Hot Topic: Social Licence to Operate

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An increasingly hot topic is that of ‘social licence to operate’ – being the acceptance of a company’s or industry’s business and operating practices by stakeholders, such as employees, shareholders, interest groups, native title holders and the public at large. It is a form of social permission to conduct business.

While social licence issues often arise during the regulatory approvals process for a project, social licence to operate should be viewed as a long term concept. This makes sense, of course, because once you’ve spent millions of dollars putting a hole in the ground or constructing infrastructure, you can’t move it. It is there to stay, so ongoing relationships with stakeholders are critical to the ongoing success of a project.

Failing to maintain social licence

Projects are increasingly being challenged in courts by stakeholders, often on the basis of procedural issues.

Recent cases include Wilderness Society of WA (Inc) v Minister for Environment[2013] WASC 307 regarding Woodside’s Browse project, and Save Beeliar Wetlands (Inc) v Jacob [2016] WASCA 126 relating to the failed Roe 8 project. The first concerned financial interests held by EPA members in the project proponent (Woodside) and the second concerned whether EPA’s published policies were mandatory considerations in the decision making process.

Another example was the proposed Wave Park development in Alfred Cove. Despite environmental and other approvals having been obtained, a challenge by an interest group in the Supreme Court of Western Australia came in the form of a claim concerning public advertising for the City of Melville’s grant of a long term ground lease. Grondal Bruining acted for Urbnsurf in successfully opposing that challenge ([2018] WASC 211). The development has, however, now hit major hurdles as a result of recent State government intervention.

Win, lose or draw, such challenges are bound to add considerable time to approvals processes and to divert significant effort and cost into legal confrontation.

Lack of social support will also inevitably affect the approach of relevant government agencies and regulators, both during the approvals processes and during operations. Resources and manufacturing companies operating in close proximity to agricultural land or residential areas, for example, are particularly prone to close scrutiny from environmental and other regulators if their operations are considered to affect local amenity. That is so regardless of whether the operations were in existence before the local stakeholders entered the area. Disputes with local shires over rate setting for mining projects has also arisen over recent years, which can then have knock on effects on future shire approvals.

Facilitating Social Licence

Social licence was a hot topic at this year’s AMPLA WA Conference, with presentations from Chris Shanahan SC, Robyn Glindermann, Tim Larcombe and Brad Wylynko.

We heard that the key to a project proponent’s management of ‘social licence’ issues is getting to know the stakeholders, and understanding they may not work on the same timelines and apply the same decision making procedures as the proponent. Indeed, stakeholders are often large groups who do not speak with a single voice. Dealing with groups rather than individuals can create its own set of challenges.  

For lawyers, the skill is to be able to speak to people and diverse groups in a way they will understand.  Tailor your language to your audience. Perhaps more fundamentally, said Chris Shanahan SC, are the three ‘R’s - Respect, Recognition and Reciprocity. As these concepts suggest, the aim should be to build trust through courtesy, frankness, openness and reciprocation.

Building and maintaining social legitimacy is, more than ever before, an essential part of operating a successful business. And there is no doubt we will see more court challenges driven by social license issues.

Dean Grondal – Managing Principal, GRONDAL BRUINING

Ph: +61 8 6500 4320 | Email: dean.grondal@grondalbruining.com.au Web: www.grondalbruining.com.au