Social Baseline in the Extractive Industries

The social baseline in the extractive industry 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:

  • Verify the improvement or deterioration of conditions
  • Validate whether or not the proposed objectives were accomplished
  • 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 industry

In Performance Standard 1, the International Finance Corporation (IFC) indicates that the “Social and Environmental Assessmentprocess 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 in the extractive industry

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

  • Insight into the key social, economic, cultural issues
  • Reduces future risks and supports decision-making by management
  • Establishes a credible baseline in order to measure changes resulting from development of a project
  • 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
  • Identifies the expectations and concerns of local communities, including indigenous peoples
  • Anticipates the expectations and concerns of local communities
  • 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 stakeholder relationship management. The second part of this blog will examine the benefits of this practice.

When data and metadata are not collected systematically and quality control and their respective metadata in a format which the data base by register can be accessed by different actors, the company cannot use them in the future or for all the “engagement activities “.

In addition, data are often forgotten for several years until monitoring is required.

This is why it is interesting to implement an information management system which one of its goal is to use the baseline data for different purposes, monitoring the progress of each of the matters (as health, education, number of complaints, complaints addressed, among others) in real-time or periodically.

It is important to visualize the social baseline from the beginning of the project.  Many of the companies that collect baseline data do not have a mandate to assess the impact that an extractive project may have on daily life until its closure.

Benefits of an integrated social baseline solution

Some of the advantages of managing a social baseline study within an stakeholder relationship management software for mining and oil & gas companies include the following:

  1. The quality of the data can be controlled in real time, and errors can be corrected quickly while technicians are still in the field. For example, automatic controls can ensure that each person has a valid identification number (especially in cases where there is some sort of compensation), that a person cannot appear in two or more families, and so on.
  2. The baseline data can be accessed, used, stored and reused easily by the company, and they can replicate the same methodology regardless the consulting firm. The methodology and parameters are stored within the system so that it can be replicated again. Data can be downloaded and used in other specialized software for statistical analysis if necessary.
  3. The data serves multiple purposes. This means that once the data is entered in the system, it can be used for different applications. A person can be part of an inventory of people, can be considered a stakeholder, can appear as a participant in meetings, and can be a beneficiary of company compensation, if applicable.
  4. The data is entered once and can be used to produce different reports. Before the system is developed and while the company is planning to collect data for the baseline, the nature, quality, and types of data will have to be established so that the company can compile reports for various entities.  Data is entered once in the system and can be used to fill the requirements of various reports such as the Social Impact Assessment (SIA), the Environmental Impact Assessment (EIA), corporate reports, the GRI, EITI, lenders’ reports, legal requirements, and others.

Finally, it is worth mentioning that stakeholder management software must:

  • Efficiently implement and track a company’s business logic
  • Ensure good interaction among different actors through shared data access capabilities
  • Store and secure information in a common repository
  • Guarantee traceability of changes in the Information Management System.

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Borealis stakeholder engagement software today!