This document discusses the importance of social license to operate for businesses. It defines social license as a local community's acceptance of a company's presence and activities. While not a formal license, it is important for development and protecting investments by building trust and partnerships with communities. The document outlines principles and tools for obtaining and maintaining social license through early and ongoing engagement, transparency, and community benefit. It also discusses challenges in applying global guidance at the local level and ensuring social license remains relevant to local contexts.

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. 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. 1. What is a social license to
operate?
“A local community’s acceptance or
approval of a company’s presence
and activities”

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. 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. 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. 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. 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. 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. Tools for getting and keeping a
social license
• Engagement strategies
• EIAs/SIAs
• Community development and investment
• Global guidelines and toolkits

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. Experiences with global tools
• Fragmented landscape
• Voluntary mechanisms lack
enforcement/accountability
• Ensuring relevance and links for local
businesses

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. 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. 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. 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. 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. 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. Thank you.