The Value of Social License – Northern Miner


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This article was authored by Wayne Dunn and discusses the growing value and importance of Social License. Originally published in 2004 it has proven to be very prescient, highlighting the importance of this key issue nearly a decade ago.

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The Value of Social License – Northern Miner

  1. 1. The value of social licenseThe Northern Miner, Volume 90 Number 29, Sep 6 - 12, 2004By Wayne Dunn"Corporate social responsibility," "social licence," "social investment," "millennium development goals," "poverty alleviation,""community development". . . Suddenly, a whole new jargon has emerged, and with it, increased complexity for miningprojects in developing economies.The mining world has changed dramatically. Projects can be stopped dead by local people and communities, dashingshareholders hopes and often destroying executives careers. Project management has become exponentially more complexas social issues no longer take a distant backseat to technical issues."Social licence" is a relatively new term that refers to the formal and informal approval a company requires fromstakeholders before it carried out work. A company is required to develop ongoing, positive relationships with thestakeholders in order to obtain support from the people who are likely to be affected by its activities.Today, if a project hopes to acquire and retain a social licence to operate, it must demonstrate it is creating local value. Thissort of social investment, though relatively new, is one the mining industry has embraced. Examples such as Perus TamboGrande and the Esquel project in Argentina clearly demonstrate that even with good intentions and considerableinvestment in local development, a social licence is not guaranteed. Local communities can lose opportunities for improvedinfrastructure, education, health services and economic development.The challenge is to find a responsible way of pushing ahead, one that meets the needs and aspirations of local stakeholders,fits within the governments development framework, and preserves the environment. Often, the first reaction is knee-jerk:simply throw money at social issues. But without a strategy, this approach often fails and leaves everyone, locals included,worse off.My experience in more than 40 social-licence projects in 26 countries has taught me that a comprehensive, partnership-building approach is effective. Its all about value.Let me use a hypothetical example to explain: Suppose you have a promising new discovery in a remote location and alimited budget for social issues, yet you must secure a social licence if your project is to proceed through licensing andpermitting and into commercial production. Start by asking yourself questions about value and key stakeholders. Who arethe key local stakeholders? If you can develop your project into an operating mine, what value can that developmentproduce for local stakeholders? Can you act as a catalyst for bringing them additional value? Mostly the value you candeliver, or help to catalyze, will be in areas such as local social and economic development, education, healthcare, genderequity, HIV/ AIDS programming, and so on.Wait, you say. . . . This is poverty alleviation. A huge task. Governments responsibility and far beyond our financial andmanagement capacity.You are right. It is such a major challenge that the member states of the United Nations got together in a specialmillennium session and hammered out what are knowns as "millennium development goals," which are concerned with thesame poverty-alleviation issues you will be considering in relation to your own project. The goals form a rough guidelinefor the development-assistance budgets of member nations of the Organization for Economic Co-operation andDevelopment, such as Canada.Suddenly, your efforts to secure a local social licence have something in common with development agencies around theworld, and with many non-governmental organizations. This commonality creates opportunities for developingpartnerships and for increasing the value you can deliver into local communities. There is a direct relationship between thesocial value you help create, the strength of your social licence, and the value you create for shareholders. -- The author is the founding partner of Wayne Dunn & Associates, a Canadian consultancy firm that works throughout the world with private-sector clients. He is currently working on projects in every continent except Australia and can be reached by e-mail at Copyright © 2004 Business Information Group. A member of the esourceNetwork