Reflections on Social Impact Assessment in the 21^st century

ABSTRACT

Social impact assessment (SIA) is a field of research and practice that addresses everything associated with managing social issues throughout the project lifecycle (pre-conception to post-closure). SIA has transformed from a regulatory tool to being the process of managing a project’s social issues used by developers, financiers, affected communities and environmental licencing agencies. SIA considers: benefit sharing, boom-and-bust cycles, community development, community engagement, community resilience, cultural heritage, due diligence, empowerment, gender issues, grievance redress mechanisms, human rights, Impacts and Benefits Agreements, Indigenous peoples, in-migration (influx, honeypot), livelihood restoration, local content, local procurement, project induced displacement and resettlement, psycho-social impacts, social closure, social function, Social Impact Management Plans, social inclusion, social investment, social licence to operate, social performance, stakeholder engagement, vulnerable groups, and traditional issues such as identifying social impacts and designing mitigation. SIA has learnt much over 50 years, however complex issues remain including involuntary resettlement, restoring livelihoods, place attachment, sense of place, maintaining intangible cultural heritage, and finding replacement land. Corruption, rent seeking, elite capture, speculation and opportunist behaviour are also problematic.

KEYWORDS:

• Social impact assessment
• social license to operate and grow
• public participation
• international standards
• environmental
• social and governance issues
• corporate social responsibility

In the beginning

Social impact assessment (SIA) began in the 1970s alongside the rise of Environmental Impact Assessment (EIA) (Esteves et al. 2012; Vanclay 2014). Like EIA, SIA originally operated largely as a regulatory tool, although only few jurisdictions formally required it (Parsons et al. 2019), which, compared to EIA, impaired its take-up around the world. Initially, SIA tried to emulate EIA as much as possible, but over time there was growing realization that social issues play out in very different ways to biophysical environmental issues and that how social issues should be managed was also very different. Consequently, SIA diverged from EIA to become a field of research and practice (discourse, paradigm) that focused on the management of social issues at all phases of the project (Vanclay 2003, 2006; Vanclay et al. 2015). This meant there was a shift in SIA from being a regulatory tool to primarily being a management tool for the project proponent and project financier (Vanclay 2014). SIA is now universally required because it is demanded by all international financial institutions and Equator Principles banks (Vanclay and Hanna 2019).

EIA has also transformed (Vanclay 2015). While traditional regulatory EIA still exists, within industry circles EIA has largely been replaced by Environmental and Social Impact Assessment (ESIA), and sometimes by Environmental, Social and Health Impact Assessment (ESHIA) (Hanna et al. 2014; Dendena and Corsi 2015). Even if still not adequately done, by the beginning of the 21^st century, assessing social issues has become mainstreamed within industry (Vanclay et al. 2015), although with some resistance and variation across sectors (Kemp and Owen 2018; Vanclay and Hanna 2019).

In the present (the last decade or so)

The single most significant recent change in international understandings around projects is the growing prominence of human rights, specifically the unanimous endorsement of the United Nations (2011) Guiding Principles on Business and Human Rights (UNGP). The UNGP has been endorsed by many industry organisations and companies. The UNGP established that all business entities – i.e. all organisations, including companies, nation states when acting as businesses, and NGOs when they undertake projects – have a responsibility to respect human rights. Furthermore, businesses must avoid harm, they must address any human rights impacts even if they are not directly responsible for them, and they must not be complicit in human rights abuse by third parties. They must apply leverage, meaning that they must use their influence to promote positive change in their business partners. In order to do all this, they must be prepared to deal with human rights issues, meaning that they must have policy and procedures in place and a budget allocation for this. It is necessary to consider human rights issues throughout the whole supply chain (van der Ploeg and Vanclay 2017). The UNGP prompted the updating of many international standards, including a revision of the OECD Guidelines for Multinational Enterprises (OECD 2011), a European law on non-financial disclosure, and Modern Slavery legislation in some jurisdictions (Vanclay and Hanna 2019). Human rights issues are now integrated into SIA (Kemp and Vanclay 2013; Vanclay et al. 2015; Götzmann et al. 2016; Esteves et al. 2017).

