Impact Assessment and Project Appraisal

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Frequently asked questions about the social

licence to operate

Robert G. Boutilier

To cite this article: Robert G. Boutilier (2014) Frequently asked questions about the
social licence to operate, Impact Assessment and Project Appraisal, 32:4, 263-272, DOI:
10.1080/14615517.2014.941141

To link to this article: https://doi.org/10.1080/14615517.2014.941141

Published online: 30 Aug 2014.

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Impact Assessment and Project Appraisal, 2014
Vol. 32, No. 4, 263–272, http://dx.doi.org/10.1080/14615517.2014.941141

CONCEPTS AND EMERGING IDEAS

Frequently asked questions about the social licence to operate
Robert G. Boutilier*
Centre for Sustainable Community Development, c/o Faculty of Environment, Office of the Dean, Simon Fraser University, TASC2 8800,
8888 University Drive, Burnaby, British Columbia, Canada V5A 1S6
(Received 26 December 2013; accepted 24 April 2014)

The ‘social licence to operate’ (SLO) is an increasingly heard term that was originally coined to draw the attention of mining
companies to stakeholder issues. Drawing on questions and comments voiced in 50 events attended by approximately 900
managers, consultants, academics and students, this article employs the rhetoric device of ‘frequently asked questions’
(FAQs) to articulate conceptual and socio-political issues associated with the term. The first two of the six FAQs deal with the
most novel contribution of the SLO concept, the idea that stakeholders have real power. The third and fourth FAQs deal with
ethical and political issues about how stakeholders wield their power. The fifth FAQ looks at how to weight the diverse SLO
levels granted by a non-cohesive stakeholder network. The sixth FAQ deals with confusion arising from the fact that both
specific projects and whole industries can lose their SLO. The answers to the FAQs explore issues raised by the questions and
identify (a) existing research that can illuminate the questions, and (b) latent questions that need further empirical research.
Keywords: social licence; stakeholders; stakeholder influence; stakeholder networks; extractive industries

The term ‘social licence to operate’ (SLO) is being used
more in both the media and the academic literature. At the
same time, different interpretations of its meaning and
implications have emerged. Increasingly, concerns about
SLO are being raised with impact assessment (IA)
practitioners, and the IA community is progressively
engaging with (or being asked to engage with) the concept.
In order to assist with this emerging field of inquiry, this
article distils six ‘frequently asked questions’ (FAQs) about
SLO, derived from participation in conference sessions, in-
house company planning sessions, courses, seminars and
public workshops from March 2009 to May 2014 where the
social licence was discussed. These six FAQs spur
discussion of diverse issues and interpretations of the
SLO concept. Where possible, existing research and theory
are brought into the answers to the FAQs. For many issues,
the FAQs provoke hypotheses and suggestions for future
research. We begin by looking at the history of the term and
the context that made it a powerful and useful metaphor. In
responding to the six FAQs, we explore politically tinged
uses of the concept and explain linkages between the SLO
concept and existing theories in management and the social
sciences. Throughout the paper, areas needing further
conceptual clarification or empirical research are noted.
The emergence of the concept
A search of the terms ‘social licence’ and ‘social license’
with Google Books’ Ngram Viewer reported the first usage
in 1818 in a book entitled A World without Souls, by John
William Cunningham, Vicar of Harrow on the Hill
(Cunningham 1818). Cunningham used the term in the
sense of excessive freedom or licentiousness in a discussion
of failing to show proper reverence for the Sabbath.
Excessive liberties taken with social norms was the general
meaning of the phrase ‘social licence’ throughout most of
the nineteenth and twentieth centuries. However, the
meaning in contemporary usage is an analogy with the
meaning of licence as a formally granted permission.
The contemporary use of the phrase is meant to suggest that
communities have as much authority as governments in
granting permissions or ‘licences’. Management theorist
Miles (1987, p. 7) used the term ‘social franchise’ to refer to
the broad concept of the general public’s acceptance or
approval of the activities of a corporation.
The contemporary usage of the term ‘social licence’
was coined by a mining executive named James Cooney in
1997 (personal communication). Cooney was the Vice
President of External Relations for Placer Dome Inc. a
Vancouver-based Canadian gold mining company that was
then the third largest in the world before it was broken up
and sold to competitors in 2004. In 1996 Placer Dome faced
severe criticism over the failure of a tailings dam in the
Philippines that released toxic mud into a river and buried a
village. Cooney had noticed that many mining companies
were losing money because of community resistance they
encountered when they tried to start up new projects or
expand existing projects. In order to draw attention to the
importance of this source of risk, he likened community
opposition to government refusal to issue permits. In late
1997, Cooney used the metaphor of the ‘social licence’ in
discussion with World Bank officials. World Bank
personnel then used the analogy at a conference on mining
and the community in Quito, Ecuador, in early 1998.
Thereafter, the term became common parlance in the
mining industry (Nelsen 2006). Nelsen (2005) surveyed

