This post has been contributed by Dr Hugh Breakey, Senior Research Fellow in moral philosophy at Griffith University’s Institute for Ethics, Governance & Law and a member of the Law Futures Centre.
The ‘social licence to operate’ (SLO) is an idea gaining traction across many areas—it is employed freely by industry, activists, commentators, and political leaders, and there have even been attempts to cite it in law.
History of the social licence to operate
Scholars generally date the first published use of the phrase to 1996, when it was invoked by W. Henson Moore, President of the American Forest and Paper Association, to explain the pro-active environmental policies of American paper industries. Moore argued that the industry’s independently verified environmental achievements could persuade the public that the industry merited their trust—allowing them to enjoy what he coined as a ‘social licence to operate’. Holding this licence would allow the industry to avoid the ‘dark side’ of what might happen when communities chose to revoke their acceptance of the industry’s practices.
The most influential usages of the concept arose in the context of extractive industries, especially in developing countries. In key cases in the early 2000s, mining companies were able to secure a legal licence for their operations by negotiating with a central government. However, this achievement often came without local communities having a say in that licencing, and without social impacts and environmental risks being appropriately addressed. In the event, local communities actively resisted the operations, and extraction industries began to consider the corporate risks they invited by securing only a legal licence, and ignoring the SLO.
The concept has now gained traction across many different industries—it is commonly referred to in paper milling and aquaculture, and has also been invoked with respect to tourism, banking, public management, scientific expertise, and more.
What is the SLO?
The SLO is one of those intriguing concepts that appears easy to use and understand—yet hard to precisely define. One of the reasons it has spread so effectively across many different actors is that it expresses an ethical idea that many people can readily understand: communities affected by an industry should have a role in determining whether and how that industry’s operations should take place.
Yet nailing down a precise definition has proved a challenge, with some scholars defining the SLO as a social contract, or as community demands, or as a process that industry and community work through together. Perhaps the most common definition, though even here there are variations, stipulates that the SLO refers to the ongoing acceptance and approval of an industry’s operations by local community members, and other stakeholders that can affect its profitability (see e.g. Moffat & Zhang 2014).
That definition certainly gets us close to the idea, but it’s not entirely satisfactory. For one thing, it doesn’t explain why the SLO tends to be invoked in some contexts and not others. After all, ‘social acceptance’ could be investigated with respect to any industry—but it is only certain types of industries that seem to attract references to SLO, namely, new industries or industries performing new operations that have substantial social and environmental impacts.
Note also that even if we did get a crystal-clear definition for the SLO, there would be many questions still outstanding. These include: Which communities should determine the SLO? How do we gauge the SLO in cases where community opinion is divided? Should some community members count more than others? What should we do in cases where community sentiment seems manifestly uninformed, or out of touch with scientific analyses? Because of the many different answers that could be given to these questions, the SLO remains highly ambiguous.
Scholarly work on the SLO
Shortly after the SLO began to be invoked by practitioners (industry and activist alike), the concept attracted scholarly attention. Initially, this work took place in isolated academic niches, often in specific disciplines, with little interaction between them (as recently demonstrated by Santiago et al, 2021). Yet over time SLO work became more consolidated, with multiple academic disciplines exploring the concept.
Initially, scholarship tended to be ‘instrumental’ in focus, in the sense of enquiring into how industries can most effectively ensure they acquire and retain the SLO. But over time, increasingly critical scholarly enquiries surfaced, interrogating the concept and the way it was used by different stakeholders.
One influential area of scholarship has been the development of SLO ‘models’. An early and important model was put forward by Boutilier & Thomson (2011). The model aimed to align certain types of stakeholder perceptions (e.g. Is the project perceived to benefit the local community? Does the company listen to locals and keep its promises to them?) with levels of legitimacy and support that the company can thereby attain. The more success companies had in showing they were behaving appropriately in their interactions with the local community, the more trust they would build—and the less risk they would face from a lost SLO.
The SLO’s ethical promise
From a social and ethical perspective, the SLO can appear highly attractive. After all, there have been countless corporate scandals in recent history—including but not limited to environmental disasters, appalling treatment of First Nations peoples and land, and ethical improprieties towards customers and stakeholders alike. Many corporate codes of ethics (such as the Global Compact and ISO26000) have been devised to raise standards to prevent such outrages, but these corporate social responsibility (CSR) codes are entirely voluntary, and have few reliable enforcement measures. As such, the SLO can be a welcome advance, demonstrating to industries that if they are unwilling to raise their own standards, then they will incur the ire of the communities in which they operate. Moreover, these communities can hit corporations where it hurts—impacting on their capacity to operate and to do so profitably. From this perspective, SLO is corporate social responsibility with teeth.
Critique of the SLO
Notwithstanding the above ethical promise, it is possible to raise serious qualms about the SLO. While there are cases where the SLO can raise standards, there are equally areas where it might seem to distract from other, more rigorous and robust governance regimes, such as the use of ‘free, prior and informed consent’, or the development of stable, effective, and independent certification practices.
Even when SLO is effective in blocking industry operations that the community rejects, it can be questioned whether its informality and unpredictability are appropriate ways of raising standards and punishing wrongdoers. After all, industries have a legitimate need for stable rules and regulations, that change in largely predictable ways, in order to allow them to invest, hire employees, and so on. Being continually subject to capricious community sentiment might not be the fairest and most socially desirable device for improving standards.
Finally, like all moral slogans—including longstanding terms like ‘human rights’, ‘responsibility’ and ‘sovereignty’—the term ‘social licence to operate’ is capable of being employed strategically. This might be done by activists, where SLO invocations are ‘weaponised’ in order to berate industries, or expose them to impossible demands. Equally though, SLO can be invoked rhetorically by industries and corporations as part of their public relations and ‘ethics-washing’ campaigns. Indeed, the inherent ambiguity of the SLO makes it easy for industries to do exactly this, declaring loudly that they take SLO seriously while avoiding any genuine reform of their operations or robust engagement with stakeholders.
At present it is not easy to provide a ‘final’ judgment on SLO. The concept, its definition, its parameters, and its legitimate modes of use are still evolving. Only time will tell whether it ultimately serves a useful ethical purpose, or whether it is too capricious and ambiguous to hold industry to account in a constructive and fair way.
From 11 – 13 August, 2021, Griffith University’s Law Futures Centre is hosting the 28th Annual Conference of the Australian Association for Professional & Applied Ethics. The conference theme is ‘Social Licence & Ethical Practice’, bringing together researchers from an array of disciplines to interrogate ethical issues raised by the nature and use of the SLO. Selected papers will be gathered together and published in a special edition of the scholarly journal Research in Ethical Issues in Organisations.
Abstracts for presentation are now closed, but people interested in the topic are still warmly invited to attend. Email [email protected] to register.
Boutilier, R. G. and I. Thomson (2011) “Modelling and Measuring the Social License to Operate: Fruits of a Dialogue Between Theory and Practice.” Social License.
Moffat, K. and A. Zhang (2014). “The paths to social licence to operate: An integrative model explaining community acceptance of mining.” Resources Policy 39: 61-70.
Moore, W. H. (1996). “The social license to operate.” PIMA Mag 78(10): 22–23.
Santiago, A. L., J. Demajorovic, D. E. Rossetto and H. Luke (2021). “Understanding the fundamentals of the Social Licence to Operate: Its evolution, current state of development and future avenues for research.” Resources Policy 70: 101941.