One expectation of the UNGP is that all companies, projects and major activities (including any impact assessment and resettlement process) should have a grievance redress mechanism. Research undertaken for the development of the UNGP and other research have revealed that situations where companies deliberately intend to harm communities are rare, however harm frequently happens as a result of neglect, ignorance or a lack of proper consideration of social issues by companies (van der Ploeg and Vanclay 2018). It is argued that, if projects have installed effective feedback procedures (grievance redress mechanisms) and act in response to such feedback, many issues could be resolved before they escalate (United Nations 2011; van der Ploeg and Vanclay 2017; Vanclay and Hanna 2019).

Another major change has been recognition that social issues are real business risks. Instead of social issues only being seen as a minor matter (a nuisance), there is now realization within companies and projects that social issues can be critical issues, which therefore need to be properly identified and managed, otherwise they will create major problems including delays, stoppages, premature closure and additional costs (Franks et al. 2014; Hanna et al. 2016a). There is a strong business case for the proper management of social issues (Vanclay and Hanna 2019).

An expression emphasising awareness of the importance of social issues is the concept of ‘social licence to operate’, a metaphor that refers to the level of acceptance of the project by the local community and other stakeholders (Parsons and Moffat 2014; Jijelava and Vanclay 2017, 2018). Although there are critics, others argue the concept is useful because it has resonance within industry. To be successful, a project needs to gain and maintain a social licence to operate (and grow) from its many constituent stakeholders (Dare et al. 2014).

There has also been growing awareness of benefit sharing and shared value. Benefit sharing refers to the arrangements by which a project provides benefits to local communities (Vanclay 2017a, 2017b). Benefits can be in financial and non-financial forms. SIA should not just be concerned with minimizing harm, SIA also needs to ensure that projects deliver benefits to local communities. Amongst other things, a social licence to operate will only be gained when there are real benefits to local communities (Jijelava and Vanclay 2017; Vanclay and Hanna 2019). Financial arrangements could include part ownership of the project by local communities, a percentage share of profit being distributed to local communities, or establishment of a community development (social investment) fund. A wide range of other benefits can also be provided (Vanclay 2017b). In addition to jobs, local procurement and local content strategies can significantly increase benefits to local communities (Esteves and Vanclay 2009; Wilson 2019). It is fully expected that projects contribute to local community development (Vanclay 2003; Vanclay et al. 2015; Aucamp and Lombard 2018).

Shared value is a philosophy about the purpose of business and the role of companies (Porter and Kramer 2011). It is a way of thinking that argues that societal needs define markets and that the purpose of companies should be about creating shared value not just shareholder value. Shared value acknowledges that social harms create costs to firms and therefore social risks need to be effectively managed, and that a positive company reputation will increase business opportunities by creating a social licence to operate and grow (Hidalgo et al. 2014).

All this has given a mandate for SIA that supersedes national legislation. SIA is now fully part of how companies do business. It is part of their normal environmental and social management systems. SIA is expected by all international financial institutions and Equator Principles banks, not only to assess the risks to the lender, but as expected management practice of the borrower. All lending institutions have procedures that require SIA, e.g. the Performance Standards of the International Finance Corporation (IFC 2012). Some have specific SIA guidelines, e.g. the Inter-American Development Bank (Kvam 2018).

Within the SIA field, there is a well-developed understanding of social impacts and how they are experienced (Vanclay 2002, 2012; Smyth and Vanclay 2017), as well as how SIA should be done (Esteves et al. 2012, 2017; Vanclay et al. 2015). Unlike biophysical impacts which arguably only happen when construction starts, social impacts happen the moment there are rumours about a potential project (Vanclay 2012). Anxiety is created, and speculation and opportunism occur, creating social impacts. These impacts happen whether or not the project proceeds. People’s fears, even if ill-founded, also create social impacts. Because people act on their fears and beliefs, and their outlook on life and perceived opportunities are affected, this gives rise to the adage that perception is reality, and that perceived impacts are real social impacts (Vanclay 2012). Social scientists and SIA practitioners generally understand the social dimensions of impacts, however not all project technical staff fully understand the complex ways projects affect local people (Hanna et al. 2016b). Increasing the awareness of technical staff about social issues and overcoming the asocietal mentality remains an ongoing challenge (Vanclay 2002).

