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(Ebook) The Social License: How To Keep Your Organization Legitimate by John Morrison (Auth.) ISBN 9781137370723, 9781349475353, 1137370726, 1349475351 PDF Version

Educational material: (Ebook) The Social License: How to Keep Your Organization Legitimate by John Morrison (auth.) ISBN 9781137370723, 9781349475353, 1137370726, 1349475351 Available Instantly. Comprehensive study guide with detailed analysis, academic insights, and professional content for educational purposes.

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The Social License
This page intentionally left blank
The Social License
How to Keep Your
Organization Legitimate

John Morrison
© John Morrison 2014
Softcover reprint of the hardcover 1st edition 2014 978-1-137-37071-6

All rights reserved. No reproduction, copy or transmission of this


publication may be made without written permission.
No portion of this publication may be reproduced, copied or transmitted
save with written permission or in accordance with the provisions of the
Copyright, Designs and Patents Act 1988, or under the terms of any license
permitting limited copying issued by the Copyright Licensing Agency,
Saffron House, 6-10 Kirby Street, London EC1N 8TS.
Any person who does any unauthorized act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
The author has asserted his right to be identified as the author
of this work in accordance with the Copyright, Designs
and Patents Act 1988.
First published 2014 by
PALGRAVE MACMILLAN
Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited,
registered in England, company number 785998, of Houndmills, Basingstoke,
Hampshire RG21 6XS.
Palgrave Macmillan in the US is a division of St Martin’s Press LLC,
175 Fifth Avenue, New York, NY 10010.
Palgrave Macmillan is the global academic imprint of the above companies
and has companies and representatives throughout the world.
Palgrave® and Macmillan® are registered trademarks in the United States,
the United Kingdom, Europe and other countries
ISBN 978-1-349-47535-3 ISBN 978-1-137-37072-3 (eBook)
DOI 10.1057/9781137370723

This book is printed on paper suitable for recycling and made from fully
managed and sustained forest sources. Logging, pulping and manufacturing
processes are expected to conform to the environmental regulations of the
country of origin.
A catalogue record for this book is available from the British Library.
A catalog record for this book is available from the Library of Congress.

Typeset by MPS Limited, Chennai, India.


“Those who expect to reap the blessings of freedom, must undergo
the fatigues of supporting it.”
Thomas Paine, The American Crisis, Philadelphia,
12 September 1777
This page intentionally left blank
For Fiona and our children (Caitlin, Roisin, Felix, and Theo)
This page intentionally left blank
Contents

Acknowledgments xi

Preface 1

Part 1: Introduction 3
1 Macondo 5

2 The social license 12

3 What’s wrong with CSR? 29

Part 2: The Foundations 39


4 Legitimacy: which organizations might receive social
license for their activities? 41

5 Trust: confidence in the relationship with those


affected 62

6 Consent: granting necessary permissions for an


activity 72

Part 3: Building and Losing Conditions for


the Social License 91
7 Benefits: the delivery of sufficiently positive
outcomes for all concerned 93

