When gas company Metgasco had its exploration licence at Bentley, NSW withdrawn in May 2014, the significance of having a ‘social licence’ really became apparent – and the cost of not having one became even more apparent. Metgasco’s share price collapsed by 40%, and it has accumulated losses of nearly $120 million. Even though local communities had overwhelmingly said they did not want the company operating in the region, executives insisted that they had a right to proceed. But the strategy of ignoring community opinion – or burying the corporate head in the sand – is rarely successful or sensible.
What is a social licence?
Social licence refers to ongoing approval for the activities of a project (or a company) among local communities, interest groups, and other ‘stakeholders’. It is based on extensive research in psychology, communication, sociology, community development, strategic management, and impact assessment. It is closely related to community or stakeholder engagement, and indeed can be seen as the outcome of good engagement. Unlike an official licence, a social licence exists on a sliding scale, and the position of your project on this scale – its level of social licence – will vary over time as conditions, expectations, and opinions change. It needs to be managed constantly, especially when social media enables news and opinion to be shared and multiplied almost instantly. Achieving a high social licence means you are listening to people, meeting their expectations, and being responsive to their concerns. In short, the community supports and trusts you. In turn, this makes it easier to operate and grow your business. Having a high social licence can bring other benefits too:
- Reducing risk and uncertainty, and strengthening reputation.
- Complementing testimonials with empirical evidence.
- Providing support for submissions to regulators or funders.
- Attracting more business by demonstrating community support.
- Demonstrating leadership and innovation in your sector.
- Creating a strategic point of differentiation from your competitors.
Clearly social licence is particularly significant for businesses engaged in controversial projects, but if your business involves extensive interaction with the public or some kind of impact on the environment, then a high social licence is essential. Equally, if you are doing something novel that might challenge people’s expectations, or that requires people to change their everyday habits or reassess their goals, being able to demonstrate broad community support can help to allay fears. People like to know that others trust you. So how do you know your project’s level of social licence?
Social Licence Assessment
A Social Licence Assessment is a structured process of gauging levels of acceptance, approval, and trust that your stakeholders perceive towards your project. It involves a range of tailored tools and techniques. The assessment process typically comprises four stages:
- Review of existing activities relating to social licence and stakeholder engagement.
- A survey of stakeholder perceptions to produce an overall ‘score’.
- Interviews and/or workshops with key stakeholders, to identify critical issues, challenges, risks, and opportunities for improvement.
- Feedback and strategy development to apply the assessment findings.
This process need not be onerous, and an experienced consultant can help design it, advise you on the best tools to suit your business, and support you throughout, leaving you to nurture your stakeholder relationships and run your business. If Metgasco executives had taken this approach, they could have saved themselves a whole lot of time, effort, and money trying to persuade, cajole, and force their stakeholders into submission. If you want to build a business that enjoys widespread community support, listen to your stakeholders, understand their needs, concerns, and expectations, and involve them in your business development. If you want to find out how not to earn a social licence, ask Metgasco! If you feel that your business would benefit from a discussion with Richard please contact him by posting a project on the Expert360 platform.