*Email: boutilier@sfu.ca
q 2014 IAIA
264 R.G. Boutilier
mining industry professionals about what they thought the
social licence meant. She found that 90% viewed it as an
intangible, impermanent indicator of ‘ongoing acceptance
of a company’s activities by communities’.
In addition to the phrase itself gaining currency in the
mining industry during the first dozen years of the twenty-
first century, the concept underlying the phrase was also
subjected to some theoretical analysis and development.
Using a grounded theory approach, Joyce and Thomson
(2000) were the first to propose that gaining a SLO required
being perceived as legitimate. They linked the social licence
to the idea of social risk and company reputation. Later,
Thomson and Joyce (2008) added credibility and trust-
worthiness to the list of required perceptions and introduced
the idea that there was a cumulative, step-like hierarchy
among the perceptions. They proposed that the lowest level
of social licence, which they called basic ‘acceptance’,
required being seen as legitimate. A higher level of social
licence, which they called ‘approval’, could be obtained if
the project and its proponents were seen as credible.
Thomson and Joyce proposed that the highest level involved
perceptions of trust. Thomson and Boutilier (2011) proposed
a cumulative hierarchy model in which trust was treated as a
boundary criterion that, once achieved, permitted the
emergence of the highest level of social licence. They
originally called the highest level ‘co-ownership’, but later
changed the label to ‘psychological identification’ (Boutilier
& Thomson 2011). Thomson and Boutilier also explained
how the concept of the social licence fits into two existing
theoretical frameworks. First, they connected it to company
profitability and survival through the resource dependence
theory of the firm (Barney et al. 2001; Davis & Cobb 2010)
and its subsidiary application in the practice of risk
management. Second, they adopted the sociology of social
networks (Wasserman & Faust 1994; Borgatti et al. 2009) as
a framework for understanding the processes through which
social licences are granted, withheld or altered.
Based on Joyce and Thomson and then Boutilier and
Thomson, Parsons et al. (2014) surveyed 16 key leaders in
the mining industry about their perceptions of the social
licence. Like Nelsen, they found agreement that it signified
acceptance or approval of mining projects and that is was
impermanent and intangible. They also found a view that it
involved going beyond compliance with the requirements
for a legal licence and the need to be seen as legitimate and
trustworthy, first by local communities but also stake-
holders further afield. Prno and Slocombe (2012) also
elaborated on the theme of going beyond compliance.
Using examples from mining in Northern Canada, they
examined the role of the social licence in non-state
governance of business, particularly in matters related to
sustainability. Bice (2014) looked at mentions of the social
licence in the sustainability reports of 18 mining
companies from 2004 to 2007. At that time, the social
side of sustainability was not given as much attention as
the environment and employment.
Most recently, there have been more quantitative
analyses of the SLO concept. Boutilier et al. (2012) devised
a measure of social licence granted to mining operations
based on agree/disagree ratings of statements derived from
the Thomson and Boutilier version of the cumulative
hierarchy model of the social licence. Black (2013) reported
factor analysis results based on the use of this SLO scale in
Australia, Bolivia and Mexico. Moffat and Zhang (2014)
collected data at two different points in time from members
of Australian communities affected by a coal seam gas
project with a large footprint. They proposed a model of the
factors contributing to the SLO. The factors included
acceptance of the project (i.e. the SLO granted), trust towards
the company, the quality and quantity of contact with the
company, perceived procedural fairness and impacts on
social infrastructure. Their findings were similar to those
reported in Black’s factor analysis insofar as trust was a
major determinant of the level of SLO granted, while trust
itself was determined mostly by perceptions of fairness and
the quality of the contact with project personnel.
Especially in the past decade, the use of the social licence
concept has spread beyond mining. Perhaps the earliest use
outside of mining was Gunningham et al.’s (2004) study of
pulp and paper mills and their responses to environmental
issues. Gunningham et al. noted that motivations for going
beyond legal compliance and working to acquire a social
licence included fear of reputation loss and consequent
consumer boycotts and regulatory tightening. Upstream in
the same industry, Wang (2013) discussed ‘the social licence
to cut timber’. The phrase has also been invoked in
discussions of oil and gas exploration and production
(Thomas 2013), pipelines (Tertzakian 2012), renewable
energy (Corscadden et al. 2012; Hall et al. 2012), farming
(Berger 2011; Martin & Shepheard 2011; Williams & Martin
2011), water use (Shepheard & Martin 2008), ports (Ircha
2012) and retailing (Graafland 2002).
With so much popular use mixed with scholarly
analysis, spread across so many diverse fields of activity
and study, the potential for multiple meanings and strained
metaphors has increased. As a result, serious attempts by
businesses to understand what the social licence entails
can be stymied by the diversity of interpretations of the
term and its implications.
Information sources
The rhetorical device of FAQs was chosen to frame this
discussion in order to help orient readers who are new to the
concept of the social licence to some of the practical
problems and political currents that swirl around the
concept. Many of the problems and perspectives are not
topics of academic investigation in their own right, yet they
form the context that conditions which topics are more
seriously considered for academic investigation. Because
the SLO concept has attracted attention in fields as diverse
as public relations and social epistemology, publications on
the topic similarly exhibit an array of interpretations. For
people encountering the concept for the first time, the
diversity of interpretations can be confusing. The six FAQs
considered in this article were drawn from participant
observations in the events summarised in Table 1.
The six FAQs listed here were extracted from 50
different interactions from March 2009 to May 2014 where
 Impact Assessment and Project Appraisal 265

Table 1. Frequencies and percentages of event participants and events at which the social licence was discussed classified by geographic
distribution and type of event.

