Social licence to operate

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.

Stakeholder engagement

Mining and Metallurgy Regions of EU- MIREU: SLO Guidelines

The Horizon 2020 project MIREU aims to establish a network of mining and metallurgy regions across Europe that exchanges good practices and ensures a consistent domestic supply of mineral raw materials. One of the work packages in MIREU, the Social Licence to Operate (SLO), focuses on the social dynamics around mining in Europe. The starting point does not assume exploration and/or mining can happen at any cost, but rather acknowledges that mines can have both positive and negative impacts and there must be a fair trade-off between benefits received and impacts experienced particularly by those who are most affected.

The OECD Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractive Sector is “a practical framework for identifying and managing risks with regard to stakeholder engagement activities to ensure companies play a role in avoiding and addressing adverse impacts”. Key recommendations are developing a stakeholder engagement strategy prioritising most affected stakeholders, and ensuring stakeholder participation in decision-making, among others.

The Responsible Mining Foundation has developed the Mine Site Assessment Tool. This is a set of questions to support local stakeholders in understanding “their” mine site and engage in a constructive dialogue with the mining company.

Meaningful participation is key for building constructive relationships with local stakeholders and minimising adverse impacts of mining operations. One way of ensuring stakeholder participation is through public consultations. The Inter-American Development Bank’s publication Public Consultations: Step by Step provides guidance on how to conduct public consultations with stakeholders in several sectors, including mining.

Redress and remedy

The UN Guiding Principles on Business and Human Rights stipulate that companies must provide redress and remedy to the population negatively affected by their operations (principles 25 – 31).

The ICMM’s guidance Handling and Resolving Local-level Concerns and Grievances: Human rights in the mining and metals sector suggests practical ways in which companies can handle local community grievances effectively, and how such mechanisms can be adapted for incorporation into different phases of the mining lifecycle.

The Mining Association of Canada developed the Site-Level Grievance and Community Response Mechanism: A Practical Design and Implementation Guide for the Resource Development Industry. It may provide useful orientation for stakeholders of mining operations in Latin America that are owned by Canadian companies.

Indigenous peoples

A salient SLO issue in Latin America is the lack of consultation and consent of Indigenous Peoples. The rights of Indigenous Peoples to self-determination, land and to be consulted, among others, are enshrined in the ILO Convention 169 and also anchored in the UN Declaration on the Rights of Indigenous Peoples.

ICMM members must adhere to the organisation’s Indigenous Peoples and Mining Position Statement. It requires members to respect indigenous peoples’ rights, ensure their meaningful participation, and work towards obtaining their Free, Prior, Informed Consent.

The ICMM has also developed the Good Practice Guide: Indigenous Peoples and Mining, offering companies orientation and practical tools for engaging with Indigenous Peoples, managing impacts, drawing up agreements and dealing with grievances.

As part of its industry initiative Towards Sustainable Mining (TSM), the Mining Association of Canada adopted a new TSM Indigenous and Community Relationships Protocol. It consists of five indicators based on which member companies must report their performance. The Argentinian mining association CAEM and the Brazilian mining association IBRAM are TSM participating organisations.

Annex B of the OECD Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractive Sector provides specific guidance on engaging with Indigenous Peoples.

Find more information on the situation of Indigenous Peoples in each MDNP member county by exploring the Country Fiches tool in the Members’ Area.