Social License: Why Investors Should Care

- October 19th, 2016

Getting a social license is key to any mining project. Here is an in-depth look at what it takes to get one.

By Janet Lee-Sheriff
In the mining business, we all hear the buzz words, get a social license, do the right thing, check the boxes for our projects to move forward, leave a positive legacy and lasting benefits. But unlike any other necessary license, a company needs to earn its social license from the community.
Simply put, a social license is the community’s acceptance of a project in their backyard. Sometimes it is a legal agreement–an understanding of terms to operate–but first, it is something much more complex than the written word. Until the time is right to enter a more formal written agreement, it is a relationship. Like any relationship, it has to begin, develop and mature which means the investment of time and a commitment of management to make this happen.

Respect for people, land, and values

The key to a social license is understanding that a company must bring the community along with the project development–there must be a reason why the community would want the project. It is recognizing and understanding that if an issue is important to the community, it is important to the company.


If there is any single word that sums up how to approach social licensing, it is “respect”. It is understanding that respect is earned and maintained, and really is only as good as the last encounter or exchange.
It is not hard to find news or articles of social license examples gone wrong: projects that have spent a great deal of money and appear to be approaching development, out of nowhere the road is blocked, protests erupt and momentum is lost. Even with a good relationship and a social license, these things happen, but it is likely there were early signs of a potential issue.
Getting into the community early and often is important. Engaging local government and engaging the community long before you think you have something to say is critical. But equally important is the active participation by management, and proper approach and adherence to values established by the Board of Directors.

Never underestimate the value of the involvement, commitment and drive from the Chief Executive Officer and senior management.

When the head of a company walks into a community, is genuine, respectful and acts in grace by taking time for people and issues, it is noticed and respected.


 
Management expertise and involvement in social license development should be a criteria for investment–no less than sound financial management and technical expertise. It doesn’t have to reside with the Chief Executive Officer or the Board but it has to start there and a high level of involvement must be maintained.

Acquiring and maintaining a social license is a never ending process.

As with any relationship, it takes consistent effort and involvement. Issues need to be addressed when they come up, and should never be diminished or disregarded. Complex issues cannot be avoided. It may take time to work through some issues, but the investment of time and energy up front can reduce delays and other risks.
If a company makes a positive, meaningful change that the community values, it can help set up a legal framework that protects investors and make the project more attractive. But the legal framework cannot begin without the relationship established.
In the end, social licensing is an imperfect science–never simple, and mistakes will be made. But like any relationship, when a mistake is made the next steps are important and you never stop working at it. Keeping that in mind respects the needs of the investors and the community.
 
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About the Contributor: 
Janet Lee-Sheriff is the Chief Executive Officer of Golden Predator Mining which operates in Canada’s Yukon. She moved to the Yukon over 25 years ago and brings extensive local experience to the role of Chief Executive Officer.
Editorial Disclosure: Golden Predator is a client of the Investing News Network. This article is not paid-for content. It is a piece that does not focus on Golden Predator and has been chosen based on editorial merit.


 

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