8 Tackling imbalances of power: knowledge,


participation, transparency, and accountability 104
ix
Contents

x
9 Prevention and remedies: protecting victims and
ensuring justice 119

Part 4: What Next? 131


10 Different organizations and the social license 133

11 A basis for partnership and accountability 150

12 The social license—a prognosis 157

Notes 169
Select Bibliography 180
Index 183
Acknowledgments

There are many I wish to thank for their support. As icons, I would like to
honor the bravery of different peoples, such as those of the Niger Delta
(and in particular Ken Saro-Wiwa) and the people of Bhopal in India,
whose suffering helped shape the consciousness behind what we might
now call the global business and human rights movement.
At a personal level I owe a lot to Anita and Gordon Roddick, Geoffrey
Chandler, Mary Robinson, and John Ruggie for their leadership; and to
countless others with whom I work.
In relation to this book, there are many I would like to thank, including:
Motoko Aizawa, Chris Anderson, Leeora Black, Phil Bloomer, Richard
Boele, Lucy Chandler, Aidan Davy, Kathryn Dovey, Bjorn Edlund, Peter
Frankental, Bennett Freeman, Doran Hanlon, Mark Hodge, Frances
House, Scott Jerbi, Chris Jochnick, Nick Killick, Justine Lacey, Amy Lehr,
Rae Lindsay, Chris Marsden, Leslie Morrison, Simon Morrison, Tamsine
O’Riordan, Malin Oud, Gerald Pachoud, Ed Potter, Lucy Purdon, John
Ruggie, Kelly Davina Scott, Haley St. Dennis, Elizabeth Stone, Salil
Tripathi, Margaret Wachenfeld, Toby Webb, and Claire White.
Michael Addo, David Angell, Sean Ansett, Turid Arnegaard, Cindy Berman,
Adam Cramer, Elizabeth Dahlin, Tom Dodd, Michel Doucin, Janneke Faber,
Liesel Filgueiras, Remy Friedmann, Christian Frutiger, Juan Gonzalez
Va lero, Adam Greene, Alexandra Guaqueta, Paul Hohnen, Marie-France
Houde, Isobelle Jacques, Bengt Johansson, Heather Johnson, Margaret
Jungk, Dwight Justice, Christine Kaufmann, Georg Kell, Catharina Kipp,
Madeleine Koalick, Khalid Koser, Ramanie Kunanayagam, Ken Larson,
Markus Loening, Jens Munch Lund-Nielsen, Tam Nguyen, Bonnie Nixon,
xi
Acknowledgments

i
xi
Are-Jostein Norheim, Julia Purcell, Gwendolyn Remmert, Angela Rivas,
Simone Rocha Pinto, Nils Rosemann, Hege Rottingen, Robert San Pe, Elin
Schmidt, Puvan Selvanathan, Charlotta Spolander, Susan Stormer, Pavel
Sulyandziga, Lisa Svensson, Claire Wallace-Jones, Dewi-vande Weerd,
Rajiv Williams, Brent Wilton, Charlotte Wolf, Yann Wyss.
Beyond this, there are many others who have guided me over the last
20 years in many different ways (and who cannot be blamed in any way
for this book), including: Kate Allen, Philip Alston, Per Uno Alm, Lucy
Amis, Robert Archer, David Arkless, Chris Avery, Graham Baxter, Philippa
Birtwell, Christine Bader, Jim Baker, Lakshmi Bhatia, Vanessa Bissessur,
Tom Blumenau, Frans Bouwen, Vicky Bowman, Zrinka Bralo, Peter Brew,
Pins Brown, Simon Burall, Doug Cahn, Lynn Carter, Kavita Chetty
McRorie, Leila Choukroune, Abrar Chowdhury, Andrew Clapham, Bob
Corcoran, Rachel Davis, Aidan Davy, Sumi Dhanarajan, Luis Fernando de
Angulo, Kaj Embren, Ravi Fernando, Teresa Fogelberg, Ian Gearing, Elodie
Grant Goodey, Lois Graessle, Donna Guest, Mei Li Han, James Hathaway,
Isabel Hilton, Paul Hohnen, Christian Honore, Sam Hoskins, Nick Howen,
Christine Jesseman, Alan Lerberg Jorgensen, Neil Kearney, Deanna Kemp,
Tom Kennedy, Irene Khan, Nick Killick, Wambui Kimathi, Rose Kimotho,
Morten Kjaerum, Jody Kollapen, David Laws, Sheldon Leader, Klaus
Leisinger, Gareth Llewellyn, Rebecca MacKinnon, Marcela Manubens,
Peter MacDonald, Steve McIvor, Aidan McQuade, Bonita Meyersfeld,
Amol Mehra, Viraf Mehta, Anton Mifsud-Bonnici, Alan Miller, Felix Morka,
Susan Morgan, Dorje Mundle, Javier Mujica, Stuart Murray, Michael Nolte,
Ron Nielsen, Roel Nieuwenkamp, Anders Nordstrom, Mark Nordstrom,
Steve Ouma, Chip Pitts, Ron Popper, Michael Posner, Kavita Prakesh-Mani,
D.J. Ravandran, Usha Ramanathan, Anita Ramasastry, Yuri Ramkissoon,
Soraya Ramoul, Caroline Rees, Joanna Reyes, Kenneth Roth, Philip Rudge,
Jill Rutter, Lyndall Sachs, Jon Samuel, David Schilling, Matthew Shreader,
Kelly Davina Scott, Nick Scott-Flynn, Andrea Shemberg, John Sherman,
Smita Singh, Sune Skadegaard Thorsen, Annette Stube, Daniel Taillant,
Mark Taylor, Ruth Valentine, Auret Van Heerden, Andrew Vickers, Claude
Voillat, Wilma Wallace, Margot Wallstrom, Yasmin Waljee, Halina Ward,
Lene Wendland, Elaine Weidman, Neill Wilkins, Luke Wilde, Peter
Woicke, Katryn Wright, Hnin Wut Yee, Ursula Wynhoven, Melike Yetken,
and Vanessa Zimmerman. There are others, some I cannot name.
Acknowledgments

