Corporate collaboration: drivers behind a joint industry social baseline study related to hydrocarbon exploration in Greenland

Abstract

Greenlandic regulations require oil companies to conduct a Social Impact Assessment before undertaking exploration drilling. A key part of this assessment is a Social Baseline Study (SBS), which provides descriptions of existing social conditions and development trends and goals in communities that could potentially be affected by exploration drilling in the area. Four oil and gas companies operating in Baffin Bay, offshore of Northwest Greenland, Cairn Energy plc, ConocoPhillips, Maersk Oil Kalaallit Nunaat A/S and Shell Greenland A/S, will potentially all be active in the same sphere of operations in the coming years and therefore agreed to undertake a collaborative SBS in 2013. The overall objective of the SBS was to build a strong base for preventing, mitigating and managing potential negative impact and enhancing the potential positive impact of the activities to be undertaken in the area. The main aim of the collaborative approach to the SBS was to achieve coherent and coordinated community engagement and to limit the risk of stakeholder fatigue. An inter-company collaboration, such as the one described, is the first of its type in Greenland. This article presents the process of conducting the SBS and reflects on the drivers behind the new collaborative approach from a ‘social license to operate’ perspective. It concludes that three triggers can be used to explain the motivation behind the collaborative company approach. It further concludes that collaborative approaches to local engagement can be the key to success in remote and sparsely populated areas, such as in the case presented.

Keywords:

• Arctic
• Greenland
• social impact assessment
• oil
• social licence to operate
• baseline

Introduction

Greenland

The Greenland basins are believed to contain substantial oil and gas reserves (see Cavallo 2002, Bird et al. 2008; Geuns 2012; Gregersen & Bidstrup 2008). The Government of Greenland offered exploration licence blocks offshore western Greenland for oil exploration in 2002, 2004 and 2006 and in the sea east of Greenland in 2013 (Government of Greenland 2014). A total of 20 offshore exploration licences have been granted off the west coast to companies such as Statoil, Encana, Dong, Husky, Chevron and ExxonMobil (Statistics Greenland 2012). However, no commercial finds have yet been made (Bureau of Minerals and Petroleum 2011). Uncertainty regarding the potential industrial development related to hydrocarbon extraction as well as the potential social change if commercial finds are made, makes it difficult to predict how the country may be affected (Government of Greenland 2011). At the same time, projections indicate that if industrial development is not achieved, Greenland risks a contraction of the economy, increasing emigration and increasing inequality (Hansen & Larsen 2014; Nordic Council of Ministers 2011; Government of Greenland 2011).

Impact assessment regulatory requirements

To address stakeholder expectations and potential social impacts, oil companies are required by the Greenland Mineral Resources Act 7 (2009, section 16) to undertake Social Impact Assessments (SIA) in areas where exploration activities may have a significant impact on social conditions. A key foundation of an SIA is an SBS, which provides ‘descriptions of existing social conditions’, including ‘relevant conditions in local communities and Greenland at large, including any changes anticipated before the project commences’ (Bureau of Minerals and Petroleum 2009, 8).

A collaborative SBS

Four oil and gas companies hold exploration licences offshore Northwest Greenland: Cairn Energy, ConocoPhillips, Shell and Maersk. The companies, all active in the same region and operating to similar timelines, agreed to collaborate on an SBS in 2013. The collaborative approach was not the result of Governmental requirements and guidelines, but rather an approach developed by the companies. An inter-company collaboration, such as the one described, is the first of its type in Greenland and may be considered unconventional, relative to the standard process described by Greenlandic requirements and guidelines.

Several factors resulted in the companies taking a voluntary collaborative approach to the SBS study. This paper presents the participants’ experience collaborating on the SBS and discusses the motivation behind the approach in practical terms and in terms of responsible business practices.

Considering a collaborative SBS

In 2012, the four companies were each preparing for individual SIAs. All met with the Bureau of Minerals and Petroleum (BMP) to understand the requirements and expectations. The managers of the companies met on a regular basis through the Greenland Oil Industry Association and discussed the challenges and opportunities related to conducting an SIA collaboratively. These included the following:

•	Conducting four SIAs in the same area over a short period of time could lead to the following issues:
-	Stakeholder fatigue amongst members of the small Greenlandic population, as the companies would carry out multiple public engagement events (open houses, plenary sessions, communications materials) on top of ongoing engagement by other industries (e.g. mining).
-	Fatigue amongst members of the Greenlandic administration who would be consulted, including officials of public bodies consulted for information relating to local statistics (health, education, demographics) and members of ministries with interest in the potential operations.
-	Overload of the approval bodies that would have to review and approve the SIA submissions.
-	Overload amongst the small number of consultants and local experts with detailed knowledge of Greenland.
•	Agreement on the social impacts indicators would make it possible to better identify and address potential cumulative impacts of the four operations.
•	Pooling the experts from the individual companies could strengthen the quality of the finished product.
•	Costs would be reduced, as broadly similar work would not have to be repeated by each of the four companies.

