Description: The Social License refers to the ongoing acceptance and approval of a company’s operations by its employees, stakeholders, and the general public. This concept has become crucial in the current context, where transparency and social responsibility are increasingly valued. The Social License is not a formal document but a state of trust built through interaction and commitment of the company with its environment. It implies that an organization must demonstrate its commitment to ethical, sustainable, and responsible practices to maintain the trust of its stakeholders. The Social License manifests in the public perception of the company, its reputation, and its ability to operate without facing resistance or opposition. In a world where information flows rapidly and social media amplifies citizens’ voices, companies must be proactive in managing their Social License, ensuring that their actions align with societal expectations and values. This includes attention to issues such as equity, environmental sustainability, and employee well-being, which in turn can influence their long-term success.
History: The term ‘Social License’ began to gain popularity in the 1990s, particularly in the context of industries that impact local communities, such as mining and natural resource extraction. As communities began to resist projects they deemed harmful, companies realized the need to gain social acceptance to operate. In 1997, the concept was formalized by academic David A. McGowan, who used it to describe the relationship between companies and the communities affected by their operations. Since then, the Social License has evolved and been applied to various industries, becoming an essential component of modern business management.
Uses: The Social License is primarily used in stakeholder relationship management, especially in industries that have a significant impact on local communities, such as mining, energy, and agriculture. Companies implement communication and engagement strategies to build and maintain their Social License, which includes conducting public consultations, promoting transparency in their operations, and implementing sustainable practices. Additionally, it is used as an indicator of the company’s reputation and its ability to operate without conflicts.
Examples: An example of Social License can be seen in industries like mining, where companies like Barrick Gold have had to work hard to gain acceptance from local communities before starting projects. Another case is that of the renewable energy company Ørsted, which has built its Social License through a strong commitment to sustainability and community engagement in its energy projects. These examples illustrate how Social License can influence the viability of a project and the company’s reputation.
