Who want a two by two kilometre and 100-meter open pit mine in their back yard or for that matter several square kilometres of land, plastered with 130-meter high windmills? Well the answer is simple nobody. Local communities together with special interest groups have been good at creating media stories on how the “little” man gets brushed aside by big business and sometimes with good reason. It could seem like that business in general and multinational companies especially have been struggling with getting on the same “wavelength” as the communities where they conduct their business.
Industries like mining and big renewable energy projects are especially exposed as they involve heavy machinery, removal of vast amounts of dirt, dangerous working conditions, damage to the environment, destruction of nature and farmland. And a lot of the time all these activities translate into a massive impact on the social life of the surrounding population. So it is not strange that the locals finds it difficult to accept they should be subjected to this kind of influence. Factors like these are all well known and the companies involved have created a wide range of systems and tools in order to cope with both the positive and negative side effects of their activities.
There have been mining in the world in the last 5000 years and its effect on society is well documented. Companies who are active in the industry knows that local communities are confronted with uncertainty as to what the future brings and have put in-place management systems and organised in order to confront these challenges. Sometimes these systems are to the benefit of the local population and sometimes not. Even though social risks are well known and described in numerous cases it remains the principal reason why mining projects have to close down after start of operations. In practice this means that mining companies are left to experiment and relay on the knowledge they can get when things goes wrong, either in their own back yard or when one of their competitors get in trouble. However, we are now seeing companies in other industries being confronted by some of the same risks and having the same types of difficulties handling the risks that local communities present.
Most people agree that the renewable energy sector by their very nature is working for a common global good. They help us reduce CO2-emissions, limit the impact of global warming, makes us free from the geopolitical implications associated with fossil fuels and creates a healthier local climate. However, they are also confronted by local communities who are not too keen on them setting up shop in their neighbourhood. These companies are making the very same mistakes that mining companies did that historically have resulted in closed down projects. For windmills and other great alternative energy infrastructure projects the story is repeating itself as we place windmills in areas where people complain about noise or that protected forests are destroyed in order to make room for some of the extremely huge mills that we are now able to produce. While we continue to argue about the pros and cons of alternative energy the fact remains that we do not want these structures where we live and we can muster significant resistance against projects which are perceived to be destroying local communities. The result has been that all major windmill projects in Denmark are now being moved to the sea despite the fact that this will drive maintenance costs up and make green energy more expensive. This development could ultimately mean that green energy will not be competitive with fossil fuel and in the end destroy the sector, as a real energy alternative.
Companies faced with social risks have tried in different ways to mitigate issues with local communities. The most common approach that companies have taken when confronted with these types of risks is to implement a Corporate Social Responsibility (CSR) system that is designed to address stakeholder grievances in the local communities. These systems can take many and have different implications for the company that uses them. Evidence of this trend is clear if one takes a quick look at multinational companies and their websites where they routinely communicate they aren’t just in business to make a profit. A lot of companies actually goes as far as to communicate that their goals are equally focused on servicing the communities for a broader and bigger social purpose. It has been shown that CSR has been an effective way for companies to show that they are good corporate citizen with a conscience. And has been a way for them to communicate and convince local communities, nongovernmental and governmental organisations that they are working for a common good that will serve social, environmental and economic aims.
However, fieldwork shows that local communities might not be too keen on the sometime very fluffy speeches given by corporate executives. These communities do not only get their information from the company when trying to make sense of a proposed project but get insights from a wide variety of sources ranging from other community members to NGOs and government officials. This means that while the CSR systems might look good on paper they often miss the point that they are not the only way that communities get information and create an opinion about a given project. And by interviewing community members it actually shows that CSR systems are giving rise to even more risk as they provide ammunition in instances where companies say one thing but do another. Like for example when companies communicate a zero environmental impact on water sources but communities experience mud in their drinking water. Or when companies document that their windmills make no noise but people living close by creates headlines when telling the press about their sickness history.
While research into social risk is still in an early stage it shows that companies have little control over how stakeholders sense making processes surrounding the projects that they propose. It also shows that CSR might not be the “miracle cure” that most of us would like it to be and could actually be counterproductive to the aims of the company and society at large. So called normal people will continue to make their own mind up around the world that they are part of and they will continue to change their mind when and if they get smarter. Even though companies would like to think that they can influence their surroundings by claiming that certain things are true such as green energy and windmill projects are for the good of everyone, it does not make the individuals affected by such project think that this is necessary true in their local community.