Years ago, infrastructure was a frequent topic of political debate across all developing countries, particularly in Latin America. Discussions about the sector’s role have always revolved around the same two points: Economic recovery (with its possibility of generating employment and income) and modernization. Argentina, Bolivia, Brazil, Colombia, Ecuador, and Peru are just some of the countries trying, to varying extents, to escalate this development agenda in recent years, regardless of their governments’ political or party alignments.
According to the Inter-American Development Bank (IDB), Latin American and Caribbean countries invested around US$125 billion in infrastructure annually between 2008 and 2017 through public and private funds. This represents the equivalent annual average of around 2 percent of their GDP. The figure is considered low, especially for a region seeking to improve its quality of life and sustainable development indices. Other emerging economies, such as those in the Middle East and North African regions, invest much more, with an average of 4.8 percent of GDP per year.
There is therefore enormous scope and demand for infrastructure projects in Latin America. Brazil is one example. To overcome the country’s difficulties in the areas of transport, logistics, energy, and sanitation, the Ministry of Infrastructure has committed to pushing through 44 project concessions in 2021. The area of sanitation alone will require at least US$10 billion per year over the next ten years.
Obviously, development is a great way to boost country investments in updating mobility, highway, port, airport, telecommunications, energy, and sanitation infrastructure, among other types. A works and concessions schedule in any of these segments adds significant percentage points to national GDP.
“The area of sanitation alone will require at least US$10 billion per year over the next ten years”
But this progress is no longer enough. It is now clear that the expectations for current projects’ impact go beyond the economic transformation they generate. A new period is emerging within the infrastructure sector; now, big state-owned companies realize they need to modernize how they manage their narratives. The traditional link with economic recovery and modernization is no longer sufficient.
Social license to operate is becoming ever more important to these ventures. Today, an infrastructure project’s success is directly related to how it responds to stakeholder concerns and expectations. Thinking about business from the perspective of shareholders alone is no longer a sufficient long-term relationship strategy.
Major infrastructure companies are beginning to realize they need to engage in dialogue with their publics. They know this dialogue is far from easy, but rather than just listening to them, companies need to include them in the equation that underpins any infrastructure project. There is a reason why appreciation for Environmental, Social, and Corporate Governance (ESG) issues has been gaining ground, in the sense of creating a new model for stakeholder dialogue.
The impact generated by an infrastructure project transcends its actual undertaking; it generates interrelationships and creates demands that need to be considered, at the risk of threatening the investment itself.
Communication is a key element for obtaining a social license, but there are several new challenges to overcome if we are to understand the complex universe of infrastructure and the relationships between a project and its various stakeholders. These publics are increasingly interrelated and interinfluenced. The authority that grants the concession; regulatory agencies; the local communities affected by the project; civil society; shareholders and investors; end users; and more are all linked. Fund managers – another strategic public – are beginning to define and create indicators that give tangible form to matters such as diversity, sustainability, and governance.
In large corporations, changing the management focus from shareholders to stakeholders also creates communication challenges when it comes to developing narratives that can effectively argue in favor of a project.
“The impact generated by an infrastructure project transcends its actual undertaking; it generates interrelationships and creates demands that need to be considered, at the risk of threatening the investment itself”
Reputational risk resulting from undertakings was not taken seriously for a long time in the infrastructure sector. There were not-infrequent cases of companies winning auctions to construct gigantic hydroelectric or nuclear power plants, highways, or railroads, only to later be surprised by local community’s resistance to the works. This resistance often led to campaigns by environmental organizations or even legal action to halt the project.
The privatization of many essential services in Latin America used to be a subject of criticism and distrust, as users were not immediately able to see the benefit of receiving private telephone, sanitation, energy, or postal services.
Facing new demands for transparency, social commitment, and reputation, companies have had to find answers in the form of stakeholder management efforts. Their goal with these activities has been to change reputation management’s center of gravity and run the business with a focus on strategic audiences.
The first great asset communications adds to this new approach is improving reputational risks audits and helping create plans to mitigate them. Mapping communities and cities affected by infrastructure projects cannot stop at the economic, social, and environmental perspectives, although these are the most palpable. This analysis must identify all the stakeholders related to the issue, as well as what drives them. After that, the question is simply whether the present narrative connects company or project purpose with the wishes of all stakeholders.
Media have reported numerous examples of how, following privatization processes, winning companies have failed to convey their future project’s storydoing. To make matters worse, local public-facing engagement and communication plans often only begin to be implemented once the works have already started, not before. That is the other pillar of infrastructure communication: Connecting to ensure the narrative’s effectiveness and demonstrate storydoing.
Companies need to keep in mind that any infrastructure project, whether it be constructing a subway line or a port or airport concession, goes through several phases in engaging with the public, each requiring a different approach. There was a time when a civil construction company’s local engagement plan was concerned only with the people directly neighboring the structure under construction. Now, it is not enough to send flowers to the neighbors and apologize for the noise. Today’s public is much more interested in the project’s effects, and it expects much more. What impacts will the work have on local mobility and traffic? Does the concessionaire treat its employees properly? Have the safety issues (both environmental and workplace) been identified and managed?
Questions arise for every type of initiative, whether a new airport, wind farm project, or a privatized highway that plans to collect tolls. Stakeholders are increasingly demanding for them all. They want answers.
The new logic of communications
One-directional or less comprehensive reputational strategies simply do not work anymore. It is therefore even more important to maintain open, participatory communication models that draw from a diversity of ideas and are incorporated into the storytelling and storydoing strategies.
“One-directional or less comprehensive reputational strategies simply do not work anymore. It is therefore even more important to maintain open, participatory communication models”
For these reasons, this new universe of infrastructure is also changing the logic behind its communications strategy. Proactivity is an increasingly valued element in engagement efforts, but it needs to be anchored in specialized sector knowledge and a deep understanding of people’s concerns and demands. This makes the role of reputational management professionals within infrastructure companies even more strategic.
Stakeholder mapping is critical to understanding how they are organized, how they position themselves, and what language they use. This is what determines how companies should present themselves before, during, and after winning an infrastructure opportunity. All of this is beginning to become part of tomorrow’s universe of corporate communications.
It is a relatively new frontier, but it is fundamental for any infrastructure project, regardless of the country or current scenario. We are dealing with a sector-wide network of interests, and tt is complex, extensive, and full of obstacles. From concept design to commercial operation, infrastructure projects mobilize many people, many resources, and many expectations.