What is a ‘Social Licence’ and why is it critical that businesses understand this term

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In essence, a social licence is an agreement between a business and its stakeholders and the wider public. It is based on the understanding that the business is not just meeting its legal obligations but also taking into account the interests of its stakeholders, its impact on the community and environment, and its role in the wider society. It is earned through responsible behaviour, transparency and accountability.

In practice, businesses that operate under a social licence are those that focus on being ethical, sustainable and socially responsible. This means that they are taking into account the needs of all of their stakeholders, including customers, employees, suppliers, local communities and the environment. They are also taking into account their wider social and environmental responsibilities, such as their impact on climate change and human rights.

A business with a social licence is more likely to be successful in the long-term, as it is better able to maintain its reputation and trust with its stakeholders, customers and the wider public. This is why it is so important for businesses to understand and manage the risks associated with their operations, as any misstep could have serious implications for their social licence.

When it comes to behaviour that is consistent or inconsistent with the conditions of a social licence, there are certain key areas that businesses should focus on. These include:

• Ethical practices: This includes ensuring that all business operations are conducted in an ethical and responsible manner, free from corruption and bribery.

• Transparency and accountability: This includes being transparent and accountable in all business activities. This means being open and honest with customers, stakeholders and the wider public about business activities, operations and decisions.

• Respect for the environment: This includes taking measures to reduce the environmental impact of business activities, such as using green technologies, reducing waste and emissions, and promoting the responsible use of natural resources.

• Respect for human rights: This includes taking steps to ensure that all employees are treated fairly and with respect, and that there are no human rights abuses in business operations.

• Respect for local communities: This includes taking steps to ensure that local communities are consulted and involved in decision-making, and that their interests are taken into account.

Ultimately, businesses that operate under a social licence are more likely to be successful in the long-term. This is why it is so important for businesses to understand and manage the risks associated with their operations, and take steps to ensure that their behaviour is consistent with the conditions of a social licence. By doing so, businesses will be better able to maintain their reputation and trust with their stakeholders, customers and the wider public.

At Compliance Quarter, we understand the importance of a social licence and offer a range of services to help businesses understand and manage the risks associated with their operations. Our services include risk management and compliance, governance and assurance, and internal audit. Get in touch with us today to learn more about how we can help your business maintain its social licence.

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