Social license: Love or hate the term, it’s a thing

Dr. Mary Lou Lauria's picture
Dr. Mary Lou Lauria, Vice President, Environment, Society & Geoscience | Americas, Advisian (WorleyParsons Group)
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Achieving a social license is difficult. Moving forward in the development of a project, companies can no longer just tick the permits and approvals box; social media and communities can quickly cause irreparable reputation damage, ultimately resulting in the grounding of a project. For many large projects, following regulatory process is no longer enough. Companies need to do more, but what is the right direction?

The first published definition of social license to operate was probably by Joyce and Thomson in 2000 when they stated, “We propose that a Social License to Operate exists when [a mineral exploration or mining project] is seen as having the approval, the broad acceptance of society, to conduct its activities.” At the level of an individual project, social license has its basis in the beliefs, opinions, and perceptions held by the local population and other stakeholders regarding the project and is something that can be granted by the community. It is intangible (unless effort is made to measure these beliefs, opinions, and perceptions) and it is dynamic and transitory because change occurs as new information is acquired. Social license has to be earned and, maybe more critically, actively maintained. No one said social license is easy. It demands commitment, alignment, and trust – attributes that take time.

Society is in a paradoxical quandary. People want investment in their communities but are uncertain of the long-term environmental and social risks that large projects can bring. Out of necessity, the relationship between industry and community has evolved through public awareness and an increased focus on sustainability and resilience, allowing consideration of more mutually beneficial arrangements.

As we have progressed, shareholders and communities have shifted the paradigm. They are now demanding locally-sustained development that gives back to the community, and they want more than the promise of short-term jobs.

Corporations have struggled to balance economic pressures with strengthening societal pushback, while communities have struggled with a lower tax base and higher social, infrastructure, and environmental pressures. Companies work to make new projects fiscally conservative. Communities and government view these projects as potential and necessary injections of cash. Though these two sides seem at odds, it has been shown that successful communities and projects often only develop when mutualistic, symbiotic relationships are formed, facilitating the attainment of social license at the community level.

In the Harvard Business Review article, “Creating Shared Value” (January/February 2011), Porter and Kramer state that companies can bridge the gap between business and society by redefining their purpose- simultaneously generating economic value and societal value (by solving community challenges). This concept of shared value proactively creates benefits for both. Projects around the world have achieved this through reimagining products and services, redefining productivity in the value chain, and creating enabling environments. With early planning, open dialogue, and careful implementation, a new definition of success is achievable.

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