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Why You May Need a Social Licence to Operate – And How to Get It

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One of Australia’s largest privately-owned construction companies, Hutchinson Builders, is buzzing this month about the success of a bee-keeping initiative started by CEO Scott Hutchinson.

Hutchinson Honey Bees was started by Mr Hutchison back in 2012. That’s when he committed to establishing bee hives at all Hutchies offices nationwide to address the crisis facing our pollinators. The project has seen 1.6 million bees provided with homes and the production of 1.5 tonnes of honey.

It has actually been shortlisted for the Excellence in Social Responsibility category of The Urban Developer’s inaugural 2018 Australia and New Zealand Awards.

Beyond the benefit of protecting a species that is critical to our environmental health and biodiversity, the Hutchinson Honey Bees project is an example of how companies are cultivating a social license to operate. Which, in a nutshell, can be defined as a measure of community acceptance and support of a company’s activities.

The concept of the social license is becoming increasingly more important.

The concept of the social license is becoming increasingly more important. That is particularly the case of projects that are likely to have an impact on the environment or on a local community, such as mining projects, utility-scale wind and solar farms, transport infrastructure and high-density urban infill, or urban redevelopment projects.

Jonathan Avery, General Manager, Sustainability Leadership for the Infrastructure Sustainability Council of Australia (ISCA), tells Jobsite that the social license for infrastructure assets whether in the planning, design, construction or the operational phase is a critical issue for asset owners, and delivery agents.

He says it is noteworthy that every credit of the ISCA rating tool, both V1 and the newly-launched V2, is in some way aimed at addressing aspects of the social licence. Adding those subsidiary aspects together builds the social license of the asset.

Specifics the ISCA V2 tool identifies include leadership, procurement strategies, energy, green infrastructure, environmental impacts, resources, water, ecology, workforce, stakeholders, legacy, and heritage.

A perfect example of an ISCA-rated project that applied effort towards gaining its social license is the Bayswater station project. It is part of the Victorian Government’s program to remove 50 of Melbourne’s most dangerous and congested level crossings. The project was delivered by the Bayswater Alliance, comprising Laing O’Rourke, Fulton Hogan, and AECOM.  

The social license was addressed under two specific ISCA tool credits—the development and implementation of a comprehensive stakeholder engagement strategy and an appropriately high level of engagement, particularly on negotiable issues.

Works to remove two level crossings and rebuild the rail station were expected to take 18 months. Significant disruption was likely to have a range of impacts on local stakeholders. 

“Our most marginal and disenfranchised stakeholders—those who are too easily dismissed—are often exactly the ones pointing us to the very issues we should be responding to.”

To make the works as smooth as possible, the Alliance project team worked from the outset to grow and sustain positive relationships, proactive and strategic communication, and responsive community engagement and consultation.

This sometimes led to shifts in the planning and program. For example, a consultation session in July 2016 resulted in the identification of previously not considered key issues—alternative transport options and communication tools for disabled persons.

The Project team’s approach demonstrated adaptability in both the communications strategy and the community engagement process. One of the key aims of taking this route was leaving the Bayswater community with a positive view of the project and maintain the reputation of the Alliance partners and Victorian Government.

This is exactly how the social licence works. Thankfully, more leading companies across all sectors of the economy are recognising just how vital it is to have one.

In a recent report by KPMG for the Australian Institute of Company Directors, entitled Maintaining the Social Licence to Operate, Richard Boele, KPMG Australia’s National Leader, Human Rights and Social Impact Services, said that “gaining and maintaining a social licence for mining and infrastructure projects remains a major challenge.”

Some industries face a genuine threat of loss or potential loss of the social licence, he claimed. In working with some of these industries, he found that boards can spend “too much time asking ‘how does this impact our business’ when they should be asking, ‘how does our business impact on people?’

According to Mr Boele, ultimately, social licence is maintained by organisations that are responsive to changing community concerns and expectations.

“After listening, and understanding, organisations must act upon what is heard in a sensitive and timely manner. Most importantly, they must be publicly seen to act upon that information.

“A social license is a license that must be earned every day.”

Mr Avery says ISCA offers a number of resources project staff can access to help address issues around sustainability and the social license, including courses and targeted training.

The KPMG report identified a range of ways organisations are demonstrating their commitment to making a positive contribution to local communities and to society more broadly. They include an interest in “shared value” approaches and social procurement strategies, for instance, committing to creating opportunities for Indigenous businesses. There is a shift, where companies go above and beyond philanthropy and traditional community investment, such as sporting team sponsorship.

“Organisations are finding ways to meaningfully solve social problems through their core business and are looking for opportunities to improve people’s lives throughout their value chain,” the report said. “Institutions that are seen to have an authentic, meaningful social purpose have a much better chance at maintaining trust and social licence in the long-term.”


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