Are resource companies programmed to fail?

Tom Liacas —  November 28, 2014 — 4 Comments

These past few years, I have done a fair amount of work with resource companies. This work mostly entailed setting up online dialogue projects to bring these companies into discussion with citizens and activists (in contexts where the latter were making life difficult for the former). While doing this work I had hoped that, through dialogue, mutual understanding and compromises could be arrived at. In the process, I was expecting forward movement on the social and environmental aspects of resource extraction.

But as time passes, I am coming to realize that resource companies may be simply unable to make the shifts required of them in a world rapidly approaching the hard walls of runaway climate change, resource scarcity and global inequalities. In fact, it seems likely that the vast majority of players in this sector will confront new realities the hard way, when citizens and governments storm their gates in the near future.

To be fair to my clients, some people in some of the companies I have worked with understand social expectations and public concerns. These people are sincere about dialogue and are maybe even ready for policy change and compromise. But the larger structures they operate in tend to smother such hopes.

Today’s large resource corporations are pulled most strongly by shareholder imperatives (always increase profits and dividends!) and the vagaries of the global resource market (where bottomed-out prices are a pain point). Given such drivers, resource companies are innovative when it comes to operations but conservative when it comes to social change. In fact, anything that increases operation costs and drives down short term profit tends to get shelved. In ‘Climate change: 3 reasons businesses aren’t seeking solutions‘, Canadian journalist Don Pitts explains the situation in more depth.

Three recent vignettes underscore the realities above

In my own experience, many of the promising open dialogue initiatives that I helped set up for resource companies started with a bang but died with a whimper. Though I worked with good people, forces elsewhere in the chain of command inevitably dragged the communications approach back to attack and denial of social and environmental concerns. This seems to be the industry’s basic comfort zone.

Still, public pressure is mounting. Citizens concerned about the climate and social justice are building vast social networks to fight the resource industry and to punish it for its role in resisting change. Those pushing forward infrastructure projects such as new mines (Gabriel Resources, Barrick Gold) or pipelines (TransCanada, Enbridge), have already been on the receiving end of this new citizen power. This is just the beginning. Climate and resource issues are going to become much more serious mobilizing forces in the very near future.

So when the time comes, and it will, that the public begins blocking every last new infrastructure project… When governments, pressured by powerful citizen networks, are finally forced to impose draconian regulations, expect to see a species die-out in this sector. Those few that survive will have started adapting early (as in now). The others, too big to change and programmed to fail, are destined to go the way of the dinosaur.

Tom Liacas

Tom Liacas

Posts Twitter Google+

An M.A. graduate in Media Studies, Tom Liacas is an experienced Social Network Strategist who first cut his teeth creating and managing advocacy campaigns as an activist.
  • Thibaut

    Great post. Thanks for sharing.
    Same might be true with “too big to fail” banks.

    • TomLiacas

      Thanks Thibaut. Yes, we could write another article about the banks, though I have never worked with them.

  • KeAun Charles

    I know this is an old post, but I’d like your thoughts: have private resource companies done more to adapt to these changes? I’d imagine that a company not pressured by shareholders might be able to move faster.

    • TomLiacas

      Hi Ke’Aun. That’s a fair question. Smaller companies can surely pivot faster but, unless they were diversified to begin with, they are fighting to break even and focused on their core resource activity so may not have much room to change their business model. The smaller companies in renewables and resource recycling, however, are gaining ground and are the disruptors of the future, in my opinion. That and any smaller company that wants to make carbon capture its core business.