While the social licence to operate began as a concept in the mining industry, it is relevant for all businesses. The social licence is a perception of legitimacy – does the company go about its business in a proper way? Whereas reputation refers to the overall favourability of the image of a company. A panel discussion at Trialogue’s 2017 Business in Society Conference explored the crucial need for companies to effectively and continuously engage communities, and the impact that this has on a business’s social licence to operate, as well as on its reputation.
Transparency, commitment required for effective stakeholder engagement
Governor Daliwonga (Dali) Duma, Head of Sustainability at Northam Platinum, said that in his experience the ability to effectively develop a social licence to operate relies heavily on effective stakeholder engagement. Business must prioritise engaging with community stakeholders honestly, transparently and with an ongoing commitment to building and maintaining a relationship of trust, prior to initiating operations or CSI initiatives in a community.
Sibongiseni Malakoane, Executive Director of the WDB Trust, described witnessing strong community buy-in, impact and programme sustainability when successful relationship development had been accomplished. She encouraged such engagement with all stakeholders in order to develop a good understanding of the needs and priorities of a community, before initiating CSI programming.
Understanding the concept of ‘community’
Similarly Jessica Rees-Jones, Executive Director of Inyathelo, advocated for emphasis on relationship-building and trust. She added that in order to effectively engage a ‘community’ the concept first needs to be unpacked. She said that just as different stakeholders have varied needs, expectations and priorities which they believe companies must address, so too will various groups within a ‘community’. There is a danger in conducting stakeholder engagement in which ‘community’ is seen as a homogenous group, or singular stakeholder, when in fact ‘community’ is comprised of multiple ‘sub-groups’ with different realities, priorities, expectations and access to power.
Rees-Jones suggested that South Africa would benefit from developing a guiding set of principles to frame how a social licence is understood; including defining roles, responsibilities and various approaches to capacity-building , with emphasis on growth and sustainability.
Asset-based Community Development
Panellists were asked to consider how CSI-funded projects could help to build a company’s credibility, particularly in an environment where demands often exceed the resources available. Two strong themes emerged: firstly, that of understanding and supporting the needs of the community, rather than imposing external priorities. Malakoane described how WDB Trust, rather than entering a community with assumptions, instead invests time and resources in listening to the local needs and then partnering towards meaningful outcomes.
Duma agreed with taking an approach such as asset-based community development (ABCD), addressing the self-defined needs of the community and then building on what is already there, including established activities and partnerships, as well as the skills and capacity of the community. Rees-Jones added that this approach presents opportunities for companies, civil society and non-profit organisations (NPO) to develop innovative funding models. She argued that traditional funding availability is likely to shift significantly in South Africa, and will require very different audiences and shared resources than in the past.
Secondly, panellists emphasised the need for transparency regarding capabilities, roles, and the goals of a company entering a community. Just as communities must be integrally involved in defining how a business will engage, including CSI foci, the business must also be clear on the limits to their capacity and resources. These same principles and responsibilities certainly also apply to any CSI-funded implementing NPO.
Once established, legitimacy and social licence must be maintained. Duma underscored the importance of transparency, accountability and proactive communication, in order to share progress, issues and any challenges related to a company’s business operations or CSI initiatives taking place within a community. Panellists and delegates acknowledged that multiple success stories exist, as well as the reverse: examples of extreme community disappointment and relationship collapse when these processes have been absent or have failed. The negative consequences in such circumstances can be enormous and, beyond wasted opportunities, carry reputational, social and financial risk.
The closing consensus was that engagement must not be undervalued. Establishing a social license requires broader consideration than funding availability and encompasses the formalisation of engagement structures, proactive relationship development, stakeholder engagement and accountability. The value of ‘doing it right’ is immense and powerful opportunities can be harnessed towards development, social licence establishment and CSI impact.
This session was presented in partnership with
- Dali Duma, Northam Platinum
- Jessica Rees-Jones, Inyathelo
- Sibongiseni Malakoane, WDB Trust
- Nick Rockey, Trialogue (facilitator)