Deciding to conduct a collaborative SBS

When the company representatives met in Copenhagen on 18 December 2012, it was determined that it would only be possible to achieve a common social baseline as a platform for individual SIAs. Due to different potential drilling schedules and operational plans for the individual companies, a collaborative SIA was deemed unfeasible. Focus thereafter was on establishing a procedure for a collaborative SBS.

An advisory panel with representatives from the social and environmental departments of the individual companies was established to make recommendations for a potential collaborative approach, first meeting on 15 January 2013. The panel proposed a joint SBS, led by one of the companies (Maersk) and supported by a panel comprised of representatives from the others. The study would be carried out by an internationally and locally respected consultant with support from local experts.

An important aspect of the study was to ensure that the regulator, the BMP, supported the collaborative approach. The initial scope of work, including the proposed organisation of the SBS, was sent to the BMP, which expressed appreciation of the initiative and approved the approach. The advisory panel (the authors of this paper) met on a weekly basis to monitor and update the progress.

Execution

The process of conducting the SBS lasted one year, from the initial managerial decision to collaborate in January 2013 to the final report in English and Greenlandic that was submitted to BMP in December 2013. An overview of the SBS process and timing is illustrated in Table 1.

Table 1. Overview of the timeline and SBS process.

Month (2013)	SBS activity
January	Advisory panel established
	Recommendation from panel
February	Presentation of approach to the Bureau of Minerals and Petroleum
	Approach accepted by the Bureau of Minerals and Petroleum
March	Agreement between companies
	Selection of consultants
April	Kick-off meeting
	Call for local experts
May	Review of first draft report
	Data collection tour
	Meeting with local stakeholders
June	Review of second draft report
July	Review of third draft report
August	Report finalised in English
September	Translation
October	Translation
November	Evaluation meeting and follow-up
December	Report finalised in Greenlandic

The first step of the study was to define (1) the methodology and (2) the scope of the SBS.

Methodology

As Greenland Statistics had available a comprehensive register of data for all settlements, the SBS was proposed as a desktop study, primarily supported by telephone surveys to obtain information that was not available otherwise.

Community visits and public participation would be initiated when a draft SBS report had been made to allow local stakeholders to evaluate the relevance of the identified key indicators and to identify any indicators that may not have been considered. The aim would be to gain understanding by meeting local stakeholders in their comfort zone, to inform mitigation plans for the potential social impacts of operations with local knowledge and cultural understanding, to promote local participation in oil and gas projects, and in the end, to achieve the BMP approval. However, as described in the next section, the final report was more extensively based on local input than expected during the planning phase.

Following definition of the methodology and scope of the study, the next activity for the advisory panel was selection of a contractor to undertake the study. The selection criteria included the following:

•	SIA expertise in international standards.
•	Knowledge of Greenland.
•	Employment of Greenlandic resources.
•	Danish language capability.

In March 2013, a partnership comprising the international consultant, Golder Associates and a Greenlandic consultancy, INUPLAN, was selected to conduct the study. In April, a kick-off meeting took place between the advisory panel and Golder Associates representatives, and a detailed plan for the SBS was designed. The SBS design focused on achieving effective stakeholder engagement.

To ensure that local knowledge was maximised, the companies assembled an expert panel to use for feedback regarding specific issues identified in the first draft report. The experts had been invited to tender their services via newspaper advertisements. Four local experts with expertise in the area of Greenland economics, social sciences and public health were chosen for the panel. The four experts all spent the larger parts of their lives in Greenland and possessed documented local community knowledge.

In May 2013, the first draft report was completed. Using this report, including identified data gaps, the advisory panel consulted the expert panel, Greenland Employers Association, Greenland Employees Association, Inuit Circumpolar Council and Greenlandic Employers Association during a data collection tour in the capital, Nuuk in Greenland. The tour was carefully planned in conjunction with the local consultants INUPLAN to ensure that needed data were collected. The important questions were asked with reference to the scope of work, but also room remained for the locals to raise issues they found relevant for inclusion in the SBS. These meetings took place in English based on acceptance by the organisations. Further, a small delegation consisting of only three persons visited the smaller settlements and met with locals there. The three persons were all Greenlandic-speaking women who participated on behalf of all of the companies. One was the Maersk representative on the advisory panel; the other two were working for the consultancy INUPLAN. These individuals were chosen based on their qualifications and experience in relationship to SIA, the oil industry and Greenland. The team was discussed and agreed upon between the companies and consultants, Golders and INUPLAN. The small number (three) of interviewers was essential to achieving an informal and comfortable atmosphere. However, the interviewers also became interviewees, as all meetings started with the company representatives being asked by the locals about their families and backgrounds in Greenland. As the Greenlandic culture is very strongly focused on social networks and as personal relationships are important to reaching trust between Greenlanders, the decision to send three locals appeared to be essential to achieving the desired atmosphere and successful data collection.

