SOCIAL LICENSE TO OPERATE
Social License to Operate (SLO) has come to be understood to be an unwritten social contract between a company and a community. Being unwritten implies that SLO is built on trust.
To have a SLO means that your company is accepted by local communities and you are allowed to go about your business. As trust ebbs and flows the strength of the SLO between stakeholders and over time will vary, ranging from passive acceptance through to broad-based trust. Your SLO makes it is possible for to maintain access to land, to secure government approvals, to build a reputation as a responsible business and to manage your social risk. Your SLO is a complement to the regulatory licence issued by government and increasingly carries weight equal to or greater than the regulatory licence.
Unlike a formal permit with its documented compliance points and periodic review and renewal process, the unwritten nature of a social license means that it is constantly evolving and requires ongoing, (often on-demand) renewal and maintenance, which in turn requires ongoing attention to your relationship with your local communities.
Earning and maintaining a SLO is as much about looking inside as it is looking outside, with company actions - what you do, or do not do - directly affecting the strength or weakness of your social license. You may be tempted to look outside for the reasons for your problems with your local communities but you would be well-served to look inside - at your own policies and practices - if you are serious about improving the quality of your relationships and the strength of your social license.
ACCOUNTABILITY FOR IMPACTS
Land Access: For community people, the very idea of losing their land creates strong emotions. Add in the complex business process of land acquisition and resettlement and the experience can be very traumatic. For your company the difference between doing it well and doing it badly will affect the success or failure of your business plan with inadequate attention to the impacts of land access and acquisition likely to lead to disaffected communities and civil society groups taking action. They might choose to do this by lobbying government and holding up permits and approvals or they may take direct action and stop construction and operations. On the other hand, if the acquisition and resettlement is well managed it can result in positive results for local people, creating benefits such as better quality housing and new livelihood opportunities.
In-Migration: Project Induced In-migration - the movement of people into an area in anticipation of, or in response to, opportunities is an inevitable consequence of project development. If it is not well managed, in-migration will cause negative affects within host communities, particularly with regard to environmental, social, and health issues. These in turn flow into increased project costs and increased operational and reputational risk. In-migration peaks during construction and early operations. Potential impacts need to be identified and plans put in place early, before the first migrants arrive. This provides the greatest opportunity to influence the result. The alternative of moving too late will see opportunities missed and a requirement to reactively mitigate the impacts for the life of the operation and beyond.
Community Health: Companies have a responsibility to avoid or minimize the risks and negative impacts to community health that may arise as a result of their activities. Physical structures and activities relating to construction and operations will, more often than not, change community exposures to environment-based health risks. In addition, communities often lack an understanding of the controls the company plans to use or has in place. This can lead to concerns which if not addressed can damage the relationship the company has with local communities and government agencies which can in turn lead to disruption, delays and cost increases.
Environmental Impacts: Changes to the natural environment resulting from company actions will cause new or elevated risks to local communities. Land use changes more often than not affect local food production and food security. Loss of natural buffer areas such as the wetlands, mangroves, and upland forests that mitigate the effects of hazards such as flooding, landslides, and fire, has a tendency to increase vulnerability and community safety-related risks and impacts. Reduction of the quality, quantity, and availability of freshwater and other natural resources is likely to create health-related risks and impacts. How these translate into impacts depends on the effectiveness of plans and activities aimed at reducing, remediating and offsetting.
Culture and Heritage: Culture and heritage are fundamental to the identity of many communities and damage to heritage sites can cause strong feelings in the affected community with social, political and legal opposition the end result. Irrespective of the nature of the business enterprise, good cultural heritage management is critical to obtaining permission to access land and contributes to the strength of the relationship between a company and a community. When it is all said and done a community is more likely to have a positive view of a company if they see that the company values what is important to them.
FAIR DISTRIBUTION OF BENEFITS
Local Jobs: Local jobs provide an important opportunity for local people to directly benefit from company activities. Jobs are one of the biggest contributions any company makes to the local economy and can help to solidify the relationship with host communities. However perceptions of unfairness, opaque recruitment practices and disparity of expectations often lead to jobs becoming one of the biggest sources of community complaints. Too much attention on the company as the provider of jobs and not enough on the company as creator of employability opportunities adds to the pressure.