Number of Percentage of Approximate number Approxiamte percentage

events events of participants of participants

Geographic distribution
North America 14 28 337 37
South America 14 28 279 31
Australia 11 22 154 17
Africa 7 14 60 7
Central America 4 8 60 7
Asia 0 0 11 1
Europe 0 0 1 0
Totals 50 100 902 100
Type of event
Conference related 10 20 381 42
In-house company 18 36 205 23
Education seminar 12 24 161 18
Public workshop 10 20 155 17
Totals 50 100 902 100

people came together to learn about and discuss the concept
of the social licence. For many of the approximately 902
participants, it was their first exposure to the concept of the
social licence. The top panel of Table 1 shows the
geographic distribution of these forums rank ordered by
rough estimates of the numbers of participants. Five of the
events were live online seminars conducted in English and
Spanish. The geographic locations for participants in these
events were based on the locations of the participants.
Fourteen of the 50 events (28%) were conducted in North
America and 14 were conducted in South America.
However, the North American events accounted for a
slightly higher percentage of the participants (37%) than
the South American events (31%). Counting the four events
in Central America, the Western Hemisphere accounted for
75% of the participants. Eleven events were conducted in
Australia and accounted for 17% of the participants. Africa
was tied with Central America for the fourth rank in terms
of the number of participants (n ¼ 60). The observations
were clearly international in nature, but not global. The low
frequency of observations from Europe and Asia limits
their generalisability.
The lower part of Table 1 shows the events counted by
type. The category ‘conference related’ includes pre- and
post-conference workshops on the social licence and
technical paper sessions on the social licence with
questions from the audience. This category had the highest
estimated number of participants (n ¼ 381, 42%), but it is
also the category with the most uncertainty in terms of
numbers of participants because subjective estimations
were used to approximate the number of participants in the
paper sessions. The participants were mostly professionals
and academics in mining and business.
The category labelled ‘in-house company’ had the
second highest number of participants (n ¼ 205, 23%).
This category includes meetings, strategy sessions and
workshops conducted with employees of mining compa-
nies. The employees ranged from community members
around mining operations who held positions with the
mining company as liaison officers to corporate level
executives. The majority, however, were in middle
management positions.
The ‘education seminar’ category included invited
seminars at universities, educational events sponsored by
professional associations and research institutes, and the
online seminars for which some participants received
university course credits. Of the 161 participants (18%),
most of the participants were students. A minority were
professors in the fields of business or mining. The online
seminars, however, tended to attract more middle managers
at mining companies doing professional upskilling.
The ‘public workshop’ category refers to private
educational workshops at which fees were charged for
participation. The 155 (17%) participants were mostly
managers, consultants and students in mining and
community relations. However, there were also partici-
pants from non-governmental organisations (NGOs) and
universities.
These six FAQs were judged by the author to articulate
recurring themes and challenges that perplex those who
begin to examine the concept in greater depth.
(1) Do communities really hold the power to veto a
project?
(2) If a project is advancing or operating, why worry
about the level of social licence it has?
(3) Is ‘the social licence’ a code phrase for more hand-
outs or extortion?
(4) Does the social licence mean that stakeholders
have a veto?
(5) Do all opinions in the community carry equal
weight?
(6) What about socially responsible companies in
industries that have lost the SLO?
Six FAQs
In answering each of these questions, theories, perspec-
tives, methods or political contexts are mentioned when
they can provide context that clarify different uses of term.
266 R.G. Boutilier
Do communities really have the power to veto a project?
Although at first glance the ‘SLO’ appears to be a harmless
metaphor, upon closer inspection it presents a radical
challenge to some pervasive tropes in contemporary
discourses about transnational corporations and commu-
nities. The idea that communities have the power to stop
projects and can speak for themselves is frequently
resisted by corporations and anti-corporate activists alike.
Occasionally, governments also resist the idea. That
resistance produces statements intended to portray the
social licence as a matter that can be handled by outside
agents who purport to speak on behalf of the community.
At times, statements to this effect are calculated to create
legitimacy for the outside agents. However, these
legitimisation efforts can create an unrealistic minimis-
ation of the real level of community power.
Corporations try to assure investors that the stake-
holders are under control. For instance, four class action
lawsuits have been launched against Barrick Gold for
allegedly misleading investors about the timeline for, and
