by Katherine Teh-White, Managing Director, Futureye Today, a Masai warrior with a cell phone has better access to information than Margaret Thatcher once had as Prime Minister in 1980s. Instant information now erupts from some of the world’s poorest places, not just the richest. The right to it and to respond and protest are embedded in the global society. This is priming global campaigns, creating an important impact on major corporations. They face demands for greater transparency and accountability. And with more openness comes exposure. With information easier to obtain, outrage at mal-practices escalates. ‘Gotcha’ journalism now has a myriad of opportunities and the public loves a juicy scandal. Nor is more access to information and its consequences just about scandal. It is also about the public’s quest for fair play.The public, consumers and stakeholders become predictably incensed when companies are regarded as not playing fair. Rightly or wrongly, companies may come to be seen as distorting markets and manipulating the masses.
Acknowledging this outrage can help companies find a way through it. By working alongside stakeholders they can create a healthier business environment and a more sustainable future. Focusing only on building a positive reputation for your business through good works or corporate social responsibility will not reduce negative sentiment. Nor will it deliver your social licence to operate. A social licence to operate mainly depends on company’s negatives, not its positives. For example, your strategy must include a specific part that focuses on reducing negative reputation factors. This means fully engaging in activities that change the emotional reaction of stakeholders to you. This is how you earn a social licence to operate. Once you have a social licence to operate, a community is more likely to pay attention to your organisation’s positive actions and forgive its mistakes, rather than the reverse. Many business executives believe that public angst is ‘the new normal’. Easy and cheap access to mobile and other communications channels allows what were once micro and local issues to now take on national and even global importance. However, organisations can also use these same channels to monitor, engage, respond or open a dialogue. Governments too are becoming increasingly reactive to public outrage. Despite intense lobbying by business, they are now often reversing approvals or ending long-standing industry practice– sometimes overnight.
A Case in Point
After several incidents threatened regulatory approvals for the Australian Live export industry, Futureye began worked closely with industry Council (ALEC) and concerned external stakeholders. By bringing together farmers, veterinarians, animal activists and politicians, the industry has successfully built a shared vision of acceptable practices. Through a transparent approach to crisis preparedness these insure against potential threats.
“We are learning how issues develop and how expectations change to give us the tools to better respond and to proactively position ourselves as an industry. We are inspired to change and this process has given us confidence to face a challenging regulatory, stakeholder and communications environment.” Alison Penfold, Chief Executive Officer, Australian Livestock Exporters’ Council
When what society expects goes beyond normal industry behaviour no policy certainty can exist. You cannot guarantee the smooth passage of a project from scope to delivery simply by rigorously following regulations, approvals procedures, or relying on political lobbying and other protocols. To ensure a project is safe from uncertainty and to protect shareholders and investorsa business needs a social licence to operate. Recently, I spoke with a despairing executive who complained:
‘With the grassroots movements all over the world against mining, we simply have to give-up on ever achieving a Social Licence to Operate’.
He is overwhelmed by the task because his organisation has set him up to fail. He cannot escalate issues to the required level in his organisation. This would normally help inoculate his company from the impacts, and to navigate the new environment. Corporate leaders who abandon consensus-building merely make it harder to resolve their issues and society’s complex sustainable development challenges.
Getting ahead of the game
The old approaches of combining government and public relations now produce diminishing returns. Effective strategies to reduce risk must today reflect the possible impact of a public backlash. However, there is still a valuable opportunity to get ahead of outrage and activism. This involves creating positive, effective stakeholder relationships. There are ways to convert the ‘soft’ tactics of community engagement, public relations and corporate affairs into a rigorous organisation-wide approach to deal with societal change. It is possible for example, to win broad community support, even encouragement, and to align business objectives with public expectations. Companies that understand how their social impact affects their reputation, political influence, profitability – even viability – see the imperative in embracing for example, the Futureye Social Licence to Operate model. Today, a company must not only genuinely engage with its critics, but also be seen to be engaging with them. The community, regulatory authorities and governments also need to see this engagement leads to an actual change in the company’s behaviour. The acknowledgement of critics and evidence of organisational behaviour change are part of the strategy that delivers a resilient social licence to operate. For more information about Futureye please contact Marcie Shaoul email@example.com or call +447753885529 See also two other recent posts on the Social Licence: Big business risks losing its social licence—Part 1 of 2 Big business risks losing its social licence.—Part 2 of 2