Social Licence To Operate Or Social License To Operate?

Perhaps some of the problems with social licences to operate stem from confusion over use of the term 'licence'? 

The official definition of 'licence' is that it is a "permit from an authority to own or use something, do a particular thing, or carry on a trade." In other words it's a noun (naming word), which implies it is a formal document granting a company with an official 'licence' to operate. This is the type of document a government must issue to allow the company to proceed with their operations.

In reality the 'licence' in SLO is much more akin to licenSe, which is a verb (doing word). Again, if we look at the common definition of 'license' we find it means:
  • authorise the use, performance, or release of (something). "the company expect that the drug will soon be licensed for use in the USA"
  • permit (someone) to do something. "he was licensed to do no more than send a message"

Authorise / Permit / Allow but not necessarily issue a formal LICENCE (piece of paper) to do so - exactly the concept behind a social licence to operate. 

When it comes to allowing a mining company to operate a project, the respective government issues the formal licence whilst the local stakeholders license or allow the company to carry out its operations. Whilst this doesn't really answer the question of just who can giveth and takeath away the SLO, it does provide some clues as to just why this is such a complex issue. Because clearly if granting a SLO was simply a case of issuing a formal licence, it would be an authoritative body like the local council. And the company could be made to abide by the conditions of that licence. But as a SLO is more about being granted an intangible and conditional permission to operate there is no formal document to authorise or revoke permission. And that makes it a lot more difficult to pin down whether anyone really does have the authority to invoke and revoke a SLO.

Social Licences To Operate – Can There Be A More Community-Recognised Approach?

There is little doubt that the primary burden of responsibility for obtaining and maintaining a social licence to operate rests with the corporations who want to develop projects that affect local communities. After all, it is the corporation who wants to dig up the ground or cut down trees (forestry), not the local community. It's also a fact that many mining projects involve very diverse groups of community stakeholders and interested parties. So much so that trying to obtain consensus about a project let alone identify all interested / affected parties, can be problematic. In light of this is it possible to build a more community-recognised approach to stakeholder engagement and the other elements that go into obtaining and maintaining a SLO?

Perceptions of exactly what a Social Licence To Operate entails differ depending on which side of the negotiating table one is sitting on. From a corporate and industry perspective it's ultimately about maintaining reputation and making sure stakeholders don't hinder the smooth operation of the project. From the stakeholder's perspective it's about ensuring the company deals fairly and openly with them, including consultation and involvement in things that directly affect them, as well as exercising responsible governance (operates sustainably, responsibly and ethically). 

Some of the most obvious questions that inevitably arise around SLOs are:

  • What comprises an 'affected' community or group of stakeholders?
  • Who within that affected community/group of stakeholders has the authority to grant or remove an SLO?
  • Who and what shapes community/stakeholder acceptance?  

Social License To Operate – Exactly Who Are The Stakeholders?

Community interest in any mining project is diverse and spread across a wide range of stakeholders. It's no longer just the immediate community who may need to be considered either. The rise of the Internet, social media and other forms of mainstream information dispersal have brought many issues into the limelight that once would have remained local issues. This has shaped community sentiment towards industries like mining, and forestry, like never before. It's no co-incidence that the last 30 years have seen a massive rise in public interest in projects that have the potential to significantly affect the environment and local communities. Governments have developed, and modified, policies around mining and forestry because of overwhelming public sentiment. Therefore, to presume that stakeholders are limited just to those directly affected by a project is to ignore the growing reality that quite often these days influential stakeholders can come from as high up as governments themselves. And that the way a country in general views an industry can play an important role in whether or not a company is given a SLO to operate.

Nevertheless, the most obvious stakeholders will be the local council, businesses, residents, landholders, community groups, shareholders and the company itself. At local government level interest and concerns will revolve around increased revenues flowing into the council coffers, improved services for residents, more business for local businesses, increased stress on existing infrastructure, health concerns and so on. For local businesses, interest will primarily be around increased business. For local residents and community groups, interest is more likely to focus on increased employment opportunities, potential pollution issues, increased competition for local services and pressure on existing infrastructure, improved services and local amenities, environmental concerns etc. For local environmental groups it will be environmental concerns. For company shareholders it will be about financial returns on their investment in the company as well as concerns about the ethical operations of that company. It's also this latter group of stakeholders that is often one of the most influential when it comes to affecting how a company goes about obtaining SLOs.

Therefore, although there are common themes, the disparate nature of these stakeholder groups, each with their own vested interests in seeing the project go ahead, or not, presents a problem. How does one draw these groups together to create a cohesive, well-managed and effective community-based approach to granting and managing a social licence to operate?
 
Stakeholder Concerns

Research is increasingly showing that some of the most common concerns expressed by stakeholders affected by mining operations continue to be:
  • Lack of involvement in decisions that directly affect stakeholders
  • Lack of consultation about developments within projects that impact the local community be it environmentally, socially, culturally etc.
Therefore, one approach could be to put in place community-based mechanisms to ensure that these specific concerns are addressed. It may be a representative committee that directly interacts with the company to ensure that local involvement is maintained as necessary and that local concerns and grievances are brought to the attention of the company. And that they're dealt with to the satisfaction of all parties involved. Further to this, some mining companies already have contractual agreements with local councils with respect to community development. Therefore those councils have a responsibility to ensure those agreements are honoured.

Who Exactly Has The Authority To Grant Or Remove An SLO?

Who granted the SLO in the first place, who has decided the SLO no longer exists and why have they decided this?

In some cases a company may be unaware they've lost their SLO until they find a roadblock preventing access to and from the operations site. Or that some of their equipment has been vandalised. Undoubtedly a community-based approach to dealing with grievances would resolve at least some of the issues that have caused the problems before they get to this stage. It gets back to that committee or similar representative community body. If local grievances were brought to their attention, the committee could then discuss the issues with the company and work out a mutually satisfactory solution. Of course this would require several things – 

  • the committee must have enough clout to make their voices heard within the company and ensure appropriate action is taken
  • the community needs to trust that the committee has this clout and that things will happen

Who and what shapes community acceptance of an SLO?

In 2014 Moffat and Zhang came up with a model that identifies the routes to community acceptance of a mining project. They found that invariably the single recurring theme present in both successful and unsuccessful SLO's was community trust, or lack thereof. Where a company had gone to a great deal of trouble to work with the community and build a high degree of trust, they were far more likely to obtain and maintain a SLO.

What shapes community acceptance currently hinges on 3 things** – 

  • the quality of the company's contact with the local community, 
  • the 'procedural fairness' the company displays in its dealings with the local community and 
  • the negative impact the operation has on social infrastructure.
These 3 factors have also been found to hold true at national level as well, indicating the need for companies to deal with fairly with communities and factoring in the concerns expressed earlier around stakeholder concerns. Companies also need to ensure that those in the front line of contact with local communities are equally as committed to maintaining a high level of trust and communication. Additionally they need to make sure their operational impact on communities is as minimal as possible. Once again, a community-based approach to ensuring this all happens would be the appointment of a representative body that can liaise and negotiate with the company on the community's behalf.

*https://academic.oup.com/forestry/article-pdf/89/5/477/6527940/cpv044.pdf
** Moffat, K. and Zhang, A. 2014 The paths to social licence to operate: an integrative model explaining community acceptance of mining. Resources Policy 39, 61–70.
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Sunday, 25 October 2020
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