Tailored Social Approach Tackles Every Project’s Unique IssuesBy Cas Biekmann | Thu, 08/20/2020 - 14:47
Q: What is the company’s specialty and how does its methodology set it apart from its competitors?
DE: We are a strategic consultancy, focusing on social and environmental impacts. What sets us apart is our ability to adapt our methods completely to the needs of our clients. We see ourselves as a strategic adviser and counselor with various tools and methods at the client’s disposal. These can be adapted to any stages of a project, such as early designs with social impact, due diligence or strategic investment decisions for corporate communication strategies. We mainly work with the energy industry and handle a variety of infrastructure projects in other sectors as well. Some of the services we provide are risk analysis and the mapping of important factors in a community. Our adaptability and flexibility in this regard gives us a competitive edge over bigger firms who work with already established processes.
LB: At the moment, social and environmental impacts are under scrutiny. At Enûma, we do not tie ourselves down to a single methodology. Many of them are good and offer valuable points. Our team, therefore, researches applicable methodologies, taking key points in order to meet the client’s expectations regarding the consultation process. We adapt international best practices to improve Mexico’s social and environmental management strategies related to energy and infrastructure markets.
Q: In the past, the firm’s portfolio primarily focused on northern Mexico. How have you been able to diversify this portfolio?
LB: It was focused there, because most of our projects were located in the north of the country. However, over the past year, Enûma has added more projects to its portfolio, and has projects in the south of the country. We tailor our approach directly to the area in which the project is located. As an additional note, we have noticed that if an industry has already taken foothold in these areas, it becomes easier for energy projects to approach communities. The local communities already have an idea of the demands they want to make, which is not the case in areas were no big investments have taken place. Either way, it is important to support companies with the proper communication tools in order to have a successful social engagement strategy.
Q: What is the firm’s assessment of recent policy shifts in the energy sector?
LB: We believe it’s a mixed signal, although many of our clients are halting their activities regarding development in the Mexican energy sector, some of them are still developing projects in a green field stage. Their experience outside of Mexico has shown them how markets constantly change and risk assessment process are critical in their investment decision, but the market is not going to disappear necessarily. Another sign that clients are not necessarily fearful of the sector’s shifts can be found in financial instruments. Companies and other players are still very much willing to invest, now a days pension funds are willing to invest in energy projects, and are requiring to include ESG (Environmental Social and Governance) parameters in order to maximize the positive impact of the project. It is important to remark that rather than merely focusing on ROI, they want to see significant social and environmental impacts as well. Most of institutional investors are starting to align to the Principles for Responsible Investment (PRI). In short, projects are still being developed but it is crucial for them to do well financially but also socially and environmentally.
Q: What factors into the success of the firm’s meticulous social approach?
LB: First of all, one can appreciate that no two projects are the same. You encounter completely different challenges to social aspects every single time. This depends a great deal on the socio-economic factors that are in play. Developers and investors would preferably value these factors, approach experts and establish a good social mediation process. This helps you to avoid social issues and misinterpretations of human rights-based situations.
DE: A large part of the success behind a social strategy for a project is to have an adequate diagnosis. If you enter a project and have adequate information concerning who the main actors are, those in favor and those against it and for what reasons, you will have a much better idea of how to approach these actors. Since all these issues are unique, we need to adapt our methodology and tailor our approach. We also often work with local people, so that our approach is supported by someone who is fully familiar with local culture and customs. All this social information will help companies establish mutually satisfying agreements with the communities. Often when projects fail, it is because the companies involved did not sufficiently understand the underlying social context of where they tried to operate.
Q: What is the difference between energy and oil and gas companies regarding social approach?
DE: There is an important difference: oil and gas companies are often in charge of the entire process if you look at those engaged in extraction of crude. In comparison, renewable energy projects often work with developers, EPCs, investment funds and other entities. Even though renewable energy companies often have a long-term vision for their projects, oil and gas companies are at times able to have an even longer-term and more integral vision for their projects, as they are involved in every aspect of it.
LB: When looking at environmental, social, and governance (ESG) criteria, renewable companies often meet environmental targets as a part of their inherent nature. However, those rating their performance have observed that the social and governance performance of these companies is not always positive. Due to the large supply chains they work with, it becomes difficult to control the social aspect of every player involved. This leads to negative ratings for their social approach. On the other side, the oil and gas industry has traditionally been chastised for their environmental approach. But many of them are adopting renewable energy projects in their portfolio, offsetting their negative carbon footprint. In addition, they have gained a lot of ground compared to renewable companies because they have successfully included diversity and inclusionary best practices in their leadership roles. This has been influenced by social pressure.
Q: What are the firm’s goals for 2020-21?
DE: We have set various objectives for ourselves. One would be to make the firm less dependent on the energy sector, which has been our primary sector for a number of years. Now, we need to broaden our scope. One example of this is our founding for the Mexican Council for Impact Assessment, with consulting firms on the environmental and social fronts. Our intention is to create an industry standard at the level of international best practices. We want to help companies to retake ownership of these standards and create a level playing field regarding standards that need to be met.
Enûma is a consulting firm specialized in the design, execution and evaluation of social impact and sustainable development strategies. This is achieved through an innovative methodology that generates trustworthy results and high-quality solutions.