The social licence, part 1

Rather like a psychological contract (read more on that here), the "social licence to operate", or SLO, is what society gives to those organisations which operate within it. I tend to think of this in terms of predator and prey. We - the herd - grant a social licence allowing organisations - the predator - to prey upon the herd because in return it gives us something of value.

Like the two parallel processes of the psychological contract and the employment contract for individuals (Rousseau, 1989), an organisation needs their "government permit" alongside their SLO (Cooney, 2017, p. 198), and was used informally by industry for some time, but was formalised as the SLO by Cooney in a 1997 presentation (2017). The idea of the SLO arose from companies mining in Africa where part of the cost of doing business was that the local community allowed the mines to operate in their locale - and if the local communities didn't 'grant' the SLO, the community and workforce disruption would mean the operations were either unprofitable or were literally run out of town. Or, to use academese: "the ongoing acceptance of an organization’s operations by stakeholders – especially local community members and those capable of disrupting operations or limiting their profitability" – enable an organisation to continue to operate within a society (Breakey, 2023, p. 2).

Where monopolies are state-owned, those organisations appear to focus on branding as a stakeholder communication channel to show how they are meeting their SLO responsibilities; these organisations need societal, regulatory, and shareholder acceptance. They "signal that they are fulfilling their social function: not just that they are providing their customers with the best services and products, but also that they are looking after state resources" or effectively looking after the commons (Larsen, 2023, p. 59).

In New Zealand, a number of industries are in danger of their SLO being revoked: the forest industry because of pine slash taking out infrastructure in the alarming rainfalls we have had throughout the country in the past few years; our national carrier, AirNZ, as an effective monopoly, indulging in predatory pricing; the decimation of deep sea corals from benthic trawling; dairy giant Fonterra gouging locals for butter, milk and cheese prices while dairy pasture nitrate run-off has left 45% of New Zealand rivers too toxic for swimming; mining companies being currently offered operating permissions without appropriate environmental checks and balances (Brettkelley, 2025); and I could go on. There are many other examples of a growing impatience with predatory practices. The herd grows restless.

There are fashions in the SLO. Those that I personally suspect are on the way out - i.e. so have a lesser and lesser social licence for their continued operation - are tobacco companies; fast food outlets; ultra processed food companies. And since Covid, Governments. Bureaucracy. MLMs. Mining. Fossil fuel companies. Plastics. Consumer tat.

It is an interesting area of research. And something that organisations need to remain awake to.

Sam

References:

Breakey, H. (Ed.). Social Licence and Ethical Practice (Vol. 27). Emerald Publishing Limited. https://doi-org.ezproxy.aut.ac.nz/10.1108/S1529-2096202327

Brettkelley, S. (2025, October 14). When social licence is revoked. Newsroom. https://newsroom.co.nz/2025/10/14/when-social-licence-is-revoked/

Cooney, J. (2017). Reflections on the 20th anniversary of the term ‘social licence’. Journal of Energy & Natural Resources Law, 35, 197–200. https://doi.org/10.1080/02646811.2016.1269472

Larsen, F. (2023). Chapter 4 Findings: Understanding Modern Energy Brands. In Commodity Branding: A Qualitative Research Approach to Understanding Modern Energy Brands (pp. 45-129). Palgrave macmillan.

Rousseau, D. M. (1989). Psychological and implied contracts in organizations. Employee Responsibilities and Rights Journal, 2(2), 121–139. https://doi.org/10.1007/BF01384942