Trust in Canadian Energy Sector Declines

Simply seeking a social licence to operate is no longer enough.

In the aftermath of the economic meltdown, bank and auto bailouts and environmental crises, trust in business and government is in short supply. According to the 2012 Edelman Trust Barometer – a survey of 30,600 people globally, which included 1,200 Canadians – Canadians’ trust in banks and financial services lags, while energy is among the least trusted industries in the country. Canadians barely give that key sector a passing grade of 5.5 on a sliding scale of one (no trust) to nine (great deal of trust).

We see the lack of trust in the energy sector starkly at work in B.C. Here, local governments, environmentalists and First Nations line up in opposition to oil pipelines through southern and northern B.C. Meanwhile, natural gas projects are hounded by critics of fracking and concerns about water use, the chemical composition of fracking fluids and even fracking-generated seismic activity.

It’s time for companies in all sectors to turn their attention to regaining and earning trust. The least credible spokespeople are now CEOs and government leaders. The rise of social media has obliterated the one-way communications that companies traditionally rely on to control information flow, and Canadians are adamant that business and government are not meeting their expectations on key issues such as transparency, honest communication and ethical practices.

Our research shows that consistent financial returns and innovative products are the primary factors determining current trust levels. However, building future trust depends on quality products and services, transparency and societal factors such as listening to customer feedback, treating employees well and putting customers ahead of profits.

Businesses must listen, establish operational and societal goals and then report them regularly and honestly. They should strive to define, communicate and reinforce their roles as job creators, environmental stewards and strong community partners.

Stakeholders traditionally look to government for two key assurances: consumer protection and oversight of responsible corporate behaviour. Businesses could boost trust by taking ownership – in principle, not legally – of these functions. That would mean holding themselves to exceptional standards on environmental, community and product-quality issues.

Embracing this licence to lead involves substantial risks, but the bigger risk for business is in rejecting these new roles, and instead depending on slow-moving governments, which lack public trust, to lead public discourse and change public perception.

On the controversial issue of hydraulic fracturing, the B.C. government and industry have made lengthy strides in recent months with regulations and best practices to – among other commitments – disclose water use and fracking chemicals. However, critics are quick to say that these efforts are not fully transparent. First, under the regulations, disclosure occurs after – not before – fracking. In addition, if the fracking chemicals used are considered proprietary, as they often are, their composition can be exempted from disclosure.

Will the efforts of industry and government meet public expectations for transparency and full disclosure? Only time will tell. But it’s worth asking whether, in this case, business is holding itself to exceptional environmental standards and prioritizing a full and complete dialogue with the community.

It is up to individual energy companies and the energy industry as a whole to listen, highlight transparency and clearly and consistently articulate project benefits to British Columbians in a manner that is meaningful and resonates. By sincerely dealing with community concerns and moving the conversation to how energy can contribute and advance the aspirations and goals of British Columbians, energy companies can positively influence public opinion, create goodwill and, potentially, build support.