University Centre for Public Policy research fellow and analyst Sara Bice said Australian miners were employing a debateable and poorly defined concept to justify their presence in local communities.
“Mining companies are increasingly claiming to have a social licence to operate in certain areas because of perceived benefits to the local community,” she said.
“But claims to this licence are misleading because the term isn’t formally defined anywhere in law.”
Brice’s report: What Gives You a Social Licence? examines how miners including BHP Billiton, Rio Tinto, Xstrata and MGM Group conceptualise and define their own social licence, voicing concerns about how these licences are applied.
"A traditional licence involves one party empowering another based upon certain conditions and responsibilities,” Bice said.
“But there are no established criteria for how mining companies and communities might broker a so-called social licence.
"Equally, there are no clear rules for how one might be revoked.”
Bice observed that early sustainability reports defined sustainable developments in terms of environmental issues and employment matters but around 2005-06, most companies began to shift their definitions of sustainable development to incorporate social and economic concerns.
But although companies did expand their conceptualisations of sustainable development over the reporting period studied, the focus of sustainability reports remained largely on environmental and employment issues.
While company representatives were found to be eager to address social issues, difficulty quantifying some social issues appeared to limit a company’s ability to report on them.
This difficulty in quantifying less tangible or “soft” issues could in turn minimise the role of social issues as criteria in establishing a social licence.
Bice’s research noted that while companies typically front-ended their positions about the importance of earning and maintaining a social licence, none actually defined the licensing criteria.
"The language of licensing leads to confusion,” Bice said.
“It suggests a formality and even regulation, which does not exist. In reality, a social licence is purely metaphorical."
This lack of clarity was flagged as negatively affecting both the companies and the communities.
"For corporations, better clarity on what their social licence really entails can help quell the vocal minority who may engineer a backlash against operations," she said.
"At the same time, clear criteria would protect local communities from big corporations who may claim to hold a licence for which minimum standards have not been set."
