Stakeholder trust in the Queensland CSG industry

Abstract

Stakeholder trust is pivotal to the social licence to operate and a source of competitive advantage for firms. While managing trust with stakeholders is recognised as a critical management competency and central to delivering coal seam gas (CSG) strategy, to date there has been little examination of stakeholder trust. This research examined the drivers and levels of trust in the CSG companies and industry from the perspective of core CSG stakeholder groups, and identified what stakeholders perceive to be critical for building and maintaining trust in the CSG industry. With the support of four major CSG companies and the University of Queensland (UQ) Centre for Coal Seam Gas, in-depth interviews were conducted with 145 participants representing five stakeholder groups: landholders, community members, regional leaders, regulators, and employees. An online survey was subsequently developed and completed by 561 CSG stakeholders. Analysis of the interview data revealed 11 key drivers of stakeholder trust and distrust. Seven drivers focused on how the CSG companies were perceived to operate in regard to: (1) integrity and transparency, (2) communication and interaction, (3) competence and efficiency, (4) community impact and contribution, (5) coexistence with landholders and the community, and having (6) a shared versus divergent identity, and (7) a positive versus negative comparative reputation. Four drivers focused on the broader CSG industry: (8) environmental concerns, (9) governance and regulation, (10) uncertainty and unpredictability of the industry, and (11) the power differential between CSG companies and stakeholders. Analysis of the survey data revealed significant differences between stakeholder groups in the level and drivers of trust. On average, CSG employees reported high trust, regulators, community and regional leaders reported moderate trust, and landholders reported low trust. In contrast to a minority of employees, the majority of external stakeholders reported concerns over the environmental impacts of CSG and the effectiveness of governance and regulation, and perceived the industry to be unpredictable and too focused on the short term. Stakeholder recommendations for enhancing trust and strategies for establishing a more resilient and trustworthy industry reputation are identified. Priority areas include: (1) building trust with landholders, (2) increasing the transparency with which companies share information, plans and regulatory compliance, (3) improving the effectiveness of CSG governance and regulation, and (4) addressing environmental concerns.