Social and economic development
The term ‘social development’ describes company activities that provide the local community with opportunities to develop. While some activities may be part of the company’s core business, others may be additional activities that enhance the company’s reputation and its relationship with the community.
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The added value brought to a host nation through the activities of the oil and gas industry
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The voluntary contributions companies make to the communities and societies where they operate
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Moving a product or service from supplier to customer
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Local content
The term ‘local content’ describes the range of benefits the oil and gas industry can bring to the areas where it operates. Companies can provide measurable benefits by:
- employing and training local people
- buying supplies and services locally
- supporting community development work
There is no single and universally agreed purpose of local content, but in December 2008 IPIECA members agreed the following definition to guide IPIECA’s work in this area:
Local content is the added value brought to a host nation (national, regional and local areas in that country, including communities) through the activities of the oil and gas industry. This may be measured (by project, affiliate, and/or country aggregate) and undertaken through activities such as but not limited to:
- Workforce development (international oil companies/national oil companies, contractors/sub-contractors):
- Employment of national, regional & local workforce
- Training of national, regional & local workforce
- Investments in supplier development (all oil and gas goods and services, including engineering and fabrication yards):
- Developing supplies and services locally
- Procuring supplies and services locally
- Community development (optional)
Local content is a significant issue for the extractive industries and other industry sectors. Several organizations are currently developing work in this area, including the International Finance Corporation (IFC), the World Business Council for Sustainable Development (WBCSD), Engineers Against Poverty and the International Council for Mining and Metals (ICMM).
IPIECA has developed a guidance document for the oil and gas industry on effective approaches towards local content.
Social investment programmes
Social investment programmes are the voluntary contributions companies make to the communities and societies where they operate. These programmes typically donate or develop skills and resources to local communities and local or national institutions.
Many companies have implemented social and community investment programmes in areas where they operate, with the aim of establishing and maintaining good relationships with local, regional and national stakeholders, and to enhance the company’s social impact on its host society. However, despite companies’ best efforts and ongoing engagement, many social investment programmes fail to generate the sustainable benefits that companies hope for and may have unintended consequences. Also, companies often find it difficult to define, quantify and measure the success of their social investments. It is important that companies build sustainability into their social investment programmes so that community members have the skills, desire and resources to maintain the benefits when the company departs or stops providing support.
IPIECA has produced a guidance document that aims to address the question of how to create successful and sustainable community investments and how to measure their success.
Supply chain
A supply chain is a system of organizations, people, technology, activities, information and resources involved in developing a product or service and delivering it to the customer. The supply chain of one company is typically made up of other companies contributing goods or services to their process.
Transparency and social performance (for example, working conditions and the environmental impacts of the manufacturing process) throughout the supply chain are under increasing public scrutiny. Lack of management attention in this area can lead to reputation damage and affect business performance. How can good social responsibility practices be created, maintained and monitored along the supply chain for the benefit of everyone involved in it? Supply chain good practices is an example of a new issue for IPIECA which is recognized as an area of growing concern and interest to companies in the industry. With other IPIECA working groups, the SRWG continues to monitor this issue, and may decide to work on it in due course.
Categories:
- Social responsibility
