sharing in governance of extractive industries

In the mining industry, the term 'social license to operate' has become common parlance and has been erroneously established as standard qualification for the broader concept of social acceptance. By simplistically equating the idea of a government's authorization and permitting process, to that of the community’s ongoing acceptance of a company’s activities, the term fails to capture the evolving and complex nature of the relationship between those companies and their host communities. An actual ‘license’ would formally sanction the execution of a legally binding authorization, would be valid for a particular length of time, and would be subject to termination as per clearly indicated rules.

Not enduring nor a formally-granted permission

I strongly believe that beyond obtaining government authorization, companies should pursue the permission of the community to conduct activities in order to mitigate the risks of surprise resistance. This process is prone to be as mercurial as the parties who shake on it, and is best guaranteed with a consistent level of shared communications and expressions of goodwill. But, it is important that one recognizes that this verbal understanding or consent to proceed – hopefully received at the end of various consultations and information-sharing sessions with key stakeholders – is more circumstantial than enduring and yet not a formal agreement.

Not legally binding

Furthermore, the concept of obtaining a “social license to operate” is misleading with regards to its legal implications. A verbal consent to proceed is in no way a legally binding commitment, nor a contract between the parties involved, and subsequently can be reversed at the discretion of any community member. Therefore, operating with the mindset that a “social license” has been obtained often leads to short-sighted community engagement, leaving companies vulnerable to unpredictable threats to the completion of projects, as those originally stated concerns morph in scope and scale. 

Not defined by clearly indicated rules

Not formally obtained nor legally binding, a “social license” also comes with no certain, clearly indicated rules, and thus can be terminated on no predefined grounds of violation. Much un–like a license, it is nearly impossible to determine when a so-called “social license” has been fully earned, and accordingly when it expires. The term doesn’t capture the fact that the perceptions and opinions held by group members are multidimensional, vary in time and, as so, are subject to change. Even a community that is emotionally vested in a project can reverse its approval without notice, due to generational, economic, and/or social circumstances. This makes conducting a business quite tricky, and is why ongoing engagement with the community is key to understanding and addressing concerns as they happen in real-time.

Moving away from the term aptly sets expectations

As stated before, reexamining the terminology puts us that much closer to understanding the intricacies of community engagement. Because of its evolving nature, thinking of this process more like a social loyalty program would avoid the misleading implication that there is a sequential course that ends with the receipt of a specified license. Maintaining ongoing social acceptance is more of a dance, a conversation, an art. It’s not a bill of sale nor a transaction; it’s not a card you can carry around to justify your activities and as such—it’s just not accurate to call it a license. Any chosen term should capture the necessary establishment of time, and contextual trust needed to maintain this dynamic relationship. Whatever term we decide to use, it requires continuous collaboration, strategic social investment, and transparent engagement to maintain its existence.

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