Friday, October 27, 2017

What is the Social License to Operate?

Origin and concepts

by Ana Lúcia Frezzatti Santiago
Ana Lúcia Frezzatti Santiago

Research Scientist, lawyer, business administrator, PhD FEI University Brazil and Alicante University, Spain; CEO at ESA Consulting - Equilíbrio Socioambiental; IAPG member 

The Social License to Operate (SLO) is based on the assumption that the expectations of the communities affected by projects/activities of mining companies usually exceed the legal matters. 

The SLO refers to the non-explicit part of the agreement made by industry with the society or the social group, and allows an extraction or processing operation to begin and continue their operations (Gunningham et al., 2004; Franks and Cohen, 2012). 

The SLO concept arises from the framework of engineering within extraction industry, when light is shed on the need to respond to the social challenges, in addition to the customary technological and management challenges. According to Franks and Cohen (2012) there is a trend in engineering, sustainability and safety departments to deal with the technological issues in a neutral way, separating the technological research projects from their social influences.

The SLO may contribute to dealing with this gap, since it proposes a systemic view, integrating the social challenges to the already customary technological, production and management challenges. “A SLO issuance may be considered as the legitimisation of the company by its stakeholders. The complex and dynamic nature of the social processes leads to uncertain conditions that demand the adoption of a new rationale and new governance arrangements in the business environment” (Funtowics and Ravetz, 2000; Berger and Luckmann, 2011). 

The SLO is a continuous negotiation process, a complement to the regulatory licenses, and not a product that may be granted by civil authorities, political structures or legal system (Franks and Cohen, 2012). Thomson and Boutilier (2011) argue that the term SLO was initially used in 1997 during a conference about mining and communities in Quito, Ecuador, supported by the World Bank.

For Prno and Slocombe (2012) however, the concept came to be in the studies on mining made in northern Canada, based on sustainability and governance theories. Since 2007, it has been used by members of the International Mining Board – ICMM (Owen and Kemp, 2013). Nelsen and Scoble (2006) identified key factors for successfully obtaining a SLO, including maintenance of a positive corporate reputation, understanding of the local culture, language and history; the needs for educating the local community members about the project and ensuring an open communication channel between all stakeholders. Also Prno (2014), based on several case studies, identified four drivers for a SLO process:

1) a SLO is built from relationships; 
2) sustainability is a dominant concern for communities; 
3) the generation of local benefits and assuring participation plays a crucial role in the SLO; 
4) adaptability is necessary to address the complexity.

Since this is a subject under construction, the literature presents a diversity of definitions and approaches for the SLO, however, there is a general consensus that companies should be granted an ‘authorisation’, a legitimacy not based only on a legal compliance, but on how well a company can be accepted by local communities, the government, NGOs. However, most of the research projects are centred within the mining sector. This can be explained due to the high potential of social- environmental and economic impact related to mining operations, such as qualitative changes caused in the local social landscape, demographic changes, environmental changes and structural transformation of the local social environment (Petrova and Marinova, 2013).

But after all, how to manage the process and get effective ways to implement a SLO strategy?
First of all it is important to take into account that it is easier to identify when a SLO is lost than when it is achieved. A second step is to understand that this is a continuous process of negotiation, passing through the company's knowledge of its potential socio-environmental impacts (positive and negative). In order to obtain and maintain the SLO, it is fundamental that the strategy is related to three company working environments:

1) the internal: policies, strategies and management practices adopted, such as the management of social and environmental impacts;
2) the external: to understand the processes of changes caused directly and indirectly by the operations and how the community perceives these changes, to invest in collaborative governance, social learning and the strengthening of the local institutions so that they have the capacity / knowledge to grant a SLO;
3) the environment of interrelationships: relationship, participation and dialogue to build relationships based on trust, that is, to open spaces for dialogue about the potential impacts and benefits generated by the enterprise, involving the community, company, organizations and government. In many situations spaces are open to discuss local development, forums, development agencies, but little is said about the operation and future of the enterprise and operations.

Anyway, getting a SLO is first of all to ensuring good relations with the community: a good insurance policy is to have the community as a company partner, including in critical moments!


Berger, L.P., Luckmann, T. (2011) A Construção Social da Realidade: Tratado de Sociologia do Conhecimento. Petrópolis. Editora Vozes. Brasil. 2011.

Franks, D.M., Cohen, T. (2012) Social Licence in Design: Constructive technology assessment within a mineral research and development institution. Centre for Social Responsibility in Mining, Sustainable Minerals Institute, University of Queensland. 79 122 Technological Forecasting & Social Change.

Santiago Frezzatti, A.L. (2016). Social license to operate: Company relationship with the local community. Influence criteria for the LSO concession. Doctoral thesis. FEI Brazil University and Alicante University, Spain.

Funtowics, S.O., Ravetz, J.R. (2000). Post Normal Science. Environmental Policy under Conditions of complexity. Barcelona. Icaria. 2000.

Gunningham, N., Kagan, R.A., Thornton, D. (2004). Social licence and environmental protection: why businesses go beyond compliance. Law & Social Inquiry 29, 307–341.

Nelsen, J., Scoble, M. (2006). Social Licence to Operate Mines: Issues of Situational Analysis and Process. Department of Mining Engineering. University of British Columbia, Vancouver. 2006.

Owen, J.R., Kemp, D. (2013). Social licence and mining: A critical perspective. Centre for Social Responsibility in Mining, Sustainable Minerals Institute, University of Queensland, St. Lucia, Australia. Resources Policy 38. 29–35. 

Petrova, S., Marinova, D. (2013). Social impacts of mining: Changes within the local social landscape. Rural Society: Vol. 22, Resource Extraction in Australia, pp. 153-165. doi: 10.5172/rsj.2013.22.2.153.

Prno, J. (2014). Establishing a social licence to operate amidst complexity: issues and opportunities for mining industry. Thesis Department of Geography and Environmental Studies in partial fulfilment of the requirements for Doctor of Philosophy in Geography. Wilfrid Laurier University. Canada.

Prno, J., Slocombe, D.S. (2012). Exploring the origins of ‘social license to operate’ in the mining sector: Perspectives from governance and sustainability theories. Journal homepage: Resources Policy 37 346–357. 

Thomson, I., Boutilier, R.G. (2011). Social license to operate. In P. Darling (Ed.), SME Mining Engineering Handbook. 

Other articles published in the IAPG Blog:

IAPG - International Association for Promoting Geoethics