Social License to Operate as a Business Strategy

Abstract

Social License to Operate (SLO) can provide a strategy to understand the society and culture in which a company might wish to do business. Although the requirements of the company structure (corporate, private, or public) and governmental regulations must be met, they do not guarantee that a business will be successful operating in new territory. By aiming at a Social License to Operate granted from the stakeholders that are important to the business, a company can decrease the incidents of complaints to governments and even temporary shut-downs by the government. Social License to Operate is based on a United Nations initiative that required industries that operate in the territories of indigenous people to secure free, prior, and informed consent from those people, but is outside the legally granted right to operate a business. The paper considers stakeholder theory to determine who the stakeholders are that should be involved in granting a Social License to Operate. It then describes examples of the use of Social License to Operate in different countries by different companies. By gaining a license to operate from stakeholders, a company can create a level of trust on which to build partnerships and allow business decisions to be made more efficiently.