Social License: It's All About Value


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Social License: It's All About Value

  1. 1. Commentary Social License: It’s All About Value BY W AY N E D U N N Corporate Social Responsibility, Social License, Social Investment, Millennium Development Goals, Poverty Alleviation, Community Development … Suddenly, a whole new set of language has emerged and with it comes increased complexity for businesses operating in developing markets. This is especially true for extractive industries like oil, gas and mining. Projects can be Photo: Courtesy of Wayne Dunn stopped dead by local people and communities, destroying share- holder value and often executive careers. T oday, projects must demonstrate that they are creating local value in order to acquire and retain a social a strategic approach, this often fails and leaves everyone worse off, local interests included. responsibility and far beyond your financial and management capacity. You are right. That’s why it makes sense license to operate. This sort of social My experience, (40-plus extractive to use a partnership and collaboration investment is a relatively new area for busi- sector social license projects in 26 coun- strategy to tackle this challenge. Your ness. Models for analyzing investments tries on six continents), has led me to need to create social value shares com- and maximizing value (both share- believe that a comprehensive value- mon ground with the international holder and social) are still emerging. focused and partnership-building development agencies of the world Examples such as Peru’s Tambo Grande approach is the most effective strat- and with many non-governmental and the Esquel project in Argentina egy. It’s all about value. Let me use a hypo- organizations (NGOs). This creates clearly demonstrate that even with thetical example. opportunities to develop partnerships good intentions and considerable Suppose you are a mining com- and to utilize leverage and synergy to investment in local development, a pany with a promising new discovery in increase the value that you can deliver social license is not guaranteed. Huge a remote location and a limited budget into local communities – and to your amounts of shareholder value can be lost for social issues. Yet you must secure a shareholders via a more secure social and local communities can lose oppor- social license. Start by asking yourself license. There is a direct relationship tunities for improved infrastructure, questions about value and key stakehold- between the social value you help cre- education, health services and eco- ers. Who are the key local stakeholders? ate, the strength of your social license nomic development. If you can develop your project into an and the value you create for share- The challenge is to find a responsi- operating mine, what value can that pro- holders. I ble path forward, one that meets the duce for local stakeholders? Can you act needs and aspirations of local stakehold- as a catalyst for bringing them additional Wayne Dunn is the founding partner of ers, fits within the national govern- value? Mostly, the value you can deliver, Wayne Dunn & Associates Ltd., a Canadian ment’s development framework, pre- or help to catalyze, will be in areas consultancy that works worldwide with serves environmental integrity and such as local social and economic devel- private sector clients, helping them to trans- produces shareholder value. Often, opment, education, health care, gender form sustainability investments into social the first reaction is an almost auto- equity, HIV/AIDS programming, etc. and shareholder value. He can be reached at matic, knee-jerk approach – simply Wait you say … this is poverty throwing money at social issues. Without alleviation: a huge task, government’s24 ExportWise | Fall 2004