Into the future

Although more prominence is being given to social issues and SIA (Vanclay 2015), some things remain under-developed and deserve more attention. Perhaps the most obvious of these is climate change, and specifically its consequences for people, as well as the consequences of climate change mitigation and adaptation actions on people. Climate change is likely to lead to considerable displacement and resettlement through increased hazard exposure and potentially climate-induced conflict. Climate change mitigation actions, e.g. carbon sequestration schemes (e.g. REDD+), also cause displacement. Care must be exercised in how these and other green schemes are implemented to ensure they do not contribute to human rights harms and social impacts (Vanclay 2017b).

Achieving the United Nations Sustainable Development Goals will require many infrastructure projects to be constructed. This will inevitably lead to displacement, resettlement, and other social impacts. Being resettled is traumatic, a significant social impact and a major upheaval in people’s lives (Vanclay 2017a). One component of the multi-dimensional stress caused by resettlement relates to people’s livelihoods. Although international standards require livelihood restoration and enhancement in people’s standard of living, there is limited experience in how to actually do this. Insufficient attention is given to this topic, and there is limited awareness of the complexities of restoring pre-existing livelihoods or implementing alternative livelihoods. Market realities limit what is feasible, especially when there are many affected people. Simple one-size-fits-all solutions are bound to fail.

For projects to truly get a social licence to operate, communities need to have more autonomy and decision-making power, including the ability to determine their own future (Hanna and Vanclay 2013). The concept of free, prior and informed consent (FPIC), which applies to Indigenous peoples, accords local communities the ability to have a say over a project (Rodhouse and Vanclay 2016). For FPIC to be meaningfully implemented, communities need to fully comprehend the implications of the project. This means there needs to be community-controlled SIA (O’Faircheallaigh 2017).

Community approval of a project is likely to partly depend on the benefits the community receives from the project (Jijelava and Vanclay 2017). In the past, company promises have often not been kept. Consequently, communities are now encouraged to ensure that a project community commitments register is maintained (Vanclay and Hanna 2019). In the future, proof of community approval of a project will likely be in the form of mutually-negotiated Impacts and Benefits Agreement or Community Development Agreement (Brereton et al. 2011).

The failure of conventional regulatory impact assessment to properly address environmental and social issues (Dunlop and Radaelli 2016) means that new methods for assessing projects are needed. A suggested method is for the regulator to assess a Social Impact Management Plan rather than a statement of impacts (Franks and Vanclay 2013). This has been implemented in some Australian states and has wider application (Parsons et al. 2019).

An issue for SIA scholars and practitioners is increasing institutional concern about research ethics, scientific integrity and the security of personal data (Vanclay et al. 2013). While all social researchers should always implement ethical research practice, there are times when this creates difficulties in how SIA practitioners undertake their work (Baines et al. 2013). Greater awareness of and commitment to ethical social research is needed.

Although considerable learning has occurred and SIA practice has improved over time, some things remain problematic for the management of the social issues in projects. A key issue is that place attachment (aka sense of place) is fundamental to being human (Vanclay 2008). Thus, any change to a person’s local environment that is perceived as undesirable will inevitably trigger anxiety and concern. Even acceptable change can generate nostalgia, melancholia, or solastalgia (Albrecht 2006; Galway et al. 2019). Therefore, effective project social performance needs to assist individuals and communities to cope with change. Place attachment will mean that any time a project requires resettling people, this will always create major social impacts no matter how well it is done. The requirement in international standards to ‘avoid resettlement wherever possible’ is very apt.

Resettlement is problematic in many ways. For rural people especially, land is particularly important and in some cultures can have deep spiritual and emotional meanings (Ogwang and Vanclay 2019). Finding replacement land can be very difficult. Compensation is often inadequate, paid too late, and may lead to spending on inappropriate items, potentially leading to the future impoverishment of displaced persons (Vanclay 2017a). There are difficulties in re-establishing the livelihoods of displaced persons. Other complexities include the relocation of graves, cemeteries and shrines, especially in societies where this would be anathema, or where discussion of death and the departed is taboo. In societies that vest spiritual significance in objects (e.g. trees, rocks), relocation of those objects may be required where this is possible. More complex is resettling spirits that are not embedded within objects. It is generally quite difficult for these spirits to be resettled, and this usually requires complicated negotiations with the affected community (Reddy et al. 2015).