The large quantity of data collected on the tour, together with the new issues identified, led to a more extended process of reviewing the draft report than expected. Further data were collected to support issues raised by locals, and a chapter in the SBS report highlighting the findings from the tour was added. During June and July 2013, several versions of the draft report were circulated, and finally in August, an English draft was agreed upon by all members of the advisory panel and subsequently approved by the managers.

Following an extensive translation process taking four months, the final report was submitted to the BMP in December 2013. The SBS will be included as an appendix in the individual SIAs by the companies.

The advisory panel met to evaluate the SBS process in November 2013. Participants concluded that the collaborative approach had been successful in terms of delivery of a high-quality product and limiting multiple engagements with the same stakeholders. Additionally, new ideas and solutions were identified during the meetings. For example, the establishment of a local expert panel had not, as far as we know, been tried in an SIA context in Greenland before.

The project demonstrated that the collaborative organisation of activities in the case of the SBS can be beneficial. The SBS was considered to be a success by all parties, securing not only economic benefits for the companies but also a high-quality report and further, residents in the remote and sparsely populated area only had to address one research team, rather than four.

However, the benefits for companies of using new organisational solutions when facing new challenges is not obvious, as working individually without having to coordinate and interact with other companies could appear to be more efficient. Therefore, looking back, we find it interesting to reflect on the motivation behind the SBS and the drivers that made it happen. The concept of a ‘social licence to operate’ relates to efforts by companies to meet societal expectations and to avoid activities that are unacceptable to local, regional and/or national stakeholders to achieve business goals. Achieving a ‘social licence to operate’ (SLO) is generally understood to mean that a local community accepts or approves of a company’s project or on-going presence in an area (Howard-Greenville et al. 2008). An SIA is exactly about avoiding or mitigating potential negative impacts on communities and enhancing the potential positive impacts of a project. An SIA and an SLO can therefore be considered to be interlinked (Parsons and Moffat 2014). In the following section, we reflect on the drivers behind the SBS from an SLO perspective.

Drivers and motives behind the SBS from a ‘SLO’ perspective

An SLO is informal and intangible, meaning that it can be difficult to determine when an SLO has been achieved for a project (Thomson & Joyce 2008; Bice & Moffat 2014). It may appear in a variety of ways, ranging from the absence of opposition to vocal support or even advocacy, and these various levels of social licence may occur at the same time amongst different stakeholders (Howard-Greenville et al. 2008). Different measure models for SLO have been developed. The most cited and most widely employed probably being the one developed by Boutilier and Thomson (2011).

An SLO is considered a motivation for many companies who are performing in a manner that goes beyond compliance with regulation (Gunningham et al. 2004; Howard-Greenville et al. 2008; Bice & Moffat 2014). In the past, corporations complying with applicable legislation have regarded such compliance as fulfilling not just legal, but also social obligations (Gunningham et al. 2004). Socio-legal research performed in the 1990s suggested that compliance was for instrumental reasons (to avoid legal penalties) or because regulations were considered to be measures of social expectations and therefore guided a corporation’s social duties (see, for example, Hawkins & Hutter 1993; Porter & Van der Linde 1995). However, over the past two decades or more, voluntary responsible business practices, which go beyond compliance, have proliferated. Research suggests that these practices are motivated by a corporate recognition that a social licence is an important driver in addition to traditional regulatory and economic drivers (Howard-Greenville et al. 2008).

Aguilera et al. (2007) developed a model categorising internal company motives behind responsible business performance as being instrumental, relational and/or moral. Instrumental motives refer to the goal-oriented implementation of responsible business practices as an instrument to achieve direct benefits for the company, for example, a good reputation, competitive advantages or profit. Relational motives focus on building relationships and securing strong connections to other stakeholders. These motives can relate to gaining a strong network, to fulfilling an industry norm or code or to achieving a collective identity in ‘groups of companies’ (Aguilera et al. 2007, p. 848). Moral motives relate to value-based objectives, which are often carried by individuals based on experience and/or professional integrity. It can also be based on their personal values (Aguilera et al. 2007).

Based on the premise that the collaborative SBS approach can be considered to be a voluntary initiative intended to improve corporate practice, the three SLO drivers and the potential motives as presented by Aguilera et al. (2007) are used to frame the following reflections on the drivers and motivation behind the SBS. An overview of the factors can be seen in Table 2.

Table 2. An overview of corporate SLO motives and drivers according to Aguilera et al. (2007) and Howard-Greenville et al. (2008).

