Human rights and trade | Qa

Make the positive case for the corporate social licence

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Mining companies get the need for a social licence

Toby Webb asks the Institute for Human Rights and Business’s John Morrison how far human rights issues are now being tackled properly by international business

TW: What is social licence for business? Is it just good corporate responsibility by another name, or is it more specific? 

JM: In some ways it is good corporate responsibility by another name – but it roots corporate responsibility within the perspective of society and not just the business itself. For me, the social licence is only meaningful if it relates directly to the social contract that binds society and communities in the first place, and one which gives government its legitimacy (or not).

In other words, social licence (or the sort of corporate responsibility I am advocating) cannot be self-proclaimed or self-rewarded by the company itself. It needs to be earned and conferred on to a company’s activities by others. It is pretty clear when a company’s operations do not enjoy social licence – there is opposition, protest and even sometimes blocking of daily activity. When activities do have good social licence things run in harmony – so the foundations of good CR can be subtle.

TW: Extractive company managers talk about social licence like it’s on an MBA course – ie all the time. How far has it really penetrated in senior management?

JM: Social licence seems to have penetrated the board rooms of mining companies in particular – and to some extent other parts of the extractive sector. What’s interesting is how often I am beginning to hear senior management in food and beverage companies use the term. Grassroots NGOs are starting to do so too. Maybe it is because I have been writing the book that my ears have tuned in to the social licence term – hearing it in recent meetings from Nairobi to Tokyo – but I think it is more than my own wishful thinking. It seems to be in the zeitgeist.

Fundamentally, I think it is an attractive term for managers as it describes a positive and not a negative – the conditions a business should work towards and not just what it needs to avoid. I am convinced that we need this for the human rights agenda, in the same way as anti-corruption campaigners have developed concepts of integrity, and anti-discrimination also requires a focus on diversity to really drive organisational change. 

TW: You write that social licence for business is about “finding ways of building capacity within the existing social contract without replacing it”. Isn’t that a) a bit academic to mean anything in business and b) outside how most companies view responsible business? (In that most companies don’t focus much on building capacity.)

JM: You say “academic” as if it were a dirty word! I am not an academic but it doesn’t mean that us policy people and practitioners should not be interested in ideas. It has been a fundamental flaw of corporate responsibility, in my view at least, that it has not been locked into some more objective view of society. It is why much CR lacks legitimacy in the view of many communities and NGOs.

Linking CR into a more objective way of thinking about how society works – such as the social contract – is the best way of achieving such legitimacy in the eyes of others. So yes, I am not offering up anything easy here, nor do I give all the practical steps, but I am asking for a paradigm-shift. There are many business managers who feel that CR needs some kind of reboot – I hope mine is helpful.

TW: Turning to John Ruggie and the UN framework on business and human rights, we’ve had it agreed since 2012, so what’s your sense on how it’s being used by companies in a serious, embedded way?

JM: Those who read the book will note that as the chapters unfold so more and more Ruggie framework stuff comes in. That is because when we really start thinking about what it means for a business (or other organisation) to operate in social contract terms, we are talking about rights-based and rights-aware approaches. I am constantly surprised by how much the UN framework has become common currency in just three years.

I was recently in Japan, meeting many companies, NGOs and the government and it is clear that the embedding process is starting there. More globally, there have been some impressive steps – such as companies issuing human rights white papers on methodology, participating in sector-wide impact assessments that are then fully disclosed, or participating in multi-stakeholder attempts to create objective human rights performance benchmarks. In many ways the serious work is only just starting, but it is starting.

TW: What will it take to bring big companies in laggard countries such as India, China and Japan to the table on business and human rights? What’s your view on the state of play with these countries and their companies today? 

JM: What do you mean by laggard countries? In broader human rights terms – say, for example, an issue such as the death penalty – then all three countries still execute people although India is less prone to do so. But then of course so does the US, whilst Russia or Brazil do not at all, although both still struggle with extra-judicial killings.

So the question of who is a laggard depends on the specific human rights question you are asking. On business and human rights, I would no longer call China or Japan laggards as there are serious efforts now afoot in Beijing and Tokyo that can properly be called business and human rights, and not just broader corporate responsibility. What is fascinating is that a key driver for businesses in these countries is social licence issues they are facing in third countries – such as Burma/Myanmar or across Africa and Latin America.

In many ways, social licence is an increasingly material concept for these companies – perhaps more than is understood by many European companies, for example. 

John Morrison is executive director of
the Institute for Human Rights and Business and author of the new book The Social License: How to Keep Your Organization Legitimate

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