Social License, or a Social License to operate, is a term that has been in use over the past 20 years. It refers to the acceptance of a community towards a business and its operational standards, company practices and procedures. The basic concept of a social license is closely aligned with sustainability and the economical perception that is the Triple Bottom Line (TBL).
“Social licence is the legitimacy of an organisation in the eyes of the consumer. Consumers in 2021 recognise the value of their dollars. They purchase products not simply because they need or want them but because they want to be associated with the business and want to recognise their value.” – Jackson Taylor, Complize Co-Founder
Anyone operating a company should bear in mind that there may be legal and regulatory licenses necessary to operate a legitimate business. However, social license is an invisible yet vitally integral agreement between a business and the society it caters for. It is an agreement composed of trust, one that is hard to win and easy to lose. Though it is important to understand that social license can be ‘difficult to define and impossible to measure’.
One of the first applications of the concept of social license was because of changing perceptions of the mining and resource industry as a threat to the environment. As public opinion about mining deteriorated, the industry fought harder to maintain public trust and recognition. For example, say that a mining company is granted with the correct licensing to operate, paying the required taxes as well as meeting all other industry standards. However, the destruction of the natural resources and the environment that the business brings upon its local community is reason enough to reverse the trust of the community for the company. The social license has well and truly been violated and earning it back may be a rocky road indeed.
Gradually, social licensing has moved into mainstream business practice and is now regarded as a key factor to boost the long-time financial gains and social acceptance of organisations. Moving forward, the value of social licenses will only increase as consumers become more discerning in which organisations they choose to patronise and support. Standards were previously the norm are being reviewed and changed in light of these principles. For example, recent moves in many large organisations to ensure appropriate levels of gender diversity among directors on boards. Some of these old practices are considered increasingly inappropriate or unethical and are being dropped in favour of more social accepted standards.
Social operational licenses consist of three components:
- Legitimacy: How much organisations are invested in fitting into the framework of community expectations in terms of corporate, environmental and social responsibility.
- Credibility: The provision of true and clear information to the community regarding the organisation and the commitment to do so.
- Trust: The willingness of members of the community to believe in the company to do the right thing by the people. It is a near impossible standard to achieve however proves to be immensely rewarding when it is gained.
The rise in popularity of the social license concept over the past few years is itself a response to the disintegration of public trust in the world of business. There are many potential reasons for this loss of trust, including a belief that elites in government, the media and business are self-serving and cannot be trusted, scandals in business and government, the negative impacts of globalisation and neoliberalism. One of the primary ways for business to win back trust is through active cultivation of social licence. To achieve this, organisations need to commit to not only maximize profits for shareholders, but effect positive social, economic and environmental change for society.
HOW TO IMPROVE YOUR SOCIAL LICENSE
There are numerous ways for organisations to improve their social license. The way in which organisations manage and engage with temporary visa holders in their employment is just one. Adopting a pro-active approach to ensure that all immigration legal obligations are met and complied with is the first step to building positive engagement with your temporary visa holder employee population. Complize has been built as an online immigration compliance platform to deliver the essential tools to achieve compliance and greater organisational understanding through automated workflows, online training, and knowledge libraries. These assist organisations to manage and mitigate the risks that come from employing temporary visa holders.
We understand that trying to stay up to date with the complexities of immigration law can be time-consuming and challenging. Designed by experienced immigration lawyers, Complize puts you in control of your immigration data with intelligent workflows, dashboards, and reporting. This is one way to build and maintain your organisation’s social licence.
Authors: Tiam Jun (TJ), Jackson Taylor & Luke Scully