longer sufficient and yet government relations specialists often still think advocacy to government and political parties will secure and mobilise supporters.

We’re in a world where news can be generated by anyone and your reaction will be judged by everyone if you’re not in line with societal values. This means there’s no controlling the media, only your reactions and making sure they are in line with societal values. Yet public relations traditionalists tell you to recruit the straddlers.

We’re in a world where activists influence the public more than companies and governments do because of how trusted they are and how capable they are of campaigning. And yet almost everyone else tells you to attack them, even though you are attacking someone with more trust and lowering your trust even further.

Your vision is great. Become more trusted through being more proactive, engage effectively, understand societal values and become socially acceptable so your projects can be approved and so your commodity isn’t bypassed.

Unfortunately, the reason why it is impossible for you to currently build trust is that whilst you want a social licence the traditional solutions which feel right to you simply don’t work any more with the maturity of the risks you face and you haven’t en masse switched approaches and mindsets.

The CSIRO work on community attitudes shows an increasing risk. While I know some may focus on the high level of acceptance, we are looking for signs of a vortex where the activists and experience are together dragging people into anti industry views. So we focus on the only increase you can see in the analysis: the 4 percentage point increase in those who reject CSG in local communities. Match that with our social media analysis and the broader societal concerns across Australia and there is a social licence risk.

Voter preference is starting to move against oil and gas which fuels the green agenda against gas as a transition fuel to a low carbon economy.

Here is how we do our research so that the vortex can be seen more clearly.

This is some research work we undertook for the dairy industry last year.

It shows that the activists who have been arguing that adult humans shouldn’t drink milk now have 11% of the Australian population aligned and it shows that 51% of the population are attentive to the views. The reasons include concerns on the environment and animal welfare as well as health. And it’s a massive risk to consumption.

At an industry level it is vital to see the vortex coming, so you can have strategy, posture, messages and engagement processes to deal with it. And moreover, you must make sure your approach doesn’t accelerate the vortex.

During our work with the live export industry many in the industry believed that they could solve the vortex by selling the benefits of the trade. Shout louder about the benefits of food security for the developing countries we serve. Shout louder about the benefits to farmers of having an export route to reduce their risks on domestic prices. So we took some messages that the PR company had developed to a group of attentives and browsers. In focus groups we saw the level of opposition in attentives double in half an hour and those who were browsers on the fence switch to being opposed.

What worked to reduce social licence risk for the live exporters was engaging with the activists on key issues, being proactive about risks before they emerged in the media and communicating about the changes they were making to animal welfare standards. Alignment with animal welfare is the real dilemma and the real solution requires the community to believe that live export can be done in a way that protects and enhances animal welfare.

We call the shift moving from DAD to DAVE. Instead of benefit selling or BS, and deciding a course of action, announcing it in a way that seeks recognition and defending when attacked, we moved them towards DAVE. Our communication and engagement model that has them declaring their dilemmas that would pass the test by the most extreme activist as a reasonable summation, acknowledge their current and past issues, develop a unified vision and enable people to evaluate their progress towards it. In the case of live exports, that is working out how an industry which now has a legal requirement to deliver high animal welfare outcomes in developing countries aligns with the agenda of animal activist groups.

The reason why it works is that when you communicate with words, actions and attitudes people receive the information in four risk frames.

The more you try to convince those who disagree, the more they dig in. The more you sell the benefits and don’t deal with the negatives, the more you recruit ambivalent mindsets to the counter argument.  The only people who like it are those who agree with you. As we know the those people who agree could create an accelerated vortex if they defend in a way that triggers more outrage.

The only way to reduce the disagrees and the ambivalents is to see-saw them.

To do this you have to have change your posture to a more effective one.

Then you’ll be able to see-saw effectively.

Through the process even if we don’t naturally seek balance, we create balance.

The outcome is fantastic, people were attentive to the issues and who didn’t believe in drinking milk became less reluctant in 30 minutes of DAVE messages and engagement. Notice that we can more than halve opposition in 30 minutes.

The key is that you shift your mindset from having a right to operate or buying one with CSR, to earning a social licence and building the capacity for a self-perpetuating resilient social licence.

Through dealing with all the issues you face in a DAVE way and shifting mindsets, you can resolve the problems. The good news is that it doesn’t require you to change any one but yourselves and your response.

In our view to do this there’s a vital 5 step process required. A real assessment of your current state. A unifying vision that is a future state you and your community can agree to. A strategic plan. A cultural change process and skills development. In our experience without these five components being governed effectively, the industry slides backwards.

To undertake these transformations, we have developed a process which consistently builds alignment in an industry, and then assists in executing the change. The results are spectacular when industries see the whole change process through. We have had activists who were against projects, blockading and litigating actually work with the industry to create a solution and swing public sentiment towards a renewed industry.

I challenge you to consider a holistic, integrated and robust process to recover and secure your social licence.

Thank-you for the opportunity to speak with you.

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