Winds of Change are Blowing, Beware

WASHINGTON — The Obama administration, under sharp pressure from officials in Nebraska and restive environmental activists, announced Thursday that it would… delay any decision about the Keystone XL pipeline until after the 2012 election.

An election year politician doesn’t really need any more incentive to delay an unpopular decision than thousands of protesters parked in his front garden.  That’s a political no brainer.

But, realistically, if a few thousand activists were the extent of it, precedent suggests that a politician is home-and-dry supporting ‘Job Creation’ activities, particularly in tough times.

Unfortunately for TransCanada Pipeline (and by extension, Oil Sands developers in Alberta) there is a large and growing backlash against ‘Big Business’ in the United States that’s altering the strategic landscape profoundly.

“The public outcry has just continued to get louder and louder, stronger and stronger,” said Annette Dubas, a Nebraska state senator. The issue for Nebraskans is complex.  Although they are a ‘red’ state, supporting business and right-of-center causes consistently, they is growing concern that the XL pipeline will contaminate the Ogallala Aquifer, a crucial source of water in the Midwest.

For TransCanada, pipeline sponsor, this is an unexpected surprise. The company has been developing this project for years and has sailed through its governmental reviews and environmental impact studies with flying colors. Their astonishment at recent developments was made perfectly clear by spokesman Shawn Howard, “A lot of people would stand back and say, ‘If this was such a concern, where were you three or four or five years ago?’ ”

Shawn’s surprise is typical. But how do you know you’re in the middle of a revolution? Answer: you don’t. Not until it’s too late.

Our societal tectonic plates are shifting. The “Occupy Wallstreet” movement marks a turning point. It is the radicalized thin-edge of a giant wedge of public resentment that has been building for many decades. The establishment is unaware that a volano of middle class anger is about to erupt Vesuvius-like over the business landscape. The speed and violence of this explosion will simply overwhelm the established way of doing things. What does a business leader do in such situations: act now to strengthen the company’s most valuable asset, the ‘Social License to Operate’.

Most hard-nosed business people pay lip service to the idea of social responsibility, and, in this, they have lots of institutional support. No less an authority than economist Milton Freedman laid down the law: “…there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits….”.  Making profits and (secondarily) providing jobs IS the social responsibility of business; it’s no wonder that many businesses take their Social License for granted.

However the winds of change are blowing. American banks, authors of the ‘sub-prime’ mortgage disaster, illegal foreclosure practices, and serial incompetence are leading the way, The oil industry, although not free of embarrassing public gaffes, is still reeling from the Gulf of Mexico fiasco and a host of pipeline problems.

What should be clear from recent events is that the status quo is dangerous. Much more will need to be done to win back public trust and confidence. A good start would be a sober analysis of the situation, and a willingness to understand businesses’ ‘relationship with the public’ is damaged and needs repairing – fast.

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