level of stakeholder support enjoyed by, their Pascua-
Lama project on the border of Chile and Argentina
(Canadian Press 2014; Hasselback 2014; McSorley 2014).
Claimants accuse the company of falsely assuring them
that the project was progressing better than was actually
the case. The Pascua-Lama project was the target of
protests and complaints from regulators during the period
covered by the suit. Owen and Kemp (2013) looked at the
degree to which mining companies actually seek high
social licences in practice, as opposed to the extent they
claim in publications directed at investors and other
audiences. They concluded that ‘the contemporary
application of social licence is more about reducing
overt opposition to industry than it is about engagement
for long-term development’ (p. 34). Parsons and Moffat
(2014) analysed 61 sustainability reports by mining
companies from 2006 to 2009 and mining conference
presentations from 2009 for their use of the term ‘social
licence’. They found a distinct tendency to downplay the
extent to which communities initiated actions. These
observations and studies suggest that it is in executives’
financial interests to allay investors’ fears about project
disruptions. At times, this can lead to reports and
webpages insinuating that stakeholders have been
successfully ‘managed’ into granting a solid social licence.
The unspoken implication is that, properly managed,
communities cannot stop projects, which is diametrically
contrary to the original intention of the concept.
Doubts about the real power of communities also come
from those dedicated to defending the rights of
communities. They imply that the fact that communities
often draw on outside services to enforce the withholding
of a social licence means that the communities cannot
withhold a social licence by themselves. For example,
NGOs that specialise in issues like human and indigenous
rights may try to bolster their legitimacy, and their chances
of funding, by promoting the stereotype that their clients
are easily duped by greedy corporations. For example, in
the case of the Wahgoshig First Nation of northern Ontario
versus Solid Gold Resources (McClelland 2013), the
lawyer who acted as defender of the community explicitly
articulated such a paternalistic stance, saying:
A lot of First Nations unfortunately don’t have the internal
resources or expertise to understand the scientific,
environmental implications of things or legal
implications of things, so they have to hire people to
inform them of what the effect of the exploration might be
and to do their due diligence.
Unfortunately, the repetition of stereotypes about ignorant
communities and all powerful corporations depreciates the
real power of communities in three ways.
First, it confounds ignorance with powerlessness. The
decision to accept or reject a given industrial activity might
be altered by an understanding of the implications of
scientific technicalities, but the power to enforce whatever
decision is made is a distinct capacity. Community power
can be limited by police, para-military, criminal or military
force, but even in these cases, communities can make it very
expensive for a corporation to override the will of the
community. Second, the stereotype completely ignores the
arguably most common situations – those in which the
proposals are clear enough that communities make their
decisions for or against a project with sufficient information
to understand what to expect. Third, in the contrary cases
where corporate proponents of the project do not have
either the communications skills or the willingness to
explain the implications clearly and correctly, depreciative
stereotypes create the impression that communities do not
already have access to advice warning of the dangers of the
proposed activities. In mining for example, a whole
counter-industry has developed around opposing mining
and energy projects (Zorrilla 2009; Krause 2012a, 2012b).
Aside from the many dire warnings about mining on
websites (e.g. http://www.minesandcommunities.org/),
anti-extractive industry sentiment became embedded in
contemporary culture with James Cameron’s billion-
dollar-grossing movie Avatar (2009). An international
survey by GlobeScan (2013) measured levels of public trust
for 13 industries. The four with the lowest trust ratings were
from least worst to worst, mining, chemical, oil/petroleum
and tobacco. Therefore, improbable as they are, stereotypes
about easily duped communities nonetheless cast doubt on
the validity of Cooney’s original conception of the social
licence insofar as they imply an unrealistic level of naiveté
and powerlessness in communities.
Governments are perhaps the least convincing detrac-
tors of the idea that communities have their own power. For
example, when the national government began licensing
gas exploration companies to operate in the Utcubamba
Province of Peru, local indigenous people unilaterally
withdrew the social licence and blocked the only highway
into the region. When the government sent police to
dismantle the roadblock at a location known as the Devil’s
Curve, the resulting dead bodies of 11 police officers
(Salazar 2009) sent a message that the social licence is at
least as potent as the legal licence. The government
subsequently changed its policies. It seems the more
governments try to show that communities are powerless,
or need outsiders to defend their rights, the more the

