In this article, we explained social license, to operate, the characteristics, the element, the important, gaining and maintaining slo, the challenges and opportunity.
Definition
A Social License to Operate (SLO) is the ongoing acceptance and approval by community stakeholders and the broader public of a company’s operations and activities, which is distinct from legal or regulatory permits. Gaining and maintaining an SLO involves building and sustaining trust through responsible practices, transparent communication, accountability, community engagement, and demonstrating benefits and responsible environmental stewardship. Without this public acceptance, companies risk social conflict, protests, operational disruptions, and potential bankruptcy, whereas a strong SLO fosters lower operational risks and greater certainty.
Social License to Operate is the informal, intangible, and non-permanent acceptance granted by stakeholders to a company or project. It goes beyond regulatory compliance and reflects community trust, legitimacy, and consent.
The characteristics of Social License to Operate
Informal and Intangible:
Unlike a legal license, an SLO is not a formal document but an informal social contract that exists through community acceptance and trust.
Context-Specific:
The nature of the SLO varies depending on the specific social, economic, and environmental conditions, as well as local community priorities and expectations.
Dynamic and Hierarchical:
An SLO exists on a spectrum, from a situation where it is withheld (no license) to acceptance, approval, and even psychological identification or co-ownership by the community.
Based on Trust, Credibility, and Legitimacy:
For a company to gain and maintain an SLO, it must demonstrate legitimacy by contributing to community well-being, act credibly, and build trust through fair and transparent operations.
Continuously Earned and Maintained:
An SLO is never guaranteed; it must be constantly earned and re-earned through consistent positive engagement and responsible behavior from the company.
A Bottom-Up and Outside-In Strategy:
It involves community perception, social movements, and citizen watchdogs, adding a layer of social oversight independent of the formal justice system.
Requires Strong Stakeholder Relationships:
Meaningful and trusted dialogue with local communities and other stakeholders is crucial for developing and sustaining an SLO.
Can Be Withdrawn or Withheld:
Communities can withdraw or withhold the SLO by perceiving the operation as illegitimate or by actively pressuring the company through social movements or by restricting access to resources.
The Element of SLO:
Social Acceptance:
The core of SLO is the confidence and approval from the public and relevant stakeholders, including employees, communities, and civil society.
Legitimacy and Accountability:
Organizations must demonstrate that they will behave in a legitimate, accountable, and socially and environmentally responsible way, going beyond mere legal compliance.
Stakeholder Engagement:
Continuous and effective engagement with various stakeholders is crucial for building and maintaining SLO.
Trust and Transparency:
Trust is a fundamental component, built through honest and transparent communication and reporting to stakeholders.
Ongoing Earning:
Unlike a formal legal license, SLO is not a one-time grant; it’s a dynamic and continuously earned status that can be lost if responsible practices falter.
Operational Certainty:
A strong SLO provides operational certainty by fostering goodwill, which helps prevent social conflict and minimizes risks.
How it Differs from a Legal License:
Intangible vs. Tangible:
Legal licenses are official, written documents granted by authorities. Social licenses are informal, unspoken agreements based on perception and trust.
Earned vs. Granted:
You don’t apply for a social license; you earn it through consistent positive behavior and engagement with stakeholders.
The important of Social License to Operate:
Risk Management:
It acts as a vital mechanism to avoid and mitigate significant business risks, such as protests, legal challenges, and operational suspensions that can result from community opposition.
Project Success:
An SLO is fundamental for the successful planning, implementation, and ongoing operation of projects, particularly in resource-intensive sectors like mining.
Stakeholder Trust and Legitimacy:
It is a key factor in building and maintaining the trust, acceptance, and support of local communities and other stakeholders.
Reputation and Value:
A well-earned social license safeguards a company’s reputation and ensures the long-term value of its operations and investments.
Community Engagement:
SLO requires proactive and meaningful engagement with communities to understand and address their expectations, values, and concerns.
How SLO is Earned and Maintained:
Community and Stakeholder Dialogue:
Engaging in open and honest dialogue with various stakeholder groups, including local communities, is critical for fostering mutual understanding and addressing concerns.
