Description
The term 'Social License to Operate' (SLO) refers to the informal and unwritten approval that companies must earn from local communities and stakeholders to conduct their business activities. Unlike formal permits or regulatory licenses, an SLO is built on trust, transparency, and mutual respect. It reflects the social expectations of a company's operations, especially in industries like mining, energy, and agriculture, where environmental and social impacts can be significant. Companies seeking an SLO must engage with communities, listen to their concerns, and demonstrate a commitment to sustainable practices. Failure to secure an SLO can lead to conflicts, protests, and even operational shutdowns, as seen in various high-profile cases globally. Thus, obtaining and maintaining an SLO is crucial for long-term success and reputation management in the Governance, Risk, and Compliance (GRC) landscape.
Examples
- In 2014, the Newmont Mining Corporation faced community backlash in Peru over environmental concerns, illustrating the importance of maintaining an SLO.
- The Dakota Access Pipeline protests demonstrated how a failure to engage with indigenous communities can lead to significant operational challenges and public relations crises.
Additional Information
- Building an SLO involves ongoing dialogue and collaboration with stakeholders, including local communities, NGOs, and government entities.
- Companies often conduct social impact assessments to understand the potential effects of their operations and tailor their strategies to address community needs.