Local Purchasing: There are four widely-stated reasons for companies to buy goods and services from local businesses. The first is in response to government regulations or investment agreements that require a minimum level of local content. The second is to deliver socio-economic benefits into the local community by creating business opportunities for people with an entrepreneurial spirit. Third is to create a shorter and more diverse supply chain and the last is to build local community support. There is no one-size-fits-all solution so it is worthwhile taking time early-on to clearly articulate the reasons for investing in this area.
Local Development: For most new businesses, establishing in or near a local community, the benefits that come from employment and business opportunities fall to a small proportion of the population. For the majority, community development is the one broadly distributed benefit they will see. It is not unusual to come under community and government pressure to help but jumping in without giving some thought to the longer term consequences can turn the instant gratification that comes with a quick fix into a nagging headache that won't go away. A better way is to move away from providing hand-outs which have a tendency to create dependency and move more towards building capabilities and developing a sense of ownership and accountability. It is also important not to fall into the trap of over-promising and under-delivering and turning a positive benefit into a negative result for all concerned.
Community Engagement: Engaging with communities is an essential activity and a shared responsibility. Every employee and every contractor needs to make the effort to make a good job of it. Good community engagement is as important to the bottom line as good design, the right attitude to health and safety and a disciplined approach to managing costs. Meeting and talking with local people is the only way to hear, to learn and to share ideas and concerns and to find solutions. Done well, it is the best way to stay on top of community-related issues and to respond effectively and efficiently to inevitably changing circumstances.
Company Conduct: Every company employee and contractor is a de-facto ambassador and every action they take reflects back onto the company in either a positive or negative way. To get it right companies need to apply the same attention to the way their personnel conduct themselves as they give to every other part of the business. Real and visible leadership from the top, clearly stated expectations supported by a strong governance structure and ongoing engagement with employees and contractors are essential building blocks.
Addressing Complaints: Complaints are part of the landscape for any business, and especially so for anyone operating close to communities. Although a complaint, by its very nature, requires dealing with dissatisfied and often unhappy people, taking complaints seriously and establishing a good complaints handling procedure is one of the most effective ways you can deal with local concerns. A well implemented procedure demonstrates a willingness to take community members and their issues seriously and has a major part to play in building better relationships with your local communities. It will also enable you to identify and resolve complaints early which in turn will reduce the potential for complaints to escalate into litigation, protests, security incidents, or regulatory challenges. It will bring your behaviour in to line with current international standards and broader societal expectations. While a good complaint handing process is an essential first step, your ultimate aim needs be making changes to the way you operate so that you avoid actions that lead to complaints.
The term social risk covers the range of threats and opportunities that may result from how your company interacts with and impacts on local communities and other stakeholders. More specifically, on the one hand a social risk to the community occurs when action by your company has the potential to cause harm or injury to groups or individuals while on the other a social risk to your company occurs when an individual, group, community or organization takes up a social issue and applies pressure to the company with the aim of bringing about change in your policies or practices. On the other hand, social risk to a company arises when negative impacts on the community that are a result of company actions (or inaction) are not addressed. It is therefore in your own self-interest to minimize negative community impacts and to manage them well when they are unavoidable. From this it would appear to be common sense for you to adopt policies and practices that avoid, minimize and mitigate negative impacts and to create, maximize and enhance the social and economic benefits that flow from your business activities.
How your social performance is perceived can have wide ranging impacts - influencing your ability to attract investors and partners, access lender funds and attract staff. It will shape your relationship with government and community. It will also affect the nature of media attention and the level of attention and attitude of civil society; community and environmental advocates and the general public. Not unreasonably you should expect all staff and contractors to play their part in building and maintaining your reputation as a socially responsible business.
Governments are becoming more rigorous in their approach to permitting new mines and the use of revenues generated by mining companies, as well as being more thorough in their understanding of the social and environmental impacts of mining and mineral processing and have higher expectations that companies mitigate these impacts and invest in their host communities. Being in a position to demonstrate a commitment to doing so can deliver tangible benefits across the business life-cycle through preferential access to investment opportunities, quicker development approvals for new projects, less onerous compliance monitoring and reporting requirements, less oversight of operations and easier negotiation of investment conventions.