The Social Licence to Operate (SLO) refers to the idea that “business also needs to earn the support of the community or society in which it operates” (IFC 2014). The concept of SLO is often used to signify ongoing acceptance by the local population surrounding a given project. It is critical for the natural resources sector; informed acceptance and support from local communities is a way to de-risk large investments and establish the groundwork for sustainability, mutual social and economic benefit, and growth. Transparency and community engagement can also create the foundations for developing proactive systems for companies to recognize and address community concerns and create tangible programs to improve planning with host communities, governments, and civil society. In line with this, SLO is also associated with (the absence of) overt protest, social conflict and expensive production disruption.
Accordingly, EY’s 2020 survey on Top 10 Business Risks finds that License to Operate is still seen by companies as the top risk for the mining sector.
However, the attitudes among local populations towards mining operations are usually more nuanced and heterogenous than what the term “licence” suggests (Pedro et al, 2017). Within the same community, there may be those who look forward to the mine and the opportunities it may bring, those who oppose it due to environmental concerns, those who tolerate the mine but do not embrace it, those who do not dare express their dissent publicly, etc. All these attitudes may also change over time.
Despite its limitations, SLO is useful as it shines a light on the responsibilties of companies to the local population and on the agency of the local population as influential stakeholders of business operations.
Unfold to find out more about key issues for procuring SLO.