opposite is demonstrated. Some governments have realised
that communities do indeed have real power and know how
to use it. When the indigenous people of the Kitchenuh-
maykoosib Inninuwug First Nation blocked mineral
exploration by Platinex Inc. that had been legally licenced
by the Canadian Province of Ontario, and succeeded in
gaining news media coverage for their protest against the
exploration, the government backed down in 2009, re-
wrote its regulations on mineral exploration (Canadian
Business Ethics Research Network [CBERN] 2013) and
reimbursed Platinex CAD$5 million. In 2012, the
provincial government reimbursed another mining com-
pany with a supposedly ‘legal’ licence to explore in the
same region. Gods Lake Resources received CAD$3.5
million when the government took back the legal licence it
had issued. The government then withdrew from issuing
mineral exploration licences in the area (Jamasmie 2012).
These are cases of a government admitting that the social
licence has at least as much force as the legal licence.
Observations of debate on these issues suggest the
hypothesis that the difference between corporate execu-
tives who dismiss community power and community
defenders who downplay it revolves around their view of
the company’s legal compliance with legal licence
requirements. The executives seem to tend to assume that
a legal licence will be enforced should a conflict arise as
long as the company obeys the law. By contrast, community
defenders seem to tend to assume that companies will find
ways to circumvent their legal obligations to communities,
or to have those obligations legally reduced. A study of
existing public texts might suffice to test this hypothesis.
Another hypothesis suggested by observations and
conversations with mining executives is that regimes that
are responsive to citizen discontent, whether they be
democratic or not, have an interest in receiving assurances
that the company has done the socio-political groundwork
needed to insure that the government’s popularity would
not suffer were it to grant a legal licence. If this hypothesis
is supported, it would imply that it is foolhardy for
companies to count on a legal licence without addressing
the stakeholder concerns that would win it a social licence.
A corollary of this hypothesis already has substantial
support. Governments that are most enmeshed in the
dynamics known as the ‘curse of natural resources’
(Humphreys et al. 2007) are the most willing to ride
roughshod over stakeholders’ concerns in order to keep
resource revenues flowing. These more authoritarian
regimes (Ross 2001) can be viewed as the polar opposites
of those regimes that use a strategy of responding to, rather
than repressing, the real power held by stakeholders.
If a project is advancing or operating, why worry about
the level of social licence it has?
Senior professionals in the mining industry see the social
licence as a continuous process that must be sustained over
the life of the project (Parsons et al. 2014). In practice,
however, site-level line managers can fall into debates
about whether or not a project’s social licence needs to be
Impact Assessment and Project Appraisal 267
improved. One side argues for the benefits of a higher
social licence, while the other argues that as long as the
project is operating, it has all the social licence it needs,
and perhaps all the social licence that can profitably be
had.
The question of what level of social licence a project
proponent or operator should seek is distinct from the
question of what levels it is possible to seek. The former is
a strategic question that can only be answered by taking
account of the specific circumstances of each project. The
latter is a theoretical question that has already received
some attention. Boutilier and Thomson’s (2011) model
proposes four levels of social licence (i.e. withholding,
acceptance, approval, psychological identification) separ-
ated by three boundary criteria (i.e. legitimacy, credibility,
full trust). Each level is associated with different costs and
benefits. Generally, socio-political risks decrease as the
level of social licence rises. For project proponents and
operators, the practical implications of graduated levels of
social licence translate into corresponding degrees of
restricted access to resources. In linking the social licence
to resource dependence theory, Thomson and Boutilier
(2011) note that the resources can be anything from raw
materials and water to skills and financing. The restricted
access can take the forms of higher costs, longer delays or
complex resource access protocols that raise adminis-
trative costs.
Research indicates that seeking a higher level of social
licence beyond the bare minimum can be a strategy for
controlling costs. Each year more empirical evidence is
published demonstrating how stakeholder discontent can
translate into several categories of costs for businesses
(Franks et al. 2014). Davis and Franks (2011), for instance,
examined perceptions of what categories of costs were
most affected by social conflicts in mining. The biggest
cost category by far was ‘staff time spent on risk and
conflict management’. Studies of extractive industries
more broadly (Goldman Sachs Global Investment
Research 2009) have found that sustainability issues are
implicated in 70% of project delays on the largest capital
investment projects. This exceeds the delays owing to
commercial (63%) and technical (21%) factors. A study of
gold mining firms (Henisz et al. 2013) found that up to half
of the discount on the value of the gold companies had in
the ground, as reflected in their stock market valuations,
depended on the level of conflict or cooperation with
stakeholders. Stakeholders do not need to completely close
down an operation to have an impact on the financial value
of a company. A reduction in the level of social licence is
sufficient.
Is ‘the social licence’ a code phrase for more hand-outs
or extortion?
The questioning of the moral integrity of social licence
withholders was not observed in all forums. However, in
many countries in Africa, the pervasiveness of corruption
tends to taint all perceptions of apparent ‘cooperation’ or
‘collaboration’ with any authority. In Mexico, the word for
268 R.G. Boutilier
