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Tackling Previous Grievances a Boon to Social Engagement

By Cas Biekmann | Fri, 07/17/2020 - 15:09

Q: How does GMI consulting provide value for project developers in the energy sector?

A: We have done approximately 200 social impact studies for the energy sector. We were among the first to generate international best practices in Mexico regarding utility-scale projects. We follow a full methodology, starting with a deep analysis on human rights and companies. We also use the framework of the Equator Principles, as well as the International Finance Corporation’s (IFC) framework for the management of mega-projects. Our approach assures compliance with human rights and best international practices. We focus especially on companies that have strong corporate social responsibility protocols.

It is crucial to apply all these best practices to communities in areas where projects are being developed. This is all about taking away social risks. When a project comes to an area, you can sometimes see social liabilities that stem from previous projects. In other cases, projects can make mistakes in their community management. These often include the non-fulfillment of promises or leaving community management to the engineer in charge of the project. Engineers do not necessarily have the right skillset to manage this area correctly, and as a result, generate friction. Even breaking small promises can have a snowball effect, which could eventually halt the project. The level of social conflicts in Mexico is increasing Those who seek to invest in Mexico will note that it has a fractured judicial system, which does not provide much certainty for investments. There is also a significant potential for social issues to arise. When you combine these factors, they lead to decreased investor interest, which is occurring in the energy sector at the moment.

 

Q: How does GMI assess the effect of the indigenous consultation process on utility-scale projects?

A: I also manage indigenous affairs for the Mexican Bar Association, so GMI has a strong approach toward indigenous consultations. This is an interesting process, with many different sides to it. It is currently under political discussion. This could end up in a law that ranges from fairly aiming to respect indigenous rights down to a juridical brake on development in the country.

What we have seen over the years is more individuals pronouncing themselves as leaders of indigenous communities. In these cases, we verify the situation and start preparing the community and the client for the consultation process. Problems arise when it turns out that the individual is not the actual leader. Despite the fact that they only represent themselves, they can still invoke amparos. The process should be “prior, free and informed,” which is not the case with the Maya Train, for instance. The use of amparos is becoming widespread, especially related to the infrastructure projects that are stalled with amparos. It is beginning to affect the outlook on Mexico’s ability to attract investment.

 

Q: What is GMI’s approach to preventing social issues for projects?

A: We developed a methodology that sends investigators to live with these communities. For the duration of the pandemic, these operations have been somewhat suspended. Nonetheless, distance tools are still helpful in more urbanized areas. The fundamental approach, however, relies on the personal interactions of the investigators living with families in the community. This allows us to have a clear proximity to what goes on in the community and to detect any social liabilities that could affect the project. If we identify the community to be indigenous, we hold anthropological surveys, identifying the members who would join the consultation process.

Next, we enact a social management program to ensure compliance with previous agreements. After all, these processes are not tools for democratic control, stating that if everyone is against a project it will not happen. What they seek to foster is respect toward individual human rights. Therefore, the consultation process allows for a personal approach toward these communities, where a prior agreement can be reached, before problems arise. Every single project, from opening a restaurant down to digging a mine, can cause all sorts of problems. Preventing problems is key in every single case. Once personal grievances enter the mix, solving problems become much more difficult.

 

Q: In your experience, what are the most common issues project developers and communities have in relation to each other?

A: Previous grievances are very common. People tend to assume that negative experiences from a previous project will happen with another project, even if there are other people involved. If you go to a rural area and explain that you wish to develop a project, taking all necessary legal requirements into account, their first question will be what they stand to gain from it. These areas are often deprived of adequate running water, electricity or a decent school, so they want to know how the project could improve their lives.

If project developers do not have responsibility and human rights protocols, they will argue that none of these issues are their fault. This is where difficulties start to occur. For developers, it is a big opportunity to create a harmonious relationship with the communities and kickstart the project by investing socially. They do not have to become a full partner of the community but simply help out with things that are in the sphere of their influence. Some of the most common social problems arise when projects do not disclose all the information to the community. Sometimes, developers have lied about the size of their project and have hidden archeological findings from communities. This can no longer happen. Development in the 21st century has to be transparent. Projects needs to be ethical and socially minded. But with Mexico’s social risk factor, even if you do everything by the book there is still a risk that a project could get suspended. All you can do is close the gap to minimize the risk.

 

Q: What does GMI Consulting identify as a major bottleneck regarding project development?

A: Developers need to deliver their social impact studies early in the process. SENER has three months to deliver its verdict. GMI worked on a project that delivered its studies two years ago, and we are still waiting for a decision, or even an explanation for the delay. This decision will go to CRE, which will then provide permission to construct the project. Obtaining this decision is considered the most difficult factor in the energy sector, mainly because of the bottleneck created by the ministry. This has caused many projects to lose their financing as they could not meet deadlines. It is not a personal issue either: projects of any scale from any company can run into these issues. For the most part, many bigger companies do not launch judicial challenges because they want to continue investing in Mexico and they prefer not to have any conflicts with the government. This is changing, however. With companies narrowing their investment down to one project, they are now more willing to go to court.

 

Q: What are GMI Consulting’s goals for 2020-21?

A: Our goal is to continue consolidating our clients’ projects while conforming to best practices. We will also work to impart a positive company culture that considers human rights, at both private and state companies. The latter will require more work for them to get used to this approach, which is a large and complicated process.

As the firm’s business is directly related to the flow of investments, the amount of work we have will depend on how many projects are developed. In general, I think that today’s energy sector in Mexico no longer exists like we would like it to. As a result, I also do not think we will see an increase in private investment in the sector anytime soon.

GMI Consulting is a Mexican firm that combines technical, scientific and legal expertise related to its specialization in environmental, social and infrastructure assessments.

Cas Biekmann Cas Biekmann Journalist and Industry Analyst