Twenty twelve was the year of Creating Shared Value. Twenty twelve was the year when CSR was found to be an inadequate way of aligning business results and social outcomes. Twenty thirteen will be the year of the social license to operate (SLO).
As the New Year begins, you need to know why SLO has become so important and how your company can secure its social license.
Over the last few years, SLO has become an imperative for corporations in the resource extraction sector that require support from local communities to secure financing and government approvals for their projects. TransCanada’s controversial Keystone XL pipeline project is a timely example. “Pipeline companies have to focus more time and resources on building their social license to operate, and earning the support necessary to operate across vast distances and through communities,” said TransCanada President and CEO Russ Girling in a recent interview with Pipelines International.
However, TransCanada’s social license is being widely challenged by local stakeholders in Texas including a 78-year-old great-grandmother, Eleanor Fairchild, who was arrested along with activist Daryl Hannah for trespassing on her own property in the path of earth-moving excavators constructing a pipeline.
During 2012 social media continued to empower local communities, advocates and activists and it also became clear that the need for SLO had moved beyond resource extraction. For example, on December 13, Levi Strauss & Co. was able to maintain its SLO by committing to go toxic-free. The company’s commitment came eight days after Greenpeace launched a report called Toxic Threads: Under Wraps and screened a documentary called Because We Fight For Life about a family struggling to hold factories in Mexico to account for the pollution they are causing.
The challenge for corporations is that a social license to operate is a subjective concept, not a piece of paper. There is no issuing organization or agency. The terms are different for every business and vary considerably, even within the same industry. Ultimately, SLO is based on who your stakeholders are and what they think of you.
Recognizing that having social license to operate has become an imperative, I wanted to find out how corporate and civil society leaders are looking at this important issue and to develop ideas for what corporations should be doing differently in 2013. Maura O’Neill, Chief Innovation Officer and Senior Counselor at USAID, Charles A. Jeannes President and CEO, Goldcorp and Bill Drayton, C.E.O. and Founder of Ashoka shared their perspectives.
Here are the three foundations for establishing and maintaining a social license in 2013:
1. Be a social purpose leader
“Making a meaningful difference starts with a bold goal shared by many and a way forward that is smart, market-based and laser-focused on both better social and business outcomes,” says USAID’s Maura O’Neill. “Today it is a false dichotomy to think growing businesses can be either or anymore. The ones that will thrive and win the hearts and pocketbooks of consumers will deliver on both.”
According to O’Neill, large companies can start by deciding what social issue most impacts their business priorities and take a leadership role. She believes one of the best examples is the bold and pioneering work the world’s largest retailers and manufacturers of consumer goods is taking. Through the Consumer Goods Forum, over 400 corporations made a commitment to achieve zero net deforestation in sourcing and packaging of their products by 2020.
Related Idea: Become a B Corp, a new type of corporation that uses the power of business to solve social and environmental problems. B Corps are “certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency.” Social purpose businesses including Seventh Generation and King Arthur Flour are B Corps. Larger corporations should also consider the business benefits of having certification that include: attracting and retailing investors, benchmarking performance and helping to secure a SLO.
2. Give more control to local communities and stakeholders.
“I think we’ve done a good job over the years of having people at our sites who really care about the relationships with the local communities or the local aboriginal groups and they do a great job, and then we have people at the corporate office who are really good about talking about our vision and putting together values and policies,” said Charles Jeannes. “Where we need to do better as an organization is to coordinate the two and support them with the kind of information and resources they need to do the best job they can.”
Goldcorp has secured a SLO at its Éléonore development through a “collaboration agreement” with the Cree Nation of Wemindji, the Grand Council of the Crees and the Cree Regional Authority that protects the environment while supporting the Crees’ social and cultural practices in a spirit of continued collaboration. “This Collaboration Agreement is a vibrant example where, with the participation of the Crees, mining development can take place and prosper in Eeyou Istchee,” said Dr. Matthew Coon Come, Grand Chief of the Grand Council of the Crees (Eeyou Istchee).
Related Idea: Have local stakeholders develop their own interpretation of how your corporate strategy ought to play out in their communities. Telus, a global telecommunications leader, is “putting decision-making in the hands of local leaders who know their communities best” through TELUS Community Boards located across Canada and in the Philippines, Guatemala, and El Salvador.
3. Build partnerships with the right and the wrong NGOs
“The big opportunity for the truly smart CEO is to focus on the chief strategic challenge and opportunity of this historic moment and engage with whoever can help most: This will include citizen organizations that see the same historic and strategic opportunity,” says Bill Drayton. “Such partnerships, which are beginning, bring deep, long-term value and the attention of both sides.”
The “Making More Health” partnership between Ashoka and Boehringer Ingelheim is a great example. Through this multi-year collaboration the partners are launching fifty leading Ashoka social entrepreneurs across the world, combining the creativity and knowledge of both partners to envision the future of the health arena, spotting and launching hundreds of promising young health change makers, giving 25 Boehringer Ingelheim executives 6-month opportunities to work in the organizations of top heath social entrepreneurs.
Related Idea: Build a partnership with a controversial NGO. In order to secure a stronger social license to operate, corporations should build relationships with the organizations that have the most contrary points of view. CounterCorp, an organization that “seeks to spotlight, curtail, and ultimately prevent the corrosive economic, political and social effects that large for-profit corporations have around the world” has a great ant-corporate resource center.
There are many more elements to SLO but all are derived from the same principle: your stakeholders write your social license. In 2012 most corporations fell far short of the mark in the eyes of their stakeholders and ran the risk of losing their social license. In 2013, without an SLO, your company might very well be SOL.
This article was originally published on Forbes.com
Paul Klein founded Impakt in 2001 to help corporations become social purpose leaders and is considered a pioneer in the areas of corporate social responsibility. Paul is regularly featured in the media as a corporate social responsibility source, was included in the Globe and Mail’s 2011 Leading Thinkers Series, and was recognized as one of America’s Top 100 Thought Leaders in Trustworthy Business Behaviour. You can follow Paul on twitter at paulatimpakt