cooperation (i.e. cooperación) is slang for a bribe. In recent
years in Canada, forum participants and media commen-
tators (Corcoran 2014; Crowley 2014) have expressed
disparaging views about the morality or prudence of a
variety of phrases involving corporate largesse (e.g.
Corporate Social Responsibility [CSR], social licence,
community benefit agreements). Indeed, one participant in
an event conducted under Chatham House rules opined
that the contributions they (a company) make to local
governments in Africa are called bribes, while the same
types of contributions made in Canada are called CSR. In
the extreme, project managers hear the term ‘social
licence’ as a euphemism for capitulation to extortion.
The conflation of earning a social licence with paying
for resource access is based in genuine experience.
According to Thomson and Boutilier (2011), the lowest
levels of social licence are indeed characterised by a
‘transactional’ relationship in which support from
stakeholders is conditional on a flow of short-term
benefits. The relationship is arm’s-length, like a typical
market transaction between bidders and sellers. Credibility
and trust are absent. Project managers caught in this cycle
sometimes assume that raising their social licence means
intensifying the flow of benefits from the company to the
stakeholders. Zandvliet (2004) characterises this dynamic
saying: ‘When companies do not engage with commu-
nities on a long-term basis, communities pressure
companies for short-term gains.’ Once enmeshed in this
dynamic, managers find it difficult to say, ‘no’ to further
requests. Yet they also fear that if stakeholder satisfaction
were to become the external affairs equivalent of customer
satisfaction in marketing, then the refrain that ‘the
customer is always right’ would be replaced with ‘the
stakeholder is always right’. That prospect is resisted by
responsible managers.
Stakeholder demands sometimes take the form of
offers to ‘sell’ the group’s support for the project, which is
known as ‘clientelism’ (Roniger 2004). In extreme cases,
the demands may take the form of extortion attempts.
According to Thomson and Boutilier’s model of the SLO,
saying ‘no’ to such requests increases the company’s
credibility. Such refusal increases the company’s social
licence in the longer term. Nonetheless, in the short term,
the social licence granted by the would-be patron or
extortionist would likely be withdrawn. That may or may
not cause other stakeholders to do the same, depending on
the extent to which they are truly controlled by the patron
or extortionist. This can be a delicate decision point for
companies. They need detailed information that reveals
the extent to which the patron or extortionist has earned the
antipathy of other stakeholders and to what extent others
would be pleased either to have an alternative patron to
choose from, or to see someone stand up to the local
‘bully’. Even by simply serving as an alternative patron, a
company can make the clientelism of a region more
redistributive (Sandbrook 1985, pp. 93– 94, cited by
Hilgers 2012, p. 180). By weakening the practice of
clientelism or by weakening a petty tyrant, the company
would be making a lasting, far-reaching, positive
contribution to the well-being of a host community.
It would go well beyond any one-time financial
contribution because it would increase the community’s
capacity for inclusive, democratic self-determination.
However, this road to credibility has to be tempered with
a realistic assessment of its success and of its security
risks. Where the extortionist is a national government or a
powerful criminal organisation, earning credibility as a
principled actor also involves weighing the probability of
having a positive long-term impact against the probability
of endangering the lives of employees or incurring
unsupportable costs.
Managers’ fears about a hidden agenda behind the
social licence concept are further dispelled with awareness
of the alternatives to relating to stakeholders through a
series of arm’s-length transactions. Zandvliet and
Anderson (2009) studied community relations at over 25
resource extraction projects and concluded, among other
things, that how a company engages with stakeholders is
more important than the benefits it delivers. It is important
to engage readily with those who eschew intimidation and
violence so as to avoid reinforcing those tactics. Also,
benefits should strengthen shared interests among
stakeholders rather than create divisions among them
(e.g. haves and have-nots). Working together in a
collaborative manner provides an opportunity to enhance
the credibility of the company or the project and transform
the interactions with stakeholders into relationships where
trust can develop. Knowing that this is the next goal, rather
than more hand-outs or ‘protection’ payments, usually
reduces misgivings about the ultimate purpose of
improving the social licence.
Does the social licence mean that stakeholders have a
veto?
This question is being asked increasingly in professional
forums on the topic. Professionals in extractive industries
have the impression that the term ‘social licence’ is
appearing on protest placards and websites with
increasing frequency (Coultan 2014). Moreover, they
see it as being used by activists to justify civil
disobedience in opposition to projects (Canadian Press
2012). This question joins the much larger historical
debates about the justification of, and limits on, civil
disobedience, and the conflict between minority rights
and the common good of the broader community. This is
not to mention the whole moral philosophy debate about
if and when the ends justify the means. In context, the
question can be phrased as something like: ‘What, if
anything, legitimises the blocking or hampering of a
legally licenced project?’ A more political version of the
question would be something like: ‘Why do governments
so often lack the political will to enforce their legal
decisions when faced with protests?’
Activists who claim veto power by citing the project’s
lack of a social licence are using the phrase in a way that
aligns with Cooney’s original intent for the term. The
ability to grant a social licence amounts to its inverse, the
ability to shut down a project. Cooney’s original metaphor

