This is a long read, but a good one that I think reflects a...

This is a long read, but a good one that I think reflects a changing communications environment. I hope that CNQ management take note.

This extract is from International Finance Corporation (IFC) member of the World Bank Group and International Council on Mining and Metals (ICMM)

Changing Expectations, Changing Communications

In 2011 a junior exploration company operating in a well-known mining region was riding high. The company’s project was progressing nicely and it had secured a respected international investor as a major shareholder. Seemingly out of nowhere the company found itself the target of online petitions and protests (organized by mass text messages) that drew hundreds of people. Its environmental permits were eventually denied and the project stalled. The company’s share price took a major hit and it had to completely reinvent itself and its image, including changing its name. The company had less than 50 employees and only one person focused purely on communication. Perhaps a sophisticated mining major would better anticipate and avoid such a costly incident. Fast forward two years to another country in the same region. One of the world’s largest mining houses was making progress on an expansion project that was to become the largest investment in the country’s history. Once again, seemingly out of nowhere to many within the company, opposition to the project sparked massive protests and hit the international news. With domestic and global observers questioning the company and the stability of the country as a whole, the project was put on hold until community and government relations could be restored.

Events such as these highlight the shift in the roles and responsibilities of communications teams in the mining sector. The internet and rise of social media have increased the expectations of stakeholders for a deeper and wider range of information. Merely pushing information out is no longer enough to ensure that communications have taken place. Companies that succeed are:

• creating an environment for effective stakeholder dialogue
• using transparency to build trust
• integrating communications to enhance sustainability efforts
• enhancing internal communication and corporate culture
• measuring impact

Mining companies face a challenging business environment with weakening prices prompting belt-tightening measures across the board. At the same time, trends towards resource nationalism and greater environmental and social expectations mean that maintaining a social license to operate is more directly linked to value perceived by host communities/countries. The sector is rife with examples of projects stalled, stopped or abandoned because stakeholders were not sufficiently engaged and trust was weak.

In its 2012-2013 survey of mining executives, Ernst and Young found that maintaining a social license was the second highest risk facing the sector. When trust is lost, the cost is financial and reputational.  It is a common observation that it is more difficult to rebuild trust than to create it. Communications’ role in managing this risk depends on how a company views and structures the function. Increasingly, this is moving from a short-term tactical role to a long-term strategic one. The mining sector is diverse in terms of operational and geographic challenges, business strategy and culture. Similarly, communications structures vary widely. Some companies operate in a pyramid model, where information flows mainly between asset and HQ levels and vice versa. Others have a decentralized, spoke-and-wheel system where autonomous groups feed information to a hub that acts as a content and news generating group and there are many variations in between.

Regardless of structure, virtually every company is grappling with the need to evolve from ad-hoc and reactive communications to a more proactive and structured model, able to engage in dialogues with stakeholders and anticipate issues before they appear. This challenge is prompting a closer and more strategic collaboration between communication, and other business functions such as operations, human resources, legal, environmental, risk management, procurement and community relations. Companies are searching for ways to ensure information is flowing around the group and that this cascades up, as well as down, in order to stay ahead of emerging risks and opportunities. While communications play a vital role in advancing business, there is a strong desire to see better processes and alignment within an organization. In most companies, communications has earned a seat at the leadership table and its role is evolving. However, the function lacks the formalization, career frameworks and business metrics of other service functions such as human resources, legal and environmental and community relations. In addition, other functions that have communications as part of their own deliverables (government relations, investor relations, community development, environment, procurement, human resources and construction) lack unified measurements on how effectively and consistently they are engaging with stakeholders to achieve their direct business objectives.

Organizations in every sector – private, public and civil society – are facing this new reality. The shift is prompted by an intersection of well-known trends. News is without borders. The events in one location can have a significant ripple effect on markets and projects across continents. Digital communications has enabled more people to access and generate information to reach wider audiences. Increasingly, a company’s communications must fit in the palm of the hand as mobile devices become an important platform for sharing content. In Mongolia, a country experiencing a phenomenal mining boom, cell phone penetration in the mineral rich South Gobi desert region that includes many nomadic herders is 77% and internet usage is 23%. Mining companies have traditionally had a business-to business mentality around communications but the attitude seems to be shifting. While companies do not provide products to the final consumer they increasingly recognize the value of making their case beyond business partners and directly engaging in a wider set of relationships. Their communications approach is becoming more consumer oriented – with brand equity, reputation management and relationship building front of mind for the professionals we interviewed.

This means the communications function is no longer the sole crafter or guardian of “the message”. Together with other functions they are designing opportunities to share the company’s experiences and to build trust with neighbors and potential partners, as well as adversaries. Social media is also changing the way people engage with companies as platforms like Twitter, Instagram and Facebook create communities who expect to be heard and influence change. Mongolia’s Oyu Tolgoi (majority-owned and managed by Rio Tinto) copper and gold mine has over 70,000 Facebook fans, one of the most popular sites in the country.

Across the board, executives would like more investment in this area. Most are reluctant to begin engaging through platforms like Facebook and Twitter, fearing that putting a toe in the water opens them up to reputational risk, limitless resource needs and opens up lines of communication with stakeholders who may be critical of company activities. There is concern about the representativeness of social media technology biased to the young and web connected. While the opportunity for engagement is immense it must tempered with efforts to include opinions from vulnerable groups such as the elderly, illiterate and physically remote communities.