Non-negotiable rule: Impact mitigation is not a community benefit. Measures such as road upgrades, workforce housing, or environmental offsets are conditions of project approval— the baseline cost of doing business. Treating them as“ benefits” undermines trust and widens the expectation gap, because communities rightly view them as obligations, not added value. 8
International Case Studies: Shetland and Denmark
SHETLAND ISLANDS, SCOTLAND Shetland hosts some of the UK’ s largest renewable projects and has responded with governance frameworks that secure lasting community value. The Shetland Islands Council adopted Energy Development Principles requiring minimum community benefit payments of £ 5,000 per MW( indexed) or 2.5 % of project value, with proposals to increase this to 5 % of net revenue for onshore wind. Research by ClimateXChange shows that local ownership delivers far greater long-term economic returns than benefit payments alone, underlining the importance of equity participation. To manage competing interests, Shetland also created an Energy Transition Task Force, bringing together council, industry and community groups to coordinate benefit distribution and ensure local voices shape outcomes. 9
DENMARK Denmark is widely regarded as the exemplar for equitable benefit sharing because it embedded community participation into law. Since 2008, developers of onshore wind have been required to offer at least 20 % of project shares to local residents. 10 The bestknown example is the Middelgrunden Wind Farm, where 8,500 citizens co-own half the project alongside Copenhagen’ s municipal utility. National legislation, including the Promotion of Renewable Energy Act, standardises compensation schemes for nearby households, provides access to finance for cooperatives, and guarantees grid connection. Danish“ energy communities,” such as Avedøre Green City, integrate renewable generation with district heating and building upgrades, pooling investments of more than € 60 million. Together, these measures ensure benefits flow directly to residents, build public trust, and align energy projects with broader local development.
“ Mitigation reduces harm, but it’ s not the same as creating benefits. Communities expect something lasting that builds social licence, not just a payoff for negative impacts.”
LESSONS FOR AUSTRALIA Both Shetland and Denmark demonstrate that clear governance rules, whether revenue-linked benefit formulas or legislated ownership rights, shift community outcomes from ad-hoc payments to systematic, long-term value.
COORDINATION FAILURES: BARRIERS TO SOCIAL VALUE Current governance arrangements are hampered by coordination failures that turn what should be systematic social value creation into fragmented, ad-hoc delivery. As one industry stakeholder put it,“ roles and responsibilities between organisations, state government agencies, and local councils are confusing.”
Key barriers include:
• Unclear accountability – no single body is responsible for coordinating benefit sharing.
• Overlapping programs – poor communication creates duplication and confusion.
• Limited community governance – communities often lack oversight of how benefits are distributed.
These gaps weaken trust, leave developer contributions unrecognised, and undermine the social licence they are designed to secure.
INDUSTRY PERSPECTIVES Consultations with developers and network operators highlight four reforms needed to address these barriers:
1. Clear roles and responsibilities. 2. A single coordination point for benefits at regional level. 3. Consistent measurement frameworks. 4. Independent dispute resolution mechanisms.
Industry participants stressed that any framework must balance consistency with local adaptation, ensuring regional communities can shape outcomes in ways that reflect their priorities.
BALANCING FRAMEWORK CONSISTENCY WITH LOCAL ADAPTATION The relationship between standardisation and local adaptation presents both challenges and opportunities for enabling systematic social value creation. Survey participants observed that " some communities may lack trust in their local government to manage community benefits funds, whereas in other communities, local government will be the best placed organisation to fulfil this role."
This variation suggests that governance frameworks for systematic social value creation require flexibility rather than uniformity. Community foundations offer professional management capabilities while maintaining " local people involved in administering funds and local ownership over that bucket of money ", potentially addressing both the need for systematic approaches and local equity participation.
The key insight from industry consultation is that systematic social value creation requires governance frameworks that establish consistent expectations about equitable participation while enabling local adaptation in delivery mechanisms. This addresses both the expectation gap that undermines social licence and the coordination failures that prevent effective implementation.
FRAMEWORK FOR SYSTEMATIC SOCIAL VALUE CREATION Industry consultations highlighted a recurring challenge: governance frameworks must be consistent enough to provide certainty, but flexible enough to adapt to local context. Drawing on PATHMAKER ' s approach to social value implementation, a four-scope framework can reconcile this tension by mapping responsibilities across governance levels, from federal leadership to local delivery.
How we can apply scope framework to improve governance:
Scope 0 – Leadership and Strategy( Federal): Set national definitions of“ benefits” versus obligations, establish minimum standards for equitable
VOL 18 NO 3 2025 08 www. edaustralia. com. au