Social Licence: a Critical Success Factor for Resource Development

PES_2011_stackedEach year since 2009, the National Bureau of Asian Research (NBR) hosts the Pacific Energy Summit, an invitation-only event that “convenes leaders from government, business, and research to explore innovative solutions to the dual challenges of rising energy demand and climate change.  By bridging the commercial, public, and nonprofit sectors, the Summit informs policy and inspires collaboration to help support sustainable economic development.”   This week, NBR is co-hosting the 4th annual Summit with the Asia Pacific Foundation of Canada in Vancouver.  The theme of the Summit this year is “Forging Trans-Pacific Cooperation for a New Energy Era,” and dialogue will focus on best practices and solutions for successfully meeting Asia’s energy needs while promoting environmental stewardship.  To inform and foster discussion, NBR commissions working papers on key topics of relevance to the Summit.  I had the privilege of being invited to co-author – with a colleague and associate of mine, Brian Yates – a paper on social licence.  Our paper examines the nature and attributes of social licence, and analyzes its growing importance as a critical success factor for resource development.

You can access the paper here.  I welcome feedback – please click on the “leave a comment” tag to the left of this post!

  1. Hello Celesa Horvath
    I just wanted to say I found the paper very interesting and also used it as reference in this paper.
    http://www.greenpeace.org/international/Global/international/briefings/climate/2014/arctic/Lego-Is-Keeping-Bad-Company.pdf
    It’s part of a Greenpeace campaign to break the relationship between LEGO and Shell. LEGO has responded to the Greenpeace campaign with a statement saying “We firmly believe that this matter must be handled between Shell and Greenpeace”.
    http://aboutus.lego.com/en-us/news-room/2014/july/lego-group-comment-on-greenpeace-campaign
    What do you think? Aren’t the social licence partners like LEGO (or museums, sports event and schools) responsible for giving the social licence to operate to the oil and mining industry?
    Best,
    Birgitte Lesanner

    • Hi Birgitte,

      Sorry for the delay in my reply. Thanks for your comment; I’m glad you found our paper on social licence helpful. Thanks also for sharing information about Greenpeace’s campaign.

      In the material you provided, Greenpeace appears to consider the co-promotion agreement between Shell and LEGO to be part of Shell’s strategy to acquire and maintain social licence. I am not convinced that is the case. Social licence generally refers to the acceptance of a project or a company’s ongoing presence and activity by local communities (and the general public and other stakeholders) affected by that project or company. As we described in our paper, social licence is built over time through direct community engagement and consultation, information sharing, provision of benefits, effective management of adverse effects, and responsible behaviour. These activities go far beyond simple branding or community investment. Indeed, it is a core premise of our paper that more is required of companies now than in the past. Even the most well-established brands may lack or lose social licence for a particular project or product, or more generally for their business model, as a result of public or stakeholder opinion, when any of the above-listed actions fails.

      To go more specifically to the point of your question, the receipt by a community organization (e.g., museum, school) of corporate funds does not necessarily mean that that organization endorses all or any of the donor corporation’s activities or behaviour. Community investment projects do not ‘buy’ social licence; true social licence is based on trust and social capital, which are developed – earned, really – over time through a consistent pattern of meaningful communication and engagement and responsible behaviour. Similarly, branding does not ‘buy’ social licence. In short, a co-promotion partner like LEGO does not, by engaging in a branding activity, deliver social licence, in my opinion. The social licence comes (or doesn’t) from the communities and stakeholders affected by a company or its activity. LEGO falls into neither of those groups in the case of Shell’s hydrocarbon exploration activities in the Arctic.

      Social licence must be earned by each company through direct engagement of the communities and stakeholders that may be affected by or have an interest in the company’s activities. At the same time, it is the responsibility of those communities and stakeholders to voice their interests and concerns to the company (and to regulators and policy makers that govern that company’s activity), so that they may be considered and addressed – the more clarity exists around what is required to obtain social licence, the more likely those requirements will be met.

      Regards,
      Celesa

  2. Readers of this post and the comments may be interested to know that Lego has decided not to renew its partnership with Shell once its current agreement expires.

    Here’s the story in the Guardian, including a link to Greenpeace’s viral video depicting an Arctic Lego land affected by an oil spill:
    http://www.theguardian.com/environment/2014/oct/09/lego-ends-shell-partnership-following-greenpeace-campaign

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