SLO drivers	Regulatory	Economic	Social
SLO motives	Instrumental	Moral	Relational

External drivers that relate to the SLO did influence the decision to conduct the SBS in a collaborative manner. In particular, the key driver for the collaborative SBS was avoiding stakeholder fatigue (and not only government stakeholders with a regulatory role). However, conducting a collaborative SBS between four companies did produce cost savings for each company compared to conducting individual studies. Although this was not a major factor in deciding on a collaborative approach, the economic benefit of the approach was positive.

The initiative to establish the advisory panel and investigate the form and benefits of a potential collaborative approach by managers was motivated by the challenges they were facing in Greenland. In the advisory panel, we were therefore asked by the managers to express our opinion as to whether a collaborative approach was a good idea or not along with our argument. During our first meeting and in the related recommendation for management, we agreed, based on our individual experience and common goals, to recommend a collaborative approach. The arguments referred to the potential benefits related to coordinating public participation and to the possibility of achieving a stronger base for future work and engagement. In this manner, the social benefits of the approach contributed to motivating the approach. The argument did not build on the need to act together to meet requirements. On the contrary, we had to access approval from the Government of Greenland to undertake the SBS in a collaborative manner.

With regard to the motives behind the decision to collaborate, the objectives were as described in the previous sections: achieving the best product by pooling skills, avoiding stakeholder fatigue and gaining drilling approval. The SBS can be considered to be an instrument used to secure achievements, motivated by a combination of the prerequisite that the goals be achieved and the rationale of gaining an even better process and product by pooling skills. It could be argued that a better process and product are also objectives, and the SBS could be the instrument used to achieve them. This underscores the concept that instrumentality is very broad, potentially covering everything, but then in practise, potentially explaining nothing. The same is the case for the concepts of relational and moral motives, as relational motives are about building relationships with stakeholders. All objectives related to the SBS could potentially be understood as being motivated by the wish to perform well and build good relations with the public and the authorities in Greenland as well as with the other companies. In this way, all of the motives could be understood as being relational. Also, the concept of morality could be used to explain the motives behind the SBS, as it was a value-based decision, understood as being based on a wish to act in a way that would be considered appropriate and responsible.

Three SLO-related triggers

Recognising that the SLO drivers and motives, as defined by Aguilera et al. (2007) and Howard-Greenville et al. (2008), are applicable in the case of the SBS and can be used to explain driving forces and motives behind the SBS, as explained in the previous section, we still find that they only partially capture and explain the practical reality as we experienced it.

To better capture and describe the point of departure for the SBS, we therefore introduce three triggers, which clearly describe our perception of the SBS collaboration from an SLO perspective. The three triggers are rationality, reliability and responsibility. These triggers are meant to support the understanding of potential types of motivations behind responsible performance, as presented in the literature, and are referenced in the previous sections of this article.

•	The rationality of the benefits and efficiency of working together. It made sense to join forces to achieve both the best process and the best product.
•	Further approval of exploration-drilling applications by the authorities depends on the companies’ capability to meet local requirements, as stated in the laws and guidelines, and hence on the reliability of the companies in question. BMP acceptance of the companies’ reliability when proposing the approach was therefore also a prerequisite for the collaborative SBS.
•	When the company representatives met in the advisory panel, the discussion regarding the potential collaboration on a SBS was focused around responsible performance: the potential for improving future SIAs and acting according to what was agreed to be best practise and ‘as good as possible’ within the given frameworks. Rationality, Reliability and Responsibility were hence the three factors, which in combination were used as arguments by and within the companies to decide on the collaborative SBS approach, as illustrated in Figure 1.

Figure 1. The three triggers that motivated the companies to choose a collaborative SBS approach.

Concluding remarks

Four licence-holding oil companies planning for potential exploration drilling in Baffin Bay in the sea west of Greenland all faced a number of challenges when confronted with the requirement of conducting an SIA in Greenland and, as part of this, an SBS based on which assessments would be conducted. It was decided by the companies to conduct one common SBS, rather than four individual ones, to both achieve cost savings and pool skills to achieve the best process and product.

The collaborative SBS was a pioneering project for exploration drilling in Greenland and, although not identified by the Government of Greenland’s requirements and guidelines, was still supported by the authorities.

It is concluded that even if it appears to be convenient for companies to work individually and stick to their own consolidated practices, when surveying new territories as in the Greenland case, bringing together the skillsets of different companies, such as the four operating companies, holds the potential to improve the process of conducting social baseline studies in remote areas, including engaging with stakeholders, potentially conducting successful planning and avoiding negative impacts on the local communities.

It was ultimately found that the objective behind the SBS could be explained as the companies’ desire to achieve an SLO. However, as the drivers and motives defined for SLO are very broad, three triggers were used to further unfold and describe how and why collaboration such as the SBS can be initiated.