Projects have a major impact on cultural heritage. While physical (tangible) cultural heritage can sometimes be relocated, e.g. placed in a new community museum, preservation of intangible cultural heritage is complex because the resettlement process and project social impacts are likely to affect performance of the activities that give rise to the intangible cultural heritage (Eoin and King 2013). The dislocation, dispossession, alienation and anomie that frequently accompany projects may lead to devaluation of local culture and cultural heritage.

A final complexity relates to the priority given to western, individualistic, rational ways of thinking and to narrow scientific understandings. To be truly respectful to local cultures, it is important for projects, impact assessments and project staff to be respectful of alternative cosmologies and epistemologies. Much advice has been given about this (CBD 2004; Vanclay et al. 2013; Hanna et al. 2016b).

Dealing with the real issues

There are many limitations to the effectiveness of SIA and the management of social issues in projects. One of the biggest issues is that corruption is rife, severely distorting how projects and the management of social issues associated with projects happen. Too often, EIA and SIA are window-dressing or greenwashing, serving to do little more than legitimate inappropriate projects (Esteves et al. 2012). In addition to any impact assessment that might be done, there must be a proper justification (business case) for every project.

Despite the rhetoric of independence, in the way EIAs and SIAs are typically done (i.e. commissioned by the proponent) there is a great risk of co-optation of the impact assessment consultants, or at least a perception by the community of this. Even community leaders and researchers, if not corrupted, are often co-opted by projects through cynical and genuine attempts by company staff to win their support (Vanclay and Hanna 2019). Rigorous peer review is needed to ensure the integrity of research underpinning impact assessments. Regulatory impact assessment needs to rethink how it is done. At face value, it would seem better if the regulator would engage a consultant to assess impacts rather than rely on a consultant directly engaged by the proponent.

A further issue is that companies and projects are often guilty of misrepresentation, of overstating benefits, understating negative impacts, and/or implying endorsement of international organisations – in other words, whitewashing, greenwashing, redwashing and bluewashing (Vanclay and Hanna 2019). Much more scrutiny needs to be given to the claims made by companies and, despite initiatives such as the Global Reporting Initiative, to the way companies report their activities (van der Ploeg and Vanclay 2013).

A final issue is that too many companies take shortcuts in the management of social issues. The technocratic, engineering, asocietal mentality (Vanclay 2002) that is present in projects and project management frameworks means that social issues are ill-considered and undervalued. Increasing the awareness of engineering and other technical staff of the significance of social issues and having them modify their behaviours and actions are critical to a project getting a social licence to operate and to the proper assessment and management of social issues.

Conclusion

Unfortunately, SIA has not always been effective in defending the interests and human rights of project affected peoples. Sometimes, charlatans have masqueraded as responsible professionals undertaking deeply flawed research that has supported harmful projects. Naïve or inexperienced individuals have accepted to be involved in risky projects without comprehending all the issues. Other times, social scientists with good intentions have failed to comprehend all the dimensions of a project and how it might affect local communities. Sometimes, practitioners have tendered for projects far too cheaply and have been unable to undertake all the fieldwork necessary for proper assessment of a project’s social impacts. Typically, the timeframes expected by companies are far too short for proper engagement of local communities or for local people to fully comprehend all the issues.

It is essential that SIA practitioners ensure that, when they agree to participate in projects, they are adequately resourced to properly assess the issues, have sufficient influence within project management to make a difference, and there is a commitment by the project to fully addressing all identified social issues. To have influence within the project and company demands that SIA practitioners be effective communicators and know how to pitch their arguments in defence of local communities in ways that resonate inside the project and company. SIA practitioners need to be stronger advocates for the value of SIA. They need to speak up more, and/or refuse to participate in projects that are likely to cause harm and suffering. Only when all professional SIA practitioners stand up to defend good practice SIA will the lives of project-affected communities be improved and projects truly get a social licence to operate.

Disclosure statement

No potential conflict of interest was reported by the authors.