The baseline represents a starting point that allows companies to objectively compare actual project impacts with anticipated impacts. It establishes the first quantitative measurement of performance indicators that are considered in the design of a social development project.
Baseline data and its usefulness
The baseline is a snapshot at a specific time of the economic, cultural, social, demographic, and geographic environment within which the project will take place. That is why it is the foundation used to measure and assess the positive and negative impacts of the project over time. This implies that each indicator should be measured more than once in the life of the project in order to (i) verify the improvement or deterioration of conditions, (ii) validate whether or not the proposed objectives were accomplished, and (iii) verify whether the project’s social performance is meeting the goals that were initially planned. If not, it is important for the project proponent to make the necessary corrections.
The baseline should be established before any activities are undertaken by the proponent. If this has not yet occurred, the baseline has to be established as soon as possible.
Social Baseline in the Extractive World
In Performance Standard 1, the IFC indicates that “the Social and Environmental Assessment” process will be based on current information, including an accurate project description, and appropriate social and environmental baseline data. The Assessment will consider all relevant social and environmental risks and impacts of the project.”
Having a social baseline at the start of the project and using it as the basis for future monitoring and evaluation is considered international good practice. In recent years extractive industries have increasingly made the collection of social baseline data a standard procedure that has been incorporated into their operational policies.
Although initially these studies were undertaken to satisfy the requirements of different lenders and the laws of various countries mandating the inclusion of social baseline data within Environmental Impact Assessments (EIA) and/or Social Impact Studies, the major oil & gas and mining companies now systematically establish a social baseline before starting operations regardless of where they are working.
Benefits of having a Social Baseline
The best time for any extractive company to establish a social baseline is at the start of the exploration phase. However, most companies do not know at this point whether or not their activities will lead to a project, and usually they do not have the financial resources to be able to collect social baseline data before the development stage.
Nonetheless, recording social baseline data at the beginning of the project gives (i) insight into the key social, economic, cultural issues, (ii) reduces future risks and supports decision-making by management, (iii) establishes a credible baseline in order to measure changes resulting from development of a project, (iv) provides integrated information to identify potential social impacts (including livelihoods, labour, health, and security), enabling the mitigation of potential negative impacts and allowing positive impacts to be enhanced in the project design process, (v) identifies the expectations and concerns of local communities, including indigenous peoples, (vi) anticipates the expectations and concerns of local communities, and (vii) identifies indigenous and cultural heritage sites.
Industry best practice involves the systematic management of key performance indicators in relation to baseline data that has been collected, and this can be done through the use of a social Information Management System (IMS). The second part of this blog will examine the benefits of this practice.