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Where social licence had its beginnings, and how the McHugh report changes everything

Posted on Aug 11, 2016

Social licence is a hot topic right now. Malcolm Turnbull this week warns banks that they operate with a social licence for the people. This follows the banks’ refusal to pass on the full rate cut.

Also this week, we have seen the Baird Government’s greyhound ban legislation pass in the upper house. It will be enacted later this month – all on the back of the industry’s inability to meet its social licence obligations.

You see, in this instance, the community just doesn’t accept animal cruelty, or greyhound killings or ‘wastage’ (a much more palatable term), or live-baiting.

A social licence is really a barometer of community sentiment. It’s a set of conditions by which a community allows a company or industry to exist.

Social licence pertains to all regulated industries: banks, greyhounds, gambling, mining etc.

What most people don’t realise is that the McHugh Inquiry last month has now legitimised social licence as a tool by which governments can make decisions affecting regulated industries (ie shutting down greyhounds in NSW) in Australia and overseas.

Social licence is no longer a “made-up thing [that] has no legal or practical application (and appears to be elastic and highly subjective in definition)” as one metropolitan journalist wrote to me this week.

My response? Where’s your objectivity?

The journalist added, “in the context of the closure of a significant industry supporting hundreds of jobs”.

The fact remains that society’s values have changed and social licence is a measure of that change. Animal cruelty is not accepted by the community at large.

The Australian Financial Review last month published an opinion piece by Katherine Teh-White, managing director of global consultancy Futureye.  Teh-White is a social licence specialist who works with both sides of the fence to make sure companies and industries can meet their social licence obligations in terms of community (ie activists, animal welfare) expectations.

She says it would be better for the greyhound industry in NSW to concentrate on fixing their problems and fixing the industry in Australia, rather than criticising the tenets of social licence and the people trying to bring real reform to the industry.

Social licence had its beginnings in the early 1990s in the mining sector and, according to KPMG’s Richard Boele, it was created in an attempt to come to terms with the growing influence of social pressure on the sector’s investments and operations.

His article says beware – no social licence to operate may scuttle your project.

It’s come much further now with the McHugh Inquiry and Baird’s decision to shut down greyhound racing in NSW. This illustrates just why all regulated industries in Australia and overseas need to take their social licence obligations much more seriously.

For more on KPMG’s Richard Boele comment on social licence go to http://bit.ly/1RKZe25