At its most narrow definition, a social license, or Social License to Operate (SLO), is the level of acceptance a company receives from the local community where it operates. Rather than a formal agreement, at the core of the concept is an assumption that companies whose operations have an impact on either the environment or society where they operate, require not only regulatory approvals, but also a social approval. In this article we look at the theory of SLO and how it has manifested itself in the mining sector.
SLO is a term that has emerged over the past two decades particularly in the context of extractive industries. An increasing number of mining companies that failed to consider the need for an SLO in their pre-feasibility studies have found themselves in prolonged legal battles and significant delays to production.
"WHILE EACH MODEL SUGGESTS A UNIQUE POINT OF VIEW, THE CONCLUSION OF ALL OF THEM REMAINS THE SAME; IT IS ONLY THROUGH TRANSPARENT DIALOGUE WITH LOCAL STAKEHOLDERS THAT COMPANIES CAN GUARANTEE APPROVAL, OR AT THE VERY LEAST ACCEPTANCE, FROM THE LOCAL COMMUNITY."
However, the ambiguity surrounding the term and the various approaches to it have resulted in widespread misperceptions about SLO. In the absence of a single agency to set a regulatory framework around it, various experts, scholars, and organisations have developed different models to approach it. While each model suggests a unique point of view, the conclusion of all of them remains the same; it is only through transparent dialogue with local stakeholders (such as municipalities, labour unions, local NGOs and indigenous community leaders) that companies can ensure approval, or at the very least acceptance, is achieved prior to the launch of extractive operations.
MARIO LEVIN, Associate Director
Mario joined S-RM in 2021 as an Associate Director at the company’s Corporate Intelligence practice, where he oversees the Regulatory & Compliance work.