Companies are expected to anticipate, avoid, and remediate negative impacts on local communities by establishing timely and effective stakeholder identification and engagement process. This is important to help understand the vulnerability of local communities and how they may be affected by the company’s activities. Where this is not possible, or where residual impacts remain, companies are expected to manage those impacts appropriately, including grievances, and to compensate local communities for negative impacts.  Local communities are defined as individuals or groups of individuals living or working in areas that are affected or could be affected by the company’s activities. The local community can range from those living adjacent to the company’s operations to those living at a distance. The company’s operations and infrastructure can have significant economic, social, cultural, and environmental impacts on local communities. It is vital to understand and identify stakeholders and community characteristics to effectively address the causes of problems and facilitate decision making in the process. These can be based on issues such as ethnic background, indigenous descent, gender, age, migrant status, socioeconomic status, literacy levels, disabilities, income level, infrastructure availability or specific human health vulnerabilities which may exist within stakeholder communities. Companies can utilise several useful tools to measure and manage their impact, such as the Theory of Change and the Logic Model frameworks, which include a set of guided approaches.

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