Social Licence to Operate: When Communities Become Advocates

Today in our Sustainability in Mining Blog, I’m introducing Isobel Alice O’Connell, a colleague from Vancouver. Isobel has over 15 years experience promoting and advising on issue management, sustainability strategy and stakeholder engagement. She is recognised for working to integrate social and sustainability performance into broader operational processes.

As Head of Social Performance at Qatar Petroleum, Isobel developed strategies and programs to mitigate human rights and stakeholder risks across the company, especially in the supply chain. She also developed and managed sustainability practices for two global consulting firms, where she designed and implemented guidelines, impact assessments/ strategies, reporting, training and assurance of non-financial performance indicators. 

Laurie: Isobel, thanks for sharing your experiences on the Social Licence to Operate (Social Licence). It is something we hear a lot about these days in North America. It was a big issue for Century Mine, where I worked at in Australia in the early 2000’s - an agreement with Aboriginal landholders was critical to allow the mine to proceed. We know that there are important challenges for resource development in Canada with respect to Indigenous and community stakeholders.

How do you understand social licence?

Isobel: I like how Pierre Lassonde, President of Newmont Mining Corporation describes social licence, ‘You don’t get your social license by going to a government ministry and making an application or simply paying a fee… It requires far more than money to truly become part of the communities in which you operate.’

In simple terms, social licence is the trust, ongoing approval and support by both a local community and affected stakeholders for an existing or to be constructed project.  It is important to point out, there is no one structure or right way to gain Social Licence, but rather it is "the duty to consult" concerned parties for broad social acceptance, and within the extractive industry the increasing interest in the social licence to grow.

Laurie: How did the term social licence come about?

Isobel: The idea of a social licence started in the mining industry some 20 years ago but has now been adopted the extractive industries dealing with a range of community concerns, fears or opposition, especially in regard to natural resource extraction and competing land use priorities. Ironically, when Canadian mining executive Jim Cooney coined the term social licence in 1997, he was talking about building support for mines in developing countries, not resource projects at home.

The term social licence draws attention to the difference between a legal permit and the social acceptance or legitimacy that is essential for a company to be able to survive, prosper and ultimately be part of communities that advocate both a company’s and industry’s interests. It is increasingly recognized by various stakeholders and communities as a prerequisite to development, or how to action a broader Corporate Social Responsibility (CSR) strategy as a platform to engage stakeholders.

Laurie: What would you say to people who say the process is just a corporate bribe?

Isobel: Ensure that the benefits of an operation outweigh the costs at the local level is the necessary first step in establishing the social licence. Then outlining and delivering legitimate benefits to the community regardless of whether it is a natural resource, or even the increasingly trendy renewable energy.

For example, over the last 4 decades, companies were generally welcomed by communities because they offered employment. While this remains true in many parts of the world, providing just jobs is increasingly regarded as not sufficient to earn a trusted place in the community. More is expected of both companies, and likely include legacy and/ or succession planning initiatives.

Laurie: In Canada, what would you say are ways social licence can be undertaken correctly?

Isobel: Some Canadian mining companies have been recognized for their commitment to social development through best business practices and CSR programs. They also participate in international initiatives such as the United Nations Global Compact, the Extractive Industries Transparency Initiative (EITI), and the Equator Principles.

Laurie: What is the best way for a resource company to approach social licence?

Isobel: To play a part in the broader “social contract”, a company will need to understand the broad socio-economic parameters of the region where a community is located and find opportunities to strengthen its operations.

Stakeholder engagement is the key to success. Getting involved in regional development forums, working effectively with other industries community development for the broader and long-term outlook of the region will be necessary. Maintaining good relationships with a wide range of well-connected stakeholders, and playing its part in the broader regional development. A company becomes part of a community. The community will advocate for a company’s interests. That’s the beauty of the often-symbiotic relationship that the social licence to operate can stimulate, but should never take it for granted. This diagram from On Common Ground Consultants summarizes it well.

On a final note, and one that shouldn’t be overlooked, a government’s political and legal framework is vital to a company’s capacity and willingness to restrain its activities within sociably acceptable standards. Strong democratic institutions with clearly defined social and environmental regulations tend to raise the overall quality and social acceptance of private sector practices so that companies will have an incentive to exceed legal expectations and meet socially desirable standards.

Laurie: Thanks very much for sharing your knowledge on social licence Isobel. I'm on the Community and Environment Society Committee for the Australasian Institute of Mining and Metallurgy (AusIMM) and I’ll share your thoughts with my colleagues there. Perspectives from different parts of the world are always appreciated. If any readers have further questions for you, or would like to discuss how you might support them on managing social licence risks, how can they reach you?

Isobel: Thank-you for letting me be Resourceful Paths inaugural subject matter expert interviewee. I'm always keen to assist companies with manoeuvring through the numerous international sustainability guidelines and standards currently being implemented worldwide. They too can show how a company is building its awareness and executing their social license to operate. Please contact me via my LinkedIn profile.