Real stakeholder engagement means listening, keeping promises, committing to fair and transparent processes and consistent behaviour.
By Dr Leeora Black, Managing Director, Australian Centre for Corporate Social Responsibility
Part of the DōShorts series
The idea of a social licence started in the mining industry some 15 years ago but has now been adopted by many industries dealing with a range of community concerns, fears or opposition, especially in regard to natural resource extraction and competing land use priorities.
The term ‘social licence’ draws attention to the difference between a legal permit and the social acceptance or legitimacy that is essential for companies to be able to survive, prosper and ultimately be part of communities that advocate for your interests.
Companies Need to Bring More Than Jobs to the Table
For many years, decades even, companies were generally welcomed by communities because they offered employment. While this remains true in many parts of the world, providing jobs is increasingly regarded as not sufficient to earn a trusted place in the community. More is expected of companies today.
The foundation of your social licence is providing legitimate benefits to communities. This is especially so for companies developing natural resources, regardless of whether the resource is renewable, like wind; traditionally mined metals and minerals like gold and copper; or newer forms of energy like oil sands or and coal seam or shale gas.
Ensuring Benefits Outweigh Costs
The fact is that the benefits of these resources are widely distributed and long term, while the costs are immediate and local. It is local communities that must live with altered landscapes, inconvenience or boom-bust local economic cycles. Ensuring that the benefits of your operation outweigh the costs at the local level is the necessary first step in establishing your social licence.
Companies need to think broadly and long term about benefits – for example, local procurement and workforce development initiatives, and investment in public infrastructure and education can be helpful. Spending on innovation and technology that can reduce the negative environmental or social impacts of your operations should be equally prioritised.
Effective stakeholder engagement is the key capability that underpins both establishing and developing a social licence. Try asking your stakeholders directly, ‘what is important to you and why?’ The answers will help you design a benefits plan that addresses community needs and positions you well for the longer term.
If the foundation of a social licence is legitimate benefits, the stepping stones are building strong social capital within communities and playing your part in the broader social contract.
Social Capital Is the Glue that Binds Community
Social capital is all about developing trust and shared values. It needs to be developed over time. It’s like the glue that keeps communities together and makes us all feel like we belong. For companies, this means on-going stakeholder engagement and dialogue with the representative organisations and institutions within a community.
Growing up my teachers told me that I have two ears and one mouth and they should be used in equal proportion. That’s good advice for stakeholder engagement, too. Engagement doesn’t mean telling your story (although that does need to be done). Real engagement means listening to stakeholders, keeping promises, fair and transparent processes for dealing with stakeholders and consistent behaviour.
Understanding the structure of relationships between the major institutions and organisations in the community is essential to understand who can work well together and on what issues, and where your company could make a useful impact.
To help you identify and prioritise stakeholders, here’s a question to follow up with, after exploring with stakeholders what is important to them. Try asking them ‘who else shares your interest in these issues?’ This question can help you identify new stakeholders and understand where potential influence lies over the matters that are important to local communities.
To play your part in the broader social contract you will need to understand the broad socio-economic parameters of the region where your community is located and find opportunities to strengthen the broader region through your operations. Stakeholder engagement is once again the key to success. Getting involved in regional development forums, working effectively with other industries for the broader and long term outlook of the region will be necessary.
It takes time to earn a social licence to operate and it needs to be maintained through your everyday behaviour and actions as well as your overarching business strategies. When your company is providing legitimate benefits to communities, maintaining good relationships with a wide range of well-connected stakeholders, and playing its part in the broader regional development, you may earn the highest level of social licence – trust and psychological identification. This happens when the community identifies so strongly with your operation that they feel like you belong to them. Your company becomes part of the community. The community will advocate for your interests, because in their eyes, your interests and their interests are the same. That’s your social licence to operate.
About the Author:
Dr Leeora Black is the author of the latest publication in the DōShorts series, The Social Licence to Operate: Your Management Framework for Complex Times and Managing Director of the Australian Centre for Corporate Social Responsibility, a specialist management consulting and training firm based in Melbourne, Australia.