did not imply anything about the legitimacy of the social
licence withholder. However, this highlights a problem
with the term. The use of force, including illegal action, is
fundamental to withdrawing a social licence. Therefore,
questions are sometimes raised about the desirability of
respecting a social licence withdrawal (Crowley 2014).
Such situations often devolve into questions about the
legitimacy of the withholder’s actions.
Comments from event participants and news reports on
project blockades and obstructions from around the world
suggest that, from the public’s point of view, the
legitimacy of a social licence withdrawal turns on three
factors. Research is needed to test these hypotheses. The
first is that the public perceives the withholding a social
licence as more legitimate when it also believes that
community consultation was insufficient. Second, if the
project is opposed by a clear majority of local
stakeholders, according to a referendum or valid opinion
polling, then obstruction has more legitimacy. Third, if the
public believes, rightly or wrongly, that the net benefits of
a proposed project for the broader community do not
exceed the status quo, then withdrawal of the social licence
with concomitant obstruction of the project will be
perceived as more legitimate. However, research should
also examine the extent to which disagreement about this
legitimacy criterion can arise when the ‘broader commu-
nity’ is defined on different scales (e.g. local, regional,
national, international).
Stakeholders canvassed in this research report often
feared that the social licence equates with a self-ascribed
veto. When they see governments lacking the political will
to challenge project opponents who simply declare that a
project has no social licence, they fear that government
may ignore its own regulatory or approval process for the
sake of political popularity. Opponents might represent a
geographic concentration of voters who place their shared
personal welfare above the community or national welfare.
This is known as the NIMBY (i.e. Not In My Back Yard)
effect. The extent to which fears of the NIMBY effect
dissuade industry professionals from seeking a social
licence, or from engaging with stakeholders at all, is an
empirical question. While the NIMBY dynamic has been
studied for its impacts on public opinion towards projects
(van der Horst 2007; Michaud Carlisle Smith 2008), there
has been no examination of the role of fears of NIMBY
dynamics as an obstacle to stakeholder engagement by
companies. Such studies would also have to take account
of the project proponents’ beliefs about the susceptibility
of the relevant politicians to be influenced by NIMBY
dynamics.
Generally speaking, professionals in the extractive
industries, but not so much academics, seem to have a
tendency to suspect that the ‘SLO’ masks political
gamesmanship of questionable legitimacy on the part of
project opponents. At least one media commentator stated
this explicitly (Corcoran 2014). If empirical research
demonstrates that extractive industry professionals do
indeed hear the term in this way, we would then have a
better understanding of how divergent connotations of the
term hamper effective dialogue about it.
Impact Assessment and Project Appraisal 269
Do all the opinions in the community carry equal weight?
This question is particularly apt to be raised at in-house
workshops with company managers. As soon as they
accept that communities have real power and that there are
clear advantages to raising the project’s level, they see the
community evaporate into a cloud of diverse groups with
conflicting priorities. Moreover, they often see stake-
holders from beyond the community exerting considerable
influence on the level of social licence granted. As Parsons
et al. (2014) found, the bias is to focus on the local level of
stakeholders. The inclusion of stakeholders from further
afield (e.g. national government, international human
rights bodies) seems dissonant with the concept of ‘the
community’. Indeed, the concept of community presumes
that there is one cohesive entity with one clearly
articulated set of priorities and a legitimate representative
structure to speak on its behalf. Throughout the fora
canvassed in this research, however, community members
often argued among themselves about whether the
‘newcomers’ should be counted as ‘true’ residents or
whether one or another faction really speaks for everyone
(Boutilier 2009, p. 140). Seeing such divisions, project
proponents may fall into the trap of trying to decide among
themselves which organisations in the community are
really ‘legitimate’ and which are not. The rarity of
cohesive communities certainly makes it worthwhile to
attempt to weight the opinions of some stakeholders over
others because some have more influence than others. The
question of which stakeholders’ opinions should have
more weight is ultimately tied to the interests and mandate
of the organisation doing the weighting. Given the same
set of stakeholders, Greenpeace would choose differently
than the International Monetary Fund. However, the
question of who does have more weight, in terms of social
influence, is an empirical question.
Boutilier (2011, pp. 97 –99) describes the details of
methods that can be applied to the task of weighting
stakeholders’ views to reflect their actual influence. Such a
method is particularly useful for IA practitioners
attempting to interpret and advise on the SLO. A key
preliminary step is to substitute the notion of community
with the concept of a stakeholder network. This has three
advantages. First, it removes assumptions about geo-
graphic location from discussions of who has the power to
grant or withhold a social licence. Debates about which
groups or clusters of organisations represent the true views
of the ‘community’ become irrelevant because the
stakeholder network approach dispenses with the fre-
quently false assumption that there is only one view.
Second, it provides a conceptual framework for easily
dealing with diverse levels of social licence granted by
many different stakeholders. Third, by enabling the
application of social network analysis methods (Was-
serman and Faust 1994; Borgatti et al. 2009), it facilitates
the task of empirically assessing which stakeholders’
opinions carry more weight in the network.
Nonetheless, the question of who to include and who to
exclude does not disappear. It returns as the need to decide
whose stakes are significant enough to warrant inclusion in
270 R.G. Boutilier
the stakeholder network. Fortunately, stakeholder theory,
which originated as a theory of strategic management
(Freeman 1984), can define which organisations or
individuals should be included in the network, indepen-
dently of geographic location. Stakeholder theory defines a
company’s stakeholders as those individuals or groups that
either (a) are affected by, or at risk of being affected by, a
project, or (b) can affect the project. The former criterion
includes marginalised groups while the latter includes
organisations like government regulators and foreign
