Are you giving resource companies a social license to operate?

Photo by John Glenn School of Public Affairs |

Photo by John Glenn School of Public Affairs |

In the past decade or so, North America has seen a major shift in the way political decisions are made regarding resource use. What had for decades been a bi-partite policy system existing between the provincial/state government and the resource company has recently evolved into a multi-party policy system including a variety of stakeholders at the local and community level. This development has largely been lauded as a positive one, as it provides for a more direct form of citizen participation on issues of environmental, economic, and political significance. With such an expanded role, however, comes an increased responsibility to ensure that local values are being represented on a consistent basis – a task that local stakeholders have struggled with.

One of the most significant drivers of policy system change in the past decade has been the desire for resource companies to obtain a "social license to operate" (SLO) on behalf of the local community. Developed for use in the mining sector, an SLO is a non-binding agreement between a resource company and the local community that fosters acceptance and trust between the two parties. An SLO benefits resource companies because it gives them a measure of legitimacy in their actions. Communities are often willing to issue a social license in the hope that it will allow for a more transparent relationship between industry and local representatives. If a local community does not approve of a resource company’s actions, community leaders can withdraw their support, a tactic that can slow down development or make it more expensive.

Resource companies, aware of the legitimizing power an SLO can provide, have been quick to seek approval of local representatives. Local interests, however, are rarely coherent, making the possibility for approval from all community members slim. Resource companies have therefore sought to earn the approval of a minimum winning coalition of stakeholders, appealing to just enough of the population to obtain and maintain an SLO.

More often than not, the minimum willing coalition of stakeholders include those who earn a living working in the resource sector, or those whose livelihood depends on residents spending money at their stores. In order to strengthen support, resource industries have spent millions of dollars investing in community infrastructure such as roads, community centres, and schools. While such generosity has certainly benefitted local communities, and eased the burden on government to provide infrastructure improvements, it has essentially bought support from locals. Many residents who would otherwise oppose resource development must find it difficult to speak up when a resource company has donated a brand-new school for their children. In a country as wealthy and democratic as Canada, citizens should never have to choose between a health environment and a prosperous community.

As governance structures across a wide variety of industries begin to become more responsive to local values and interests over the next decade, local stakeholders and citizens should be aware of the responsibility that comes with such a system. The opportunity to leverage an SLO for the benefit of the community should not be undervalued. Smaller governance structures can be an excellent forum for all voices to be heard. Without central organization, everyone owes it to his or her community to speak up.