Aussie Miners’ ‘Social Licence’ Spurious: Report

Australian mining companies are employing a debatable and ill-defined concept to justify their presence in local communities, new University of Melbourne research suggests.

What Gives You A Social Licence?, by public policy analyst Dr Sara Bice, was published in the current edition of the academic journal, Resources and examined how mining companies — including BHP Billiton, Rio Tinto, Xstrata and MGM — conceptualised and defined their own "social licence."

Bice’s report voices concerns about how these "licences" are applied in practice.

"Mining companies are increasingly claiming to have a 'social licence' to operate in certain areas because of perceived benefits to the local community," Bice said. "But claims to this 'licence' are misleading because the term isn't formally defined anywhere in law."

"A traditional licence involves one party empowering another based upon certain conditions and responsibilities. But there are no established criteria for how mining companies and communities might broker a so-called 'social license'.

"Equally, there are no clear rules for how one might be revoked," she said.

The research drew on qualitative evidence and examined a total of 18 sustainability reports published by five leading Australian mining companies between 2004 and 2008.

The analysis revealed that Australian mining companies defined sustainable development and ‘social licence to operate’ through three broad areas of interest: environmental issues, social and community issues, and employment practices.

It found that while front-end positioning of the social licence concept in reports was frequent, none actually defined any criteria through which such a licence may be granted.

Instead, 56 per cent of reports took a broader approach to social licence, contextualising it as an outcome of the company’s sustainable development opportunities. Coverage of key issues around sustainable development within the reports also tended to be generalised to a high level.

Bice, based at the University's Melbourne School of Government, said a lack of clarity negatively affected both resources companies and communities.

"The language of licensing leads to confusion. It suggests a formality, and even regulation, which does not exist. In reality, a 'social licence' is purely metaphorical," Bice said.

"For corporations, better clarity on what their social licence really entails can help quell the 'vocal minority' who may engineer a backlash against operations," she said.

"At the same time, clear criteria would protect local communities from big corporations who may claim to hold a licence for which minimum standards have not been set."

The research also revealed the growing inclusion of social issues in sustainability reporting.

In 2004, 6.5 per cent of report content covered social issues, a figure that had risen to 22 per cent by 2007.

Read the full report here. Read more about sustainable development here.