ii
xi
Finally to acknowledge all the support of friends and family and those
who spend weekends with us in Sussex, UK. Eating, camping, running
on the Downs and even fishing expeditions are valuable sources of fun.
Those who visit Lewes in Sussex will see that Thomas Paine appears on
the town’s own unofficial currency as well as being the name of a beer
from the local Harveys brewery (Paine lived in Sussex between 1768 and
1774, during which time he wrote his first political work). For anyone
wishing to apportion original blame for this book, they can probably start
with too many years in local pubs drinking that beer.
Preface

I have spent the past 25 years working in the field of human rights, initially
in refugee resettlement but for nearly 15 years on the issue of business
responsibilities towards human rights from the vantage point of civil
society, international organizations, governments, and business itself. This
book is highly personal and subjective: it draws on my own experience as
well as concepts and examples that have inspired me in trying to consider
the societal impacts of different types of organizations.

I have seen occasions where business itself has stepped up voluntarily


to show real leadership when government officials, elected or not, have
demurred from doing so. Alternatively, I have seen times when business
has lobbied hard against changes that have been needed to advance wider
societal interests. Similarly, non-governmental organizations (NGOs) play
an essential role in holding both governments and business to account,
but NGOs themselves can also be highly unaccountable and they do not
always represent the interests of the most vulnerable.

The book takes the broad concept of “social license” as a way of


considering how different activities may acquire or lose legitimacy in the
eyes of society. Whilst the term “social license” is a relatively new one, I
link it to a much older idea—that of the “social contract” that binds
society itself and also legitimizes the role of what I consider to be one of
the most fundamental of all organizations, that of government. I believe
that thinking about social license in relation to the social contract raises
some interesting ideas and questions for all types of organizations in how
their activities might be sustainable in social terms.

The social license relates to the activities of any organization. Obtaining and
securing the social license cannot be directly managed or self-awarded; rather, it
1
The Social License

2
is the result of interactions between a number of factors that will be explored in
greater depth in this book. It is these factors that organizations can manage, not
the social license itself. The fact is that it is much easier to notice the absence of
the social license than to recognize its presence. The presence of the social license
might be described as an equitable balance, or harmony, between different
societal interests that allows a specific activity to continue and to thrive.
However, as the social license is dynamic, it can always be withdrawn by society.

I have long felt the gap in our understanding of how the world operates from
debates about business and society in particular. The concept of corporate social
responsibility has taken us only so far while emerging work on business and
human rights has taken us much further, in my opinion. Perhaps some of the
ideas in this book represent my own reflections on the still wider question—
what does it mean for the activities of any organization to be legitimate in
societal terms and what can organizational managers and decision-makers do
about it? What follows are not the reflections of an academic, nor is this book
meant to be a management guide. Rather, the story I tell is aimed at shifting our
collective thinking and to start asking some of what I see as the right questions.

Some of the ideas I present throughout the book are inspired by my


current role as Executive Director of the Institute for Human Rights and
Business. However, the views expressed here are wholly my own as are
the mistakes I have made. I am very interested in any feedback and views
these ideas stimulate—these can be tweeted to me at @jomo1966.
1
Pa
rt

Introduction
1 te
r
ap

Macondo
ch

“Their Power in the utmost Bounds of it, is limited to the Publick


good of Society”1
John Locke (1689)

20 April 2010

At 8.50 pm the rig personnel felt “a kick.” They had been monitoring the
cement pumped down to the bottom of the production casing of Block
252 of the Mississippi Canyon in the Gulf of Mexico, one of the deepest
deepwater oil wells in the world. The rig was 48 miles off shore, in 4,992
feet of water and drilling to a depth of 20,600 feet.2 The jolt they felt was an
imbalance between the pressure of the drilling fluid and the hydrocarbons
in the reservoir at the bottom of the well deep below the sea. Within ten
minutes these hydrocarbons had flowed up the riser onto the rig floor and
caused the rig to explode—a chain of events that would kill 11 platform
workers and cause the largest offshore oil spill in US history. The platform
was the Deepwater Horizon, contracted by BP to exploit the “Macondo
Prospect” (named after Gabriel García Márquez’s fictional Colombian
village). The rest is a matter of recent history.

