By: Alex Liatsis, Consultant, Public Engagement Team
Canadian companies involved with natural resource extraction and infrastructure development have long understood the importance of obtaining social license to operate (SLO).
In the twenty-first century, these companies are under immense pressure to successfully engage the communities affected by their intended projects and successfully demonstrate that the benefits of any development outweigh the risks. Failure to obtain public support has the potential to expose firms to regulatory and litigation delays, multi-billion dollar cost escalations and outright cancellation as strong public opinion has the potential to provide impetus for legal challenges or large-scale demonstrations that can influence elected decision makers to nix projects.
To be sure, there is no legal requirement for companies operating in Canada to have SLO and it is certainly not an actual license that must be secured by developers in order to break ground on projects. As a result, skeptics have criticized SLO as an ill-defined concept manufactured by activists seeking to undermine development projects – particularly when they involve oil and natural gas extraction and transportation. The validity of SLO becomes further eroded when critics point to Canada’s already well-established regulations that protect the environment and promote safety.
Obtaining SLO nevertheless features heavily in our public discourse and is recognized by many industries as a critical requirement in addition to the requisite legal licenses and permits that must be obtained for a project. A 2012 study noted that between 2007 and 2012, almost every corporate member of the International Council of Mining and Metals, the Mining Association of Canada and the Prospectors and Developers Association of Canada used the term social license to operate in their public communications.
Large development projects can be immensely disruptive to communities, altering and inconveniencing the day-to-day activities of tens of thousands of people. Regulators providing assurances for environmental integrity and safety do not take this social disruption into account and are not privy to the insights that come from those with intimate knowledge of the community. Therefore, a project’s future is inextricably tied to a firm’s ability to successfully execute public consultations that foster partnerships within the community to establish good faith and mutual trust.
To successfully do this, companies must demonstrate a genuine desire to invest in and support the well-being of these communities and ensure community members are made to feel they have a voice in the process. It is important that firms and communities are rowing in the same direction but even more critical is that all stakeholders are confident they have an oar in the water, too.
Public and stakeholder consultations provide the opportunity for communities and companies to have thoughtful dialogue where the intentions and/or concerns of all parties involved can be addressed. It is not good enough however to simply view these consultations as box to be checked in the lead up to a project’s ground break. Firms need to demonstrate they have considered what they hear from communities as part of their project plans. Business practices that promote inclusive dialogue and openness are far more likely to secure the social license required to complete projects with far less risk to their bottom line.