Many ARC reports touch on topics that relate to an industrial facility’s basic “license to operate.” In the US, this typically requires the organization to demonstrate its ability to comply with regulations established and/or enforced by a variety of regulatory agencies such as EPA, OSHA, DOT, FTC, CSB, etc. But we’ve been a little remiss when it comes to discussing topics that relate to a company’s social license to operate (SLO), which in many cases, can be just as important, but also far more subjective and intangible.
This short “video-with-an-agenda” produced by Bechtel following the recent completion of a yet another of that company’s mega LNG projects in Australia is what got me thinking about this. A little follow-up research on Google uncovered quite a few resources on the social license to operate, including a column in the Journal of Petroleum Technology, by Nathan Meehan, 2016 SPE President. Mr. Meehan stressed that while the extraction industries provide many positive benefits, at the project level, SLO is neither “automatic nor unconditional.”In another article, I learned the definition of SLO developed by Robert Boutilier and Ian Thompson, a Canadian consultant: The social license is the level of acceptance or approval continually granted to an organization’s operations or project by local community and other stakeholders. It has four levels from lowest to highest: withdrawal, acceptance, approval and psychological identification. Most companies or projects are in the acceptance or approval range most of the time. It can vary across time or between stakeholder groups in response to actions by the company and/or its stakeholders.
Returning to Mr. Meehan’s column in JPT: SLO is deemed to exist when a project has ongoing approval of the community. For any project to have SLO, it is necessary to earn and maintain the support — and ultimately trust — of the community. We have seen ample evidence, including in our own industry, that failure to do this can lead to conflict, delays, added costs, or even prohibition of projects. Because it is rooted in beliefs and perceptions, SLO is intangible. Beliefs and perceptions are subject to change with new information; SLO is nonpermanent.
In logistics, moving ahead with a tank farms, chemical warehouses, pipelines, and oil trains requires the same kind of thinking. Sure, the ability to comply with environmental and safety regulations comes into play here, but so does the ability to generate good jobs, support local businesses, and minimize the negative aesthetic and cultural impacts on the community. SLO also implies that companies proactively seek out opportunities to support the community. This could be through encouraging its employees to volunteer in the community and supporting their efforts to do so and by providing corporate support for educational, cultural, social, or other worthwhile activities in the community.
As highlighted in that Bechtel video, the “soft” benefits to a company include a happy and stable workforce, which is critical for any business to achieve long-term business sustainability in any country in the world, and particularly in those countries where skilled workers are in short supply.
While achieving and maintaining a social license to operate is both largely subjective and somewhat intangible, successful industrial organizations will pay as much attention to SLO as to their bottom lines, since the two appear to be inextricably linked.
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