The next few months would be bad for the company. Few US stakeholders
would be prepared to defend the company’s safety record (largely due to
the Texas City and Prudhoe Bay disasters which had preceded that in the
5
The Social License

6
Gulf of Mexico3) and even worse, BP’s four main competitors were willing
to go to Congress to testify against the company for not meeting industry
standards.4 BP faced between $20 and $37 billion in total liabilities—a
large sum even for an oil company.5 The story is now well known. The
then CEO, Tony Hayward, stumbled when trying to explain the accident
and BP’s response to the wider world.6 By this time, it had become
a media feeding frenzy—his tone was perceived to be aloof and there was
virtually no one anywhere in the world who was willing to stand in front of
a camera and defend his company, other than those his company paid to do
so (i.e. his employees and lawyers). Within weeks, a new CEO was in place.

What lessons can be drawn from this example? First, that the risk to
human life was not perceived to have been managed well enough by a
company that had gone through a cycle of aggressive acquisitions and then
cost-cutting. This is not to suggest that BP intended any adverse outcome
to occur. Few companies are cynical enough to have such a goal. But the
outcome was not anticipated, or if it was, the probability, the company
thought, was negligible. Second, so whilst BP’s problems all had a technical
element at source, they were undoubtedly compounded and magnified
by something greater—the social, political, and legal context of the
USA. In other words, whilst the problem was technical, the management
implications of such a technical risk had a direct bearing on the expectations
that society had and still has on the company.

It is important to remember that in 1984 Union Carbide, whose health and


safety breaches in Bhopal, India, caused the death of over 3,000 people,
arguably faced much less of a reputational issue in the US market than
did BP. The Bhopal disaster was a generation earlier and on a different
continent but whilst it has left a strong legacy of societal expectation in
India, the actions of a US company abroad have left fewer expectations
in the home country. So public and political sentiment can be fickle
and highly domestic in focus. Legal regimes differ considerably around
the world, and therefore so does non-technical risk. However, a human
life is a human life and recent efforts between governments, within the
United Nations and elsewhere, make the lessons of the Gulf of Mexico
increasingly relevant to anyone anywhere in the world.7 Both these cases,
BP and Union Carbide, illustrate how legitimacy in the eyes of society can
be a material issue for a business. It can cost the company not just in terms
of immediate financial damages but also in terms of its future operations.
For example, a recent study has estimated that conflicts with local
Macondo

7
communities can cost mining companies up to US $20 million per week
when large projects are delayed. Legitimacy and community relations can
have real commercial value.8

And so to the focus of this book: the “social license.” In recent years the
concept of the “social license to operate” has arisen within the mining
sector in particular. The concept has been defined in various ways, as will be
discussed in the next chapter, but has broadly meant “the extent to which a
corporation is constrained to meet societal expectations and avoid activities
that societies (or influential elements within them) deem unacceptable.”9
This book endeavors to take the social license concept much wider and
deeper, showing its relevance not just to all business sectors but also to the
activities of governments, civil society organizations, trade unions, faith
groups, communities, and other actors. My own experience of working in
and with all of these types of organizations suggests to me that a good
deal of their legitimacy, in the eyes of society at least, arises from their
social license. As I will discuss, the concept is perhaps much less woolly and
intangible than some might appreciate if it is pinned to older philosophical
ideas—in particular the idea of the social contract between individuals in
society.

When taking over from John Browne as CEO of BP in 2007, Tony


Hayward made the comment that BP had “too many people trying to
save the world.”10 My contention is the opposite. In fact BP would have
benefitted from having more people who really understood social risk and
social impact in a global sense, and the company would come to suffer as
a consequence. Ironically, a few years earlier, BP had had more of these
socially minded people, but many left as part of the “de-Browneification”
of the company when Sir John Browne stood down as CEO (for unrelated
reasons), according to some observers.11 As I will argue, being part of
global solutions and not global problems is much more than an issue of
“public relations,” “corporate social responsibility,” or “spin,” but about
legitimacy that can be earned through knowledge and actions, not clever
advertising or aggressive lawyers.

“World savers” and “tree huggers” are two of the many derogatory terms
that some who think they have “hard skills” (e.g. geologists, engineers,
bankers, lawyers) throw at those with “softer skills” (e.g. anthropologists,
sociologists, political scientists, NGO types). However, there is much in
the world today to suggest that human skills (a better term than “soft
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