Obtaining and maintaining a social license is currently a hot topic for Oil and Gas companies in Australia. Big name's such as Prime Minister, the Hon Malcolm Turnbull MP and Woodside Chief Executive; Peter Coleman have both weighed in on the issue, warning that the nation's oil and gas industry has "lost the trust of the public", which is threatening its "social license".
The commonly held definition of social license refers to a local community's acceptance or approval of a company that exists outside of formal regulatory processes.
"At the level of an individual project, social License is rooted in the beliefs, perceptions and opinions held by the local population and other stakeholders about the project. It is therefore granted by the community. It is also intangible unless effort is made to measure these beliefs, opinions and perceptions. Finally, it is dynamic and non-permanent because beliefs, views and perceptions are subject to change as new information is acquired. Hence the Social License has to be earned and then maintained,” said Dr Robert Boutilier, senior associate of the of the Australian Centre for Corporate Social Responsibility, Melbourne.
In the Oil and Gas sector, local communities have emerged as particularly important governance players. Conventional approaches to project development no longer suffice for these communities, who have demanded a greater share of benefits and increased involvement in decision-making.
“Communities have power. Their portrayal of themselves as little David’s facing corporate Goliaths is pure political posturing. By the same token, industry assurances that they have 'secured' a social license once and for all, is also posturing,” continued Dr Boutilier.
Accordingly, there is now widespread recognition that extractive companies need to gain a ‘social license to operate' to avoid potentially costly conflict and exposure to social risks.
“The license is granted by the community. In most cases, it's more accurate to describe the granting entity as a network of stakeholders instead of a community. Calling it a network makes salient the participation of groups or organisations that might not be part of a geographic community. Calling them stakeholders means the network includes groups and organisations that are either affected by the operation or can affect the operation.”
“This unwritten social contract is earned and maintained through relationships based on honesty, transparency and respect,” said Dr Boutilier.
On occasions, the Social License can transcend approval when a substantial portion of the network of stakeholders incorporates the project into their collective identity. At this level of relationship, it is not uncommon for the community to become advocates or defenders of the project since they consider themselves to be co-owners and emotionally vested in the future of the project, however, without proper maintenance this license can be removed at any point.
“A potent tool in mobilising stakeholders to withdraw social license is the social discourse around the activity in question. There are duelling discourses around fracking, for example. An older, more accurate term for 'managing the discourse' is 'framing the issue'.
“The discourse around carbon and climate catastrophe not only withholds the social license from specific carbon projects but also withholds the social license from whole industries.”
Companies also risk their social license when viewing the process of gaining the community’s acceptance as a series of transactions or tasks, therefore, confusing acceptance for approval, co-operation for trust and technical credibility with social credibility.
“As alternative, renewable and non-carbon energies reduce their need for subsidies, the need to vilify carbon declines. In those cases, more opportunities appear for discourses that legitimise the place of carbon industries in a 'mixed source' energy future,” summarised Dr Boutilier.
Dr Robert Boutilier is a social research consultant and a senior associate of the of the Australian Centre for Corporate Social Responsibility, Melbourne. He specialises in relations among the extractive industries, communities, governments and civil society. He has published three books and over a dozen scholarly articles and book chapters on topics in development economics, issues management, social psychology, and stakeholder relations.
Wednesday 12th July 2017