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.
Jane Baseby is responsible for sustainability initiatives including climate change and modern slavery for all investments at PATRIZIA Infrastructure. In 2021, she worked to develop PATRIZIA Infrastructure’s updated sustainability strategy and is currently devising the decarbonisation strategy in line with the Net Zero Asset Managers Initiative. She is also an author of PATRIZIA’s thought leadership research and was awarded Pensions for Purpose Impact Thought Leadership of the year in 2021. She has just completed her Master of Applied Data Analytics at the Australian National University.
Associate Director, Sustainability, Infrastructure
Justin leads the Investment Solutions Group which is responsible for providing strategic advice and building investment strategies for institutional and government clients. Justin’s particular fields of expertise centre around developing and managing investment risk management strategies and developing alternative asset portfolio plans for institutional investors, focusing on liquidity and illiquid asset investment programs. Justin is a Chartered Accountant and a member of the Australian Institute of Company Directors with extensive experience in infrastructure investment, corporate finance and financial modelling together with performance analysis, reporting and alternative asset management. Justin sits on PATRIZIA’s Listed and Unlisted Infrastructure Investment Committees and is member of PATRIZIA Infrastructure’s Valuation Committee.
Managing Director Infrastructure Investment Solutions