Social Licence is Vital

Social license is the ongoing acceptance and support that individuals, communities, and stakeholders grant to an organisation or an industry to conduct its activities. It represents the level of trust, credibility, and legitimacy that an entity has in the eyes of the public through media reports and social media. The challenge for organisations and sectors is to get both side of the story out in the media.


One of the concepts used by the Wellington beltway is the need to retain a sector’s social licence. The lack of or gradual loss of social licence is used as a measure of how much support the sector should receive. When questioned about what social licence is, more often than not reliance is placed on media reports. If you have been involved with the media, you will know that sometimes the full story, that is both sides to the story, is not reported. The risk of inaccuracy is increased through social media. The end result is that social licence can be lost through inaccurate reporting. This could be contrary to the actual facts of the situation.

Social license recognises that organisations and industries operate within a broader social context and that their activities can have significant social, environmental, and economic impacts. It emphasises the idea that simply complying with the minimum legal requirements is not sufficient for long-term success and sustainability. Social licence requires organisations to actively engage and gain acceptance from the communities and stakeholders affected by their operations and the customers that buy their products. Building social license requires an on-going commitment to responsible and ethical practices, environmental stewardship, community development, and respect for human rights.

So how do businesses in New Zealand build and keep their social licence. One answer is to become a member of NZ Ethical Employers and attend its conference from 19 July in Tauranga NZ Ethical Employers offers tools and a network of like-minded businesses to help build and maintain social licence through ethical employment relationships. This is because media reports of poor employment practices are one of the main causes for losing social licence.

Internationally the United Nations Guiding Principles (UNGPs) on Business and Human Rights set out 31 principles that set key international standards for responsible business practice:

• Governments have a duty to protect everyone within their jurisdiction from environmental and social impacts caused by business practice.

• Businesses have a responsibility to avoid environmental and social impacts wherever they operate and whatever their size or industry and address any impact that does occur.

• When environmental and/or social impacts occur, both governments and businesses have a duty/responsibility to support victims to access effective remedies through judicial and non-judicial grievance mechanisms.

The UNGPs are interwoven into NZEE tools, conferences, and communications.

Maintaining social licence is vital for each sectors on-going public and governmental support. It is all too easily lost through media reporting and social media commentary. For businesses and sectors to keep social licence and have successful interaction with governments more than minimum legal compliance is required. Working to put into effect the UNGPs is a good first step.

Mike Chapman,
Chair New Zealand Ethical Employers Inc