The social licence: why all businesses need it

Insights from one of the most anticipated speakers at this year's European Communication Summit

A keynote takes place during the 2015 European Communication Summit

Due to the ongoing debate over the role of companies in the wider society, achieving social acceptance is vital to ensuring the ability to operate. But what does this licence look like in 2016? How is it defined, who gets to decide its parameters and how should it be communicated? This year's European Communication Summit will include session presenting different perspectives on the social licence to operate: we asked session participant John Morrison for a few insights.

To quote one of the chapter titles of your new book, The Social License: How to keep your organization legitimate: What’s wrong with CSR?

Corporate Social Responsibility (CSR) has been heavily criticised both by business itself as well as civil society organisations. For business, the biggest problem is that CSR can mean anything to anyone, and often means actions outside the core business model of the company. At worst, these can be little more than "social offsets", philanthropic gestures that do not align with the real impacts of the company. Surely it is better that a company contributes to society what it is good at – its core business. This is why concepts such as "shared value" have developed over recent years (although I think 'shared value' still lacks sufficient emphasis on accountability and governance). From the civil society perspective, CSR has been a profoundly business-centric approach to societal responsibilities: business tends to see itself at the centre of "spheres of influence" and decides itself how and where to engage. My definition of  "social licence" responds to both these critiques – it builds on 300 years of social contract thinking to propose that business needs to understand its role in society not in its own terms, but in relation to the pre-existing social contract between communities and government. Therefore to enjoy a strong social licence for its activities, business (or any other type of organisation) needs to gain the legitimacy, trust and consent of communities.

Isn't a legal licence enough?

There was a time when all a business needed for its activities was its legal licence to trade, or for particular licences for larger projects. This was often backed by political licence - winning the consent of a president in a developing country for example. Now almost everywhere in the world, this is no longer enough. In addition to legal and political licences, business needs a social licence from the community upon which its activities will impact. A social licence is not a piece of paper, it cannot be self-proclaimed by a business for any activity, rather it needs to be given by the community itself on a ongoing basis. When it is working well, the social licence is often invisible, it is only when it is lost that its existence (or absence) becomes fully apparent.

How do you define “legitimacy” for organisations, and who gets to define it?

Legitimacy is one of the most subjective of terms. My book is not about the legitimacy of organisations - my view is that all law-abiding organisations have the right to exist. Rather, it is about the legitimacy of specific activities and how these can be managed.

The concept of social licence seems to suggest that companies are Goliaths that need to be shown how to behave by the plucky Davids of various stakeholder groups. Is this imbalance of power an accurate reflection – is it really such a one-way street?

Yes, it is can often be the case that the companies are better resourced than local communities, in particular if the communities are already vulnerable or marginalised due to the lack of infrastructure, employment or other resources. However, my book does not assume this is always the case. In fact, the chapter on "Consent", which describes the importance of "Free, Prior and Informed Consent" (FPIC) of indigenous peoples challenges NGOs who try and take this term too widely. FPIC should not be extended to all communities, as for well resourced communities this then becomes NIMBY-ism. No one wants a world where middle-class communities can thwart every attempt by central government to build infrastructure nearby which would serve the greater interests of a society (in particular the poor).

John will take take part in the European Communication Summit, which celebrates its 10th anniversary this year in Brussels on 7 and 8 July. Find out more about the Summit, including the full programme and details of how to register at

John Morrison

John Morrison is executive director of the Institute for Human Rights and Business. He has advised the Danish, Swedish and British during respective presidencies, as well as chairing the jury of the Dutch Government’s human rights prize in 2013. Before joining IHRB as its founding director in 2009, John directed the Business Leaders Initiative on Human Rights 2003-9, was head of global campaigns and community affairs for The Body Shop International and also worked for a number of civil society organizations.