environmental organisations. Any single method for
making that determination has its weaknesses, but the
use of multiple methods can yield a sound set of
stakeholders (Boutilier 2011, pp. 62– 65). Being reason-
ably certain that one is looking at a graph of the network of
stakeholders with significant stakes, then an examination
of the graph itself, with information added about each
stakeholders’ issues of concern and level of social licence
granted, usually suggests some strategies for raising the
level of social licence.
What about ‘good’ companies in industries that have lost
the SLO?
Confusion about which level of organisation the social
licence applies to can be traced back to the original
metaphor coined by James Cooney. Cooney (personal
communication) wanted to emphasise that the whole
mining industry had an image problem but that the
solution was to improve social and environmental
performance at the level of specific mines and exploration
projects, rather than to launch an expensive public
relations and advertising campaign. Today, there are
campaigns to withhold the social licence of whole
industries (e.g. fracking, coal), usually within a geographic
region, but sometimes also on a global scale (e.g.
Greenpeace 2014).
The withdrawal of a social licence from entire
industries is often a political process aimed at changing
public policy. The concept of the lifecycle of social issues
provides a framework for understanding the relationship
between the social licence and the legal licence in such
cases. Post et al. (2002, p. 36) offer a four-stage issues
lifecycle model that summarises the main points and
features from previous research and models. The first stage
involves awareness and changing stakeholder expec-
tations. In social licence terms, this corresponds to a
minority withdrawing the social licence. The second stage
involves political action. In terms of the social licence, this
would be the creation of a more powerful coalition to press
the government to withdraw the legal licence. The third
stage is government action. Here, the government would
legitimise the views of social licence withholders by
launching a debate or a study on the adequacy of the
existing legal framework for the issue. The fourth stage is
legal implementation, which would lead to either a
withdrawal of the legal licence or the imposition of more
conditions upon it. Even when a campaign against an
industry stalls at stage two, companies can experience
increased costs owing to conflict with stakeholders (Franks
et al. 2014). Therefore, stakeholders can often achieve
some of their objectives even without the issue moving to
stages three or four.
Academics and practitioners have yet to answer
questions about which circumstances would allow a
socially responsible company to be exempted from the low
social licence of its industry or a socially irresponsible
company to be rejected despite the good reputation of its
industry. There is also a need to identify the relevant levels
of analysis at which social licences are granted or withheld
and then to understand the interrelations among those
levels. For example, mining a company may have a
popular purchasing department that creates lots of local
activity, while the company itself might be suspect
because of executive decisions in other areas. Moreover,
the industry might enjoy a high level of acceptance, but the
private sector in general might be suspect. Little is known
about the interplay of these layers, perhaps because multi-
level research is itself very complex and challenging
(Tesluk 2001; Kulik 2011; Mathieu & Chen 2011).
Besides the problem of developing measures of the social
licence at different levels of analysis and organisation,
there are questions about how to know when one level is
affecting another. More broadly, it would be interesting to
know what it takes for a whole industry to decide it needs
to re-examine its social licence with society.
Conclusions
As it is currently understood, the term ‘SLO’ originated in
the mining industry as a metaphor for the power of
communities to impose conditions on, or to completely
reject, the advancement of mineral exploration or the
operation of an existing mine. In recent years, the term has
spread to other industries that operate under different legal
regimens. Six FAQs about the social licence were gleaned
from the author’s participation in 50 events focused on the
topic (e.g. workshops, conference session, in-house
planning sessions, seminars, courses). Over 900 people
participated in the events. Most were managers, consult-
ants, academics and students.
The first two FAQs deal with whether or not the social
licence really matters. One viewpoint simply denies that
communities have as much power as governments to stop
projects. This view presumes that communities are so
disorganised and powerless that either they can be
convinced to accept company proposals, or they need
outsiders to protect them from such persuasion. The other
view is that the social licence only matters when
operations are disrupted but otherwise should be ignored
as a waste of time and money. The response to both these
views comes not only from the growing list of stopped or
hindered projects, but also from empirical research on
costs and profitability associated with conflicts with
stakeholders.
The third and fourth FAQs assume that stakeholders
have power, but then question the ethics and political
propriety of their use of that power. This is a topic that has

been largely ignored in academic research but that very
much concerns practitioners from industry. Several
hypotheses were suggested as ways of helping to frame
future research on the social licence and of bridging what
appears to be a growing divide between academics and
practitioners over the connotative meaning of the term.
The fifth FAQ dealt with practical matters about how
to weight the importance of the social licences granted by
different stakeholders. Because cohesive communities are
so rare, and because outside stakeholders (e.g. regulators)
can have so much influence, attention was drawn to the
alternative of viewing stakeholders as forming a network.
The question of what level of social licence a project
enjoys then mutates into a set of more tractable questions
about socio-political influence dynamics in the stakeholder
network. The sixth FAQ dealt with companies that lose
their SLO as a side effect of the whole industry losing
sufficient public acceptance. It was also noted that more
research is needed to identify the levels of entities that can
receive a social licence and the dynamics of the interplay
among those levels.
The use of the term ‘SLO’ is spreading to different
industries, professions and socio-political sectors, but not
always with the same understanding of its connotations
and implications. The danger is that the meaning could
become so blurred that its value as a tool for promoting
collaboration becomes obscured or lost. This paper
attempted to identify areas where either existing
interpretations or more research can create more shared
understanding.
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