The Power of Social Licence in Action - the Coal Seam Gas Example

The concept of a ‘social licence’ or community acceptance clearly has some merit, as long as it complements rather than replaces the more traditional concepts of corporate social responsibility and sustainable development says Dr Richard Parsons, Principal at Richard Parsons Social Research Consultancy.

Recently, Metgasco announced that it was suspending its coal seam gas (CSG) exploration activities in northern New South Wales. While this news disappointed some who were anticipating economic benefits, it has delighted the many activists who have been campaigning against CSG in the region.

Indeed, they may see it as vindication of their sustained efforts. So, is this outcome an example of the power of social licence in action?

Until recently, social licence was a term used by corporations and governments, typically to describe ongoing approval or acceptance of local communities for mining operations.

Lately, however, community members and groups campaigning against operations have appropriated the term, most usually to claim that a particular operation/company does not have one.

Since social licence is an intangible concept with no legal status, it is impossible for either company or community to prove that it does or does not exist. In other words, a battle of words ensues, with no clear means of resolution.

In the Metgasco case, until yesterday it appeared that the company was able simply to ignore all opposition, on the basis that a legal exploration licence was sufficient. Yet opposition has been relentless. As local MP Janelle Saffin stated that Metgasco has been "told loudly and clearly and almost daily that they're not welcome". She added, pertinently: "You also need a social licence to work and operate in the community in which you are".

The concept of social licence here appears to have empowered local communities to stop an activity. Indeed, this case is likely to encourage other activists to adopt the social licence concept strategically to oppose projects. But what are the drawbacks to these developments? Two come to mind.

Firstly, it is notable that Metgasco itself did not cite community opposition as a reason for its suspension. It did not claim to be “listening to the concerns of the community”, or indeed acknowledging that its social licence had been eroded or lost.

Rather, in a statement to the Australian Securities Exchange, it cited “the uncertain operating environment” created by new state government regulations, and argued that the decision was "to preserve shareholder value".

Further, it stated that it intends to resume operations once “regulations are firmly established”. In other words, it is not clear that companies themselves are willing to talk about social licence when its existence is contested, as though it becomes mysteriously irrelevant when it is threatened.

Secondly, is the language of social licence encouraging a race to the bottom? Debates around the impacts of CSG mostly revolve around serious concerns regarding potential environmental degradation, notably to underground water.

Opponents’ claims that Metgasco did not have a social licence derived from a belief that significant damage could occur, rather than from a belief that Metgasco was not quite delivering optimum social and environmental outcomes. Social licence was invoked, in other words, only because performance appeared to be particularly poor.

The social licence concept clearly has some merit, as long as it complements rather than replaces the more traditional concepts of corporate social responsibility and sustainable development.

The Metgasco case suggests that social licence risks becoming the least ambitious of these concepts, and that an aspirational conceptualisation is needed it is to be genuinely oriented towards social development and environmental stewardship.

About the author:

Dr Richard Parsons is Principal at Richard Parsons Social Research Consultancy and assists organisations and communities to co-design sustainable social programs that have a strong ethical foundation. He holds a Ph.D. in organisational communication from the University of Queensland, and a Master of Business Administration from Queensland University of Technology.