Respect for Values and Expectations:
Companies must demonstrate a commitment to understanding and respecting the diverse worldviews, values, and expectations of communities.
Fair and Participatory Processes:
Establishing participatory processes where communities have a meaningful voice in decision-making fosters trust and procedural fairness.
Proactive Risk Management:
Anticipating and managing potential negative impacts on communities and the environment is essential for maintaining a social license.
Track Record and Accountability:
A strong track record of prompt action, fair compensation (where applicable), and fulfilling commitments builds credibility and trust over time.
Gaining and Maintaining a Social License to Operate
- Early and Genuine Stakeholder Engagement:
Involve communities from the planning stage.
Seek free, prior, and informed consent (FPIC), especially with Indigenous Peoples.
- Transparent Communication:
Regularly share project updates, risks, and benefits.
Use accessible language and forums tailored to different groups.
- Benefit Sharing:
Ensure that communities directly benefit through jobs, infrastructure, education, or profit-sharing.
- Cultural Sensitivity and Respect:
Understand and respect local customs, values, and social structures.
- Environmental Stewardship:
Commit to best practices in sustainability, pollution prevention, and habitat protection.
- Responsive Grievance Mechanisms:
Establish clear channels for complaints and resolve disputes promptly and fairly.
Challenges in Implementing SLO
- Power Asymmetries:
Corporations may dominate dialogue, sidelining vulnerable communities
- Diverse Stakeholder Interests:
Conflicting views within and between communities can complicate consensus-building.
- Changing Social Expectations:
What is acceptable today may not be tomorrow, requiring companies to continuously adapt.
- Lack of Clear Metrics:
Measuring the strength or presence of SLO can be difficult without standardized tools.
- Greenwashing:
Superficial community engagement can backfire, eroding trust if seen as insincere.
Achieving and Maintaining a Social License
Achieving a SLO requires a multidimensional strategy, including:
- Stakeholder Engagement
Early involvement of communities in decision-making.
Inclusive dialogue respecting all voices, especially marginalized groups.
Continuous communication to build trust.
- Transparency and Accountability
Open disclosure of environmental impacts and project plans.
Third-party audits and independent monitoring.
Willingness to admit mistakes and implement corrective measures.
- Corporate Social Responsibility (CSR) Initiatives
Investment in local infrastructure (schools, hospitals, roads).
Employment and training opportunities for local populations.
Environmental protection and restoration projects.
- Cultural Sensitivity
Recognition of indigenous rights and traditions.
Consultation in culturally appropriate ways.
Commitment to Free, Prior, and Informed Consent (FPIC).
Opportunities Arising from a Social License to Operate
Enhanced Project Certainty and Reduced Risk:
A strong SLO minimizes risks like work stoppages, protests, and blockades, providing more confidence for project continuity.
Improved Community Relations:
By behaving legitimately and accountably, companies build trust and positive relationships, which can lead to greater community support for projects.
Access to Future Opportunities:
A good reputation for social responsibility opens doors to new investments, partnerships, and opportunities that might otherwise be inaccessible.
Greater Operational Stability:
Sustained community acceptance provides greater operational certainty and a stable environment for business activities.
Increased Stakeholder Support:
Beyond the local community, a strong SLO can attract support from other key stakeholders, including investors and consumers, who increasingly align with ethical and responsible companies.
Long-Term Sustainability:
By addressing community concerns and generating shared value, companies can ensure the long-term viability of their operations and contribute to local development.
Positive Brand Image and Reputation:
Maintaining trust through responsible practices enhances a company’s brand image, which is crucial in today’s market where consumers and employees care about values.
Conclusion
The Social License to Operate is a serious, though intangible, element of modern business practice. It emphasizes that legal compliance alone is not enough; companies must earn the trust and approval of society to operate successfully and sustainably. As stakeholder expectations continue to rise, corporations that integrate community engagement, transparency, and ethical practices into their core operations will be better positioned to thrive in the long term.
READ Business License And Permits In Nigeria