Matter of trust – why social license to operate is critical for infrastructure

31 / 10 / 22 - 1 minute read

Infrastructure companies are legally required to abide by the laws and regulations of the jurisdiction in which they operate.  However, there is another framework, an ethical one, that also applies – the social license to operate.  In this research brief, we define the social license to operate, as well as examine what an infrastructure company would typically need to do to acquire and maintain the trust, acceptance and support of the community in which it operates.

While there is no law or regulation that says that infrastructure companies must meet community expectations, to fall short and break community trust is a significant business risk that, at best, will interrupt day-to-day operations and, in extreme cases, will see an infrastructure company suspended or shut down completely.

A social license to operate is key to the successful long-term operation of an infrastructure company.  Infrastructure provides essential services to communities and its often-monopolistic characteristics impose a social obligation for assets to operate in an equitable and fair manner. 

In addition, infrastructure assets are often big and can generate localised impacts that change the way of life of the people that live nearby.  Ongoing community acceptance and support is hard to define, difficult to get, easy to lose and, if lost, near impossible to get back. 

In this time of growing institutional mistrust underpinned by environmental degradation, coupled with the impacts of climate change, growing inequality, technology and stakeholder activism, a social license to operate has never been more valuable. 

Authors

Justin Webb

Jane Baseby