Social License

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Many of the ‘wicked problems’ we face today are socially complex. Some of the best examples are those where a solution depends on establishing social license.

A New Reality

Jim Cooney coined the term social license in 1997, when he was director of International and Public Affairs for the Canadian mining company Placer Dome. He recognized that social acceptance was required in addition to regulatory approval for resource extraction companies to maintain their freedom to operate. The term is now being used more widely in industry and government. Even governments have come to realize that, in addition to the mandate they receive from voters in elections, social license is required to make significant changes to policies and programs.

Social license is becoming harder to achieve due to the growing fragmentation of communities and widespread challenges to the legitimacy of institutions. Public distrust in industry and government has increased, and political power has shifted to other actors. Non-government organizations and communities mobilize quickly when projects trigger their existential interests.

Building Trust

Social license is based on trust. Trust is earned through consistent, transparent, ethical behavior. Companies need to be seen as credible, contributing members of society – sensitive to cultural norms and aligned with a community’s values and aspirations. They need to demonstrate corporate social responsibility. Increasingly, they are being held to account for lapses in corporate ethics, human rights, labor practices, and environmental performance. The consequences of failure are significant: abandonment of major projects, delays, disruptions, and damage to their reputation.

When the Canada West Foundation commissioned an Ipsos Reid survey of adults in Canada’s four western provinces to assess the level of public trust in key resource industries, the results were dismal. Levels reported in Restoring Trust: The Road to Public Support for Resource Industries (2014) were 62% for farming, 32% for forestry, 14% for mining, and 13% for the energy sector.

Meeting Diverse Expectations

Companies have to meet the expectations of many stakeholders, and for these expectations to be fulfilled they need to be realistic. Dialogue is the only way to reconcile divergent positions. The voices are diverse: those with a direct stake in a project, those directly affected by it, those who are impacted more broadly (either positively or negatively), and those with no direct connection to a project who nevertheless take a particular philosophical or ideological stance.

Conflict is inevitable between those who stand to gain and those who pay. Local communities may bear the highest cost, while society at large reaps the rewards. Companies are using development agreements to balance these interests, allowing communities to share in project benefits. Social inclusion is another important issue, since agreements reached without the participation of marginalized groups may be quickly discredited.

Social media are giving voice to a broader constituency. Joel Gehman, Lianne Lefsrud, and Stewart Fast describe the impact in the paper “Social license to operate: Legitimacy by another name?” (Canadian Public Administration, June 2017). “Internet enabled technology … and mobile apps … allow virtual, unmediated conversations between quite distant actors. No longer do company managers, media reporters, or television producers solely determine who has the right to speak. User-generated social media provides massively distributed and open access to diverse media stages: anyone can distribute information, draw interest, criticize issues, and create global alliances.”

Resource projects are creating fault lines in society, reinforced by tensions between local action and global effects, economic benefits and environmental impacts, current priorities and future consequences. Government, industry, and society at large are struggling to find a defensible way to reconcile diverse interests and make good choices. Meaningful dialogue is the only answer, but first we must resolve the thorny question: who are the legitimate stakeholders?

This article is an excerpt from a book in progress on collaboration and transformative change. It was first posted on December 19, 2017, on LinkedIn.

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David Forrest

David is the founder of the Integral Strategy Network. He is a writer, futurist, strategist, and facilitator of systemic change.

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