Corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps, they can persuade governments and the wider public that they are taking issues such as health and safety, diversity, or the environment seriously as good corporate citizens with respect to labour standards and impacts on the environment.
The license to operate which is commonly termed as social licence to operate (SLO) refers to the level of acceptance or approval by local communities and stakeholders of any particular company and its operations. The concept of SLO was first proposed by Jim Cooney, Canadian mining executive, in 1997 as an essential requirement for the future survival of the mining industry. It has four levels from lowest to highest: withdrawal, acceptance, approval and psychological identification. Most companies or projects are in the acceptance or approval range most of the time. It can vary across time or between stakeholder groups in response to actions by the company or its stakeholders.
Licence to operate requires far more efforts than just to make application or pay fees to a government ministry. It truly involves company to become part of the community in which it will be operating. This licence is an intangible, informal, non-permanent, and dynamic grant of the local community which is earned and then maintained by the company. It is an expression of quality relationship between the company and its stakeholders.
The social licence to operate reminds communities that they do have collective power. When communities talk about a company’s social licence to operate, it makes their power more explicit. What’s interesting is that, although the SLO has only recently materialised in the mainstream amongst major companies, it’s an idea which has been central to the success of democratic societies since at least the eighteenth century, so perhaps it’s uptake is not so much about a power shift and more about active recognition of what we’ve known for a very long time.
