If you believe that trust is a crucial ingredient in any transaction, look no further than this populist era to underscore the importance of earning people’s trust early and often. This is especially true for energy and environmental issues.
For nearly 50 years, the energy and environment debate has perpetuated a false choice between enhanced production and security and concern over emissions and climate change. The polarization, far pre-dating this current wave of populism, is deep and wide, often pitting coastal and liberal elites and climate change against traditionally conservative groups from energy producing regions. This has largely tracked with the growing divide between the mass population, or otherwise ordinary citizens, and the informed public (aka elites), as confirmed in the annual Edelman Trust Barometer.
On top of that, people’s increasing lack of trust in policymakers and institutions writ large has created opportunities for populist-style politicians to tap into people’s existing fears and desires in a meaningful way. In the U.S., for instance, this includes sometimes inflated claims by politicians on both sides about the jobs to be realized in either oil and gas or “green energy,” or promises to save or bring back jobs in the coal industry.
The irony is that in the U.S., our economy is growing, but emissions are not—a win-win for energy and for the environment. This indicates that perhaps we don’t have to be that far apart after all.
What is the state of trust in Energy?
“Trust has been eroded to the point that it is becoming a serious issue for our long-term future,” said Ben van Buerden, CEO of Shell. “If we are not careful, broader public support for the sector will wane. This is the biggest challenge as we have at the moment as a company...The fact is that societal acceptance of the energy system as we have it is just disappearing."
During the last year, trust in the U.S. energy sector rose four points to 65 percent globally, earning a spot in the “truster” category. Even with prolonged low oil prices exacerbating geopolitical tensions and continued polarized debates around climate change and pipelines, people have found a reason to believe in energy.
Inherent challenges remain, however. For example:
- There is a widening gap in audiences that tracks with the populist movement—the U.S. energy sector has an 11-point gap in trust between ordinary citizens and elites. It’s the only country with a double-digit gap two years in a row. One could argue that the industry has been over-indexing on the perceptions of the informed public, communicating more with opinion elites than communities and citizens.
- While trust in energy is increasing, it’s still ranked second-to-last just above the financial services sector and well below technology, which continues to enjoy the top spot at 75 percent. This lower trust in energy is fueled by rising activism. According to SigWatch, energy is the most targeted sector globally by far, and U.S.-based activist actions have grown 340 percent since 2000.
- Public attitudes toward energy have shifted. Polls like Gallup show that environmental concerns are rising. In the U.S., global warming has 66 percent of Americans worried and 71 percent prioritize alternative energy over fossil fuels.
Can energy and environmental policies and the marketplace accommodate populism? What does it look like?
What is populism? According to The Week, “Broadly speaking, it's the belief that the will of ordinary citizens should prevail over that of a privileged elite.”
Unmet needs and growing fears of the broader population represent risks and opportunities in this complex landscape. Which institutions are prepared and poised to capture the hearts and minds of the average person on energy and environment issues? Which will connect the dots between the hyper-local role a landowner plays in the U.S. pipeline infrastructure network to global energy governance? To trade flows? To climate policy? Which will show people why it matters and to whom?
If this is a race for who speaks most for the average person, the current public discourse offers the energy industry significant opportunities to connect with people—at the very least through providing a variety of jobs and robust training. As populism cuts both ways, the industry has been effective in demonstrating the potential negative impacts that environmental policies could have on jobs and higher costs for gasoline and electricity—and how they hurt people who can least afford it. All in all, the industry might fare better than the financial and technology sectors, which could be more of target than energy based on the fears at the heart of much public discussion.
Of course, populism can work against energy companies, too.
The environmental movement tapped into people’s consciousness and wallets in the 1970s; but given the largely elite-led campaigns, it hasn’t even begun to fulfill the potential it has now. Over the past decade, the environmental movement has become more diverse, attracting faith-based organizations and other groups, and we should expect that to continue and expand. Recent intersections of movements on DAPL with the Native American and Black Lives Matter communities indicate a familiar playbook. Do you have broader anti-corporation grievances? Expect groups to leverage exploitation of poorer citizens to target not just energy companies, but the banks who finance their projects, through divestment campaigns that enlist both individual customers and cities that do business with banks.
If history repeats, environmental justice activists will drive the agenda, amplifying minority and indigenous voices who have been disproportionately affected by water and air pollution and climate change. This more inclusionary approach further came into focus in The People’s Climate March in April 2017 and is a major focus of NGOs like the Sierra Club.
Energy industry engagement has certainly improved over time as companies recognized the need to expand their stakeholder engagement efforts beyond investors and policy makers to others who influence their license to operate, from media and opinion leaders to NGOs and activists. Now, the industry is on notice to foster more meaningful connections with people, from treating its employees as ambassadors to engaging ordinary citizens that influence peer-to-peer dialogue.
People are voting with their feelings; this is an industry of engineers that don’t deal in feelings. Moreover, the industry must resist celebrating the President’s agenda to loosen regulations; this will not serve the industry well in the long-term. (In fact, we’re seeing that leading energy companies appreciate the need for balance.) Instead, the industry must give people a reason to affirmatively support their projects even in the face of organized opposition. This will require a fundamental culture shift, a profoundly new way of looking at the landscape in which these companies operate.
In an ideal world, these forces work together to focus more on win-win solutions than the divide in front of us today. The worst-case scenario is that disparate efforts further drive a wedge between energy and the environment, perpetuating the false choice and leading to gridlock on both important policy priorities and the development of new technologies and infrastructure. At the center are people looking to reconcile what it means for them, their families and their futures. These people have unmet needs and legitimate grievances. They also have expectations and influence.
In fact, Edelman’s Trust Barometer shows a new relationship between influence and authority, in which, given the democratization of information, authority follows influence and influence has now shifted from elites to the mass population. In this new paradigm, to alleviate the tension, institutions of all kinds must be much more people-centric.
With the energy and environmental opportunities before us, who will be “with the people?” In this era, it’s anyone’s game.
Amy Hemingway is an executive vice president based in Washington, D.C. and a senior counselor in Edelman’s Energy practice.
