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Social Licence to Operate: What and Why Undp standley


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Social Licence to Operate: What and Why Undp standley

  1. 1. Social Licence to Operate: What is it and why is it important? ANZBA Corporate Social Responsibility Conference 24 November 2014 Vientiane, Lao PDR
  2. 2. Structure 1. What is a social license? 2. Why would a business want a social license? 3. How to obtain and keep one 4. Global guidance and tools 5. What does this all mean for businesses?
  3. 3. 1. What is a social license to operate? “A local community’s acceptance or approval of a company’s presence and activities”
  4. 4. A social license is not… • Formal license issued by government • A one-off sanctioning of activities; can be reversed and lost • Approval for an organization to operate—instead activity-based • Self-declared
  5. 5. Instead a social license is… • Partnership between business, government, and communities • Agreement that a company’s activity has a legitimate place in the community • Dynamic and conditional arrangement that can be lost
  6. 6. 2. Why would a business want to obtain a social license? 1. Development case: to promote social and economic development, ensure rights, or protect the environment 2. Business case: to protect investments and enhance business activities
  7. 7. Business case • Lack of social license can have short- and long-term costs • Outlays for community engagement can be investments to protect potential (and large) profits. • Engagement with local communities can help develop closer ties, positive reputation, and business prospects  Obtaining social license from communities is increasingly seen as an important part of doing business
  8. 8. Social license in practice • Once lost very difficult to regain; communities have long memories • Negative impact of no social license… • Peruvian mining disruptions • Tata Motors in India • Nestle and Coca-Cola water use • Myanmar Myitsone dam • Shell natural gas in the Philippines
  9. 9. 3. How can businesses obtain and keep a social license?  Principles of social license 1. Legitimacy 2. Trust 3. Consent  Promoted through 1. Comprehensive and early engagement 2. Transparency and timely communication 3. Community-driven local development 4. Observed behavior
  10. 10. Tools for getting and keeping a social license • Engagement strategies • EIAs/SIAs • Community development and investment • Global guidelines and toolkits
  11. 11. 4. Global guidance and tools Global guidance for good business practices is a growth industry (200+) • UN Global Compact • Global Reporting Initiative • UN Guiding Principles on Business and Human Rights • Equator Principles • IFC Performance Standards • ISO 26000 • EITI • Voluntary principles on Security and Human Rights • etc.,
  12. 12. Experiences with global tools • Fragmented landscape • Voluntary mechanisms lack enforcement/accountability • Ensuring relevance and links for local businesses
  13. 13. But global tools have a role… • Setting down good practices is important • Guidance for behavior, esp. for committed companies • Adherence can help with social license (quasi “credit rating” for social commitment) • Reporting tools have clarified and standardized reporting
  14. 14. Social licensing in local context • Concept of social license has not yet gained much traction in most developing country settings • CSR of SMEs in developing countries is distinctive • Anchored more in philanthropy • Less formalized/institutionalized • Locally focused
  15. 15. 5. What does this mean for businesses? • The concept of partnership between business and communities can be applied in the context of local companies • Global mechanisms can help even at the local level; only a starting point
  16. 16. Making global frameworks relevant to local context • Stakeholder engagement can start with informal communication with people affected by businesses • Work with companies to help develop simple templates for reporting and delivering information
  17. 17. Critical issues  Early and continuous engagement • Not a one-off process but requires systematic engagement  Representation • Who represents the community? What happens if community interests are not uniform? Who has the authorization to grant social license?  Real transparency • Communities need to be informed of details of activities in a timely way and in understandable formats
  18. 18. Critical issues  Partnership and mutual benefit • Engage in community development strategies and fair benefit sharing  Accountability and follow through • Feedback should be reflected in activities and promises followed through  Making relevant to local context • Taking principles and tools and adapting them to local context
  19. 19. Thank you.