Won in translation – Blessed are the peacemakers: community consultation and corporate reputation

Handled badly, stakeholder engagement can have a serious adverse impact on a utility’s corporate reputation. After all, it is stakeholder groups – be they members of the public, investors or employees – that effectively own a company’s reputation. Each has their own opinion and expectations as to how that company should behave.

There is often a perceived disconnect between companies’ stated aims of working with local communities and ensuring the protection of the local environment and their approach to planning applications and infrastructure development – this is a reputational risk issue.

Part of the challenge for utilities is that public consultation has become more complicated. First, communities and activists have become a lot more media savvy, and have more tools, such as Facebook and Twitter, with which to launch anti-project protests. They also have a deeper knowledge of environmental matters and a good understanding of how to stop or slow down projects within the planning process.

Second, the country requires the largest tranche of energy infrastructure building for a generation. Third, public consultation is now a statutory part of the pre-application phase of the new planning regime, which was introduced in England and Wales in March 2010. Under the previous regime, consultation was often voluntary and occurred a lot later in the planning process.

“In the past we were used to preparing public documents for an inquiry at the end of the planning process,” says Catherine McCloskey, planning and best practice manager at National Grid. ”Now all our documents have to be open and transparent to the public much earlier in the process. We have to make sure that we get this stage right. We don’t want to damage our reputation by putting through an application that doesn’t get past the pre-application phase.”

So hesitant are companies that since the new regime came into force, only three projects have gone through the pre-application phase (one of which was rejected). National Grid currently has four infrastructure projects in the pre-application phase (Hinkley C Connection, Bramford to Twinstead, King’s Lynn Connection and Mid Wales), all of which have completed a stage of public consultation. McCloskey says the company has learnt from each one. ”At the last of the four consultations, we were much more prepared for people’s depth of knowledge and level of interest,” she says.

“If people go to the press with their concerns instead of coming to us, it can put the project on the wrong foot,” she continues. ”While we are trying to explain what we are doing and why, we also want to understand the issues locally so that we can take account of them.”

That is just as well, because by engaging stakeholders earlier in the process and by publishing more information, companies are inadvertently making themselves more vulnerable to criticism, protest and negative press.

“The risk to reputation is that ultimately you may not realise the development,” says Ian Anderson, head of national and retail planning at CB Richard Ellis. ”Engagement needs to be looked at as both a sword and a shield – it provides the platform to communicate the benefits and protect against and disperse objection early in the process.”

James Darley, executive vice president of planning consultancy Chelgate, agrees. ”It almost goes without saying that a large business shown to be bullying, insensitive or incompetent in its interaction with stakeholders will damage its reputation,” he says.

The cost of failing to engage properly can run into hundreds of thousands of pounds as projects are delayed or permission is denied. And the reputational cost of this failure can damage stakeholders’ trust in the company, undermining future consultation programmes and other engagement activities and shaking confidence in the management.

This article was written by Alastair Pickering, Research and Operations Director at Alva and released in full on Utility Week.