Social license to operate refers to the ongoing acceptance and approval of a project among its stakeholders. In this business climate, it is imperative that companies set their sights on achieving social license. This is true for all sectors, not just mining and gas.
Driven by stakeholders
Stakeholders are the local community and other interested parties, such as NGOs, government and other organizations. It is that diverse group of people’s beliefs, opinions and perceptions that make up their collective feelings about a project.
For companies proposing projects, social license to operate is something that only stakeholders can grant. Companies should be well aware that social license is a dynamic, mostly intangible concept that can change and evolve over time. Therefore, it must be gained and then maintained over the course of a project’s lifespan.
Research shows the concept of social license depends on stakeholders’ perceptions of the project—first the project must be viewed as legitimate in order for it to have credibility. A company must therefore understand a group or community’s social, cultural and legal norms before engaging them. Having this understanding legitimizes and lends credibility to the process, as does sharing clear and accurate information under an established communications framework.
Finally, real trust takes time and effort to cultivate, and requires shared experiences throughout the engagement process.
Different levels of social license
Even if the project travels through the stages of legitimacy, credibility and trust, approval is still not guaranteed. There are often different levels of support for a project:
- Acceptance: stakeholders accept the project, but this is viewed as a lower level of social license.
- Approval: this is a higher level of social license that carries more weight and is more desirable for all parties.
- Part of social fabric: on rare occasions, projects transcend mere acceptance and approval, and become part of a community’s collective identity.
Normally, social license is granted on a per project basis, and not to a company overall.
Industry leaders have suggested ways to achieve and maintain social license, including:
- Taking a leadership role on a social issue affecting your particular business.
- Allowing stakeholders more input and control.
- Engaging and building relationships with NGOs, even those opposed to your project.
Some pitfalls that can have an impact on your company’s ability to gain a social license to operate are:
- Failing to engage a community early enough in the process.
- Not taking the time to understand the norms of a community of stakeholders.
- Choosing not to listen to, and respect the views of, stakeholders.
- Delivering inaccurate information
- Not investing enough time for the process and for relationship building.
- Overestimating support for a project.
One example that illustrates the different levels of social license is the Enbridge Northern Gateway Pipeline project. While the company has gained the approval of industry and provincial and federal governments, it has yet to achieve complete acceptance from some First Nations groups and segments of the general public.
On the other side, Innergex Energy, a developer of hydroelectric and wind power projects in North America, has successfully engaged the Lil’wat First Nation in the process to develop a hydroelectric project in the nation’s traditional territory at the headwaters of the Lillooet River in British Columbia. Success was achieved through establishing a positive working relationship, seeking input at many stages, facilitating the Lil’wat’s involvement in all stages of the project’s assessment and review, offering meaningful ways to provide feedback, and consulting regarding the project’s potential impact.
Social license is an achievable goal for companies in today’s market provided a company is willing to make investments in the stakeholder engagement process.