Community engagement and social licence to operate
In a free and open market economy, organisations depend on the actions of stakeholders to continue to do business. From community leaders to policy makers, influencers and customers, managing positive public relations is a vital part of any business’s strategy. These stakeholders hold views on the way that the business should operate within their community, forming a set of expectations and demands that inform their support or opposition to a firm’s activities. The tacit permission to operate these stakeholders grant a business when these expectations are met is referred to as a “social licence to operate”, a metaphorical term as this permission is intangible and unwritten.
Nevertheless, when this social licence to operate is lost, the impacts are anything but intangible. From reputational damage, boycotts, protests, to regulatory backlash and reduced market access; the loss of this social licence has led to the failure of projects and the collapse of entire industries.
In this current climate of distrust in governments, business, and the media, it has never been harder, or indeed more vital, for businesses to maintain their social licence to operate. Research suggests that the generation and maintenance of a social licence depends on the quality of organisation-stakeholder relationships, but despite the critical role that public relations (PR) plays in stakeholder engagement it is generally only considered in the social licence literature as a response to the loss of a licence following some crisis or negatively received business decision.
This focus on PR as a reaction to the loss of a firm’s social licence has led to the generally negative perception of PR in this space as tokenistic, spin or empty rhetoric. However, the recent focus in PR literature regarding the importance of proactive relationship management and stakeholder engagement has generated many insights into how a social licence is created, maintained or repaired. Rather than using PR as a tokenistic response to backlash following the loss of a social licence, this literature review advocates for an active approach to stakeholder engagement that builds and maintains a more resilient social licence to operate.
Key findings
1. In an organisation multiple social licenses will exist across multiple scales both internally (project, organisation and industry) and externally (local, regional, national and international).
2. These different social licenses are often at odds with one another. For example, the Adani Carmichael Mine is supported by local community groups that benefit from the jobs it creates, while opposed by state and national groups concerned with its environmental impacts.
3. While the loss of a social licence relating to a specific project may not necessary impact the broader social licence for an organisation or industry, there is often a contagion effect. For example, the mistreatment of animals by specific greyhound racing operators resulted in the loss of social licence for the entire greyhound racing industry.
4. A social license to operate cannot be controlled, but it can be managed through protecting reputation. This is accomplished either through a pro-self perspective, where the social licence is a resource “bought” through actions that align with stakeholder expectations, or a pro-social perspective in which the social licence is the result of mutually beneficial relationships with stakeholders.
5. While a pro-self perspective can result in a social licence, the transactional nature means that collaboration with stakeholders is done episodically (usually only in a short burst around a specific project) and on the firm’s terms. Often the stakeholders are chosen by the firm to pre-determine the outcome, engaging only with those likely to already agree with the firms’ actions. These licences are therefore not supported by any lasting relationship and are withdrawn as easily as they are initially acquired.
6. A pro-social perspective results instead in collaborative relationships. Rather than trying to persuade stakeholders that the firm’s actions will be beneficial, through authentic dialog and ongoing engagement the desires of the stakeholders are integrated into the firm. The emerging social licence then reflects a genuine alignment of interest and is much more resilient as it is founded on shared values.
7. When a firm fails to meet stakeholder expectations the social licence may be damaged or lost altogether. Repairing a social licence is a major challenge. To be seen as anything other than tokenistic dialog must be accompanied with concrete action to demonstrate a genuine desire to repair relationships.
8. Community engagement is a fundamental part of this process, as the loss of a social licence is typically the result of a failure of the firm to predict the response from stakeholders which indicates a lack of awareness of their expectations. Reflective engagement is therefore necessary to prevent repeating the same mistakes.
Recommendations
The review of social licence literature reveals that spin and manipulation are unlikely to build resilient social licences with stakeholders. While the established “pro-self” approaches to engaging with these stakeholders can (and indeed often do) result in PR “wins”, they do not often result in lasting relationships. The transactional nature of engaging with stakeholders only to claim a social licence to operate results in weaker licences, based only on momentary benefits to both parties. As soon as a mistake is made, or the stakeholders no longer feel they
are benefited by the firm’s presence, they are quick to abandon the relationship and withdraw the licence.
This review therefore endorses a “pro-social” approach to developing a social licence to operate. This is a process of facilitating dialog, proactively engaging with the community with the view to build lasting relationships. These findings suggest that as much as being the representative of the firm to the public, PR professionals also need to consider themselves the voice of society to the firm.
Rather than just selling the actions of the firm, stakeholder engagement can bring the expectations and desires of the community into the firm. This results in a social licence to operate founded on mutual interest and shared values, creating relationships that are more resilient to the occasional misstep and of greater worth to the firm.
Researcher
More information
The research article is also available on eprints.