Mining giants such as Rio Tinto, Xstrata and BHP Billiton actively seek community approval because they know that ensuring a social licence to operate leads to success.
So says Katherine Teh-White, founder and managing director of consulting group Futureye.
A social licence to operate is earned by gaining consent and approval from the local community and other stakeholders. According to the Australian Centre for Corporate Social Responsibility the higher the social licence, the lower the social risk.
Futureye has released a strategic model developed to improve and maintain a mining company’s social licence to operate. The model is designed to predict and measure community concerns around a project and to prepare a company for any unexpected events which may impact its commercial future.
“The outcome of implementing this model is that the business develops a good reputation, which leads to greater business certainty, confidence and control over adverse events,” Teh-White said.
“Our long-term pitch is ‘do this work and you will never need us again’.”
Teh-White established the company 10 years ago to fill a gap she had noticed in how companies were dealing with sustainable development issues. She has created social licences for projects ranging from $40 million to $20 billion on outrage issues including climate change and uranium mining.
Prior to founding Futureye she worked at Western Mining Corporation Resources as public policy and government relations project manager.
Teh-White said companies needed a full strategy model involving the entire organisation, including board members and executives.
“It is not just about the economics anymore, or jobs or taxes it is also about social and environmental impacts,” she said.
“A social licence to operate strategy and implementation provides a safety net against rising expectations.
“Our preference if possible is to help [companies] before they are in a crisis, so they do not end up in one.”
Futureye’s mining company strategy model looks at risks from a technical perspective.
“They [the company] need to tell us what these risks are, including risks from a social and legal perspective, economic, environmental and political,” Teh-White said.
“We look at risks from all those angles and find out which of those are going to promote or create outrage.”
Specific models are designed for individual businesses to manage any emerging risks and issues.
The model gives companies a blueprint to structure their communication with stakeholders, the media and regulators.
Futureye believes companies have a responsibility to people with a perceived interest in their operations.
“Governments are more sensitive to community outrage,” Teh-White said.
“Traditional corporate responses such as a defensive or aggressive approach no longer work.”
Teh-White said Qantas’s recent corporate woes were an example of how a company failed to consider its broader community in its communications strategy.
On October 28-31 October the airline grounded its entire fleet due to an industrial dispute.
“I do not think they explained the business risks effectively enough,” Teh-White said.
“What were the risks they were facing and why was it that the industrial issues were so important to them?
“Had Qantas implemented a social licence to operate they would have already put a plan in place that had them working towards consensus that would have avoided the enormous polarisation.”
A feature of Futureye’s model is understanding the audience and producing risk assessments on worst case scenarios.
It assesses expectations in society to develop strategic planning.
“The people who are demanding change are not the ones necessarily in positions of power,” Teh-White said.
She said to deal with “fearful” people you had to deal with their outrage.
Melbourne-based Futureye has recently branched out and opened an office in the Perth CBD.
A version of this article first appeared in the February version of Australia's Mining Monthly