A selection of interesting articles we found recently providing insights into the concept of social licence to operate.

These papers are all from a special issue of the Journal of Business Ethics, 2016, vol. 136(4)

The social licence to operate
This article proposes a way to zoom in on the concept of the social license to operate (SLO) from the broader normative perspective of contractarianism. An SLO can be defined as a contractarian basis for the legitimacy of a company’s specific activity or project. “SLO”, as a fashionable expression, has its origins in business practice. From a normative viewpoint, the concept is closely related to social contract theory, and, as such, it has a political dimension.

After outlining the contractarian normative background to the SLO, the authors will show how academic concepts such as legitimacy and stakeholder management have a tendency to provide the intellectual underpinning for the business case for securing an SLO. While business case perspectives on the SLO may well be in line with the use of the term in business practice, this paper will highlight certain difficulties and ambiguities related to the instrumental use of the expression. In the final section, the authors briefly introduce the articles of this special issue to the reader and explain how they relate to the topic.

Read further at: Geert Demuijnck & Björn Fasterling. 2016. The Social License to Operate.
Journal of Business Ethics, 136(4), 675-685.


The business school’s right to operate 
The current crisis has come at a cost not only for big business but also for business schools. Business schools have been deemed largely responsible for developing and teaching socially dysfunctional curricula that, if anything, has served to promote and accelerate the kind of ruthless behaviour and lack of self-restraint and social irresponsibility among top executives that have been seen as causing the crisis.

As a result, many calls have been made for business schools to accept their responsibilities as social institutions and to work toward becoming more socially embedded and better attuned to public interests. In this paper, however, authors David Murillo & Steen Vallentin point to some of the barriers there may be in the way of business schools developing into responsible organizational citizens proper.

The authors argue that there are lines of resistance against responsibilisation operating at epistemological, institutional, and organization levels and that we need to take account of barriers on all these levels in order to properly capture the challenges that are involved in making the modern business school amenable to demands for more social responsibility. In terms of working toward overcoming such barriers, Murillo & Vallentin discuss how business education can become more socially embedded via the inclusion of ethical reflection and critical thinking.

For more detail, see: David Murillo & Steen Vallentin. 2016. The business school’s right to operate: responsibilization and resistance.
Journal of Business Ethics, 136(4), 743–757.


Social licence to operate in recent United Nations instruments on business and human rights and the juridification of CSR
The social licence to operate (SLO) concept is little developed in the academic literature so far. Deployment of the term was made by the United National (UN) Guiding Principles on Business and Human Rights and the UN ‘Protect, Respect and Remedy’ Framework, which apply SLO as an argument for responsible business conduct, connecting to social expectations and bridging to public regulation.

This UN guidance has had a significant bearing on how public regulators seek to influence business conduct beyond Human Rights to broader Corporate Social Responsibility (CSR) concerns. Drawing on examples of such public regulatory governance, this article explores and explains developments towards a juridification of CSR entailing efforts by public regulators to reach beyond jurisdictional and territorial limitations of conventional public law to address adverse effects of transnational economic activity.

Through analysis of an expansion of law into the normative framing of what constitutes responsible business conduct, the author demonstrates a process of juridification entailing a legal framing of social expectations of companies, a proliferation of law into the field of business ethics, and an increased regulation by law of social actors or processes.
Full details are at: Karin Buhmann. 2016. Public Regulators and CSR: The ‘Social Licence to Operate’ in Recent United Nations Instruments on Business and Human Rights and the Juridification of CSR.
Journal of Business Ethics, 136(4), 699-714.


Moral legitimacy in controversial projects and its relationship with social license to operate: a case study. 
Moral legitimacy entails intrinsic value and helps executives convince firm’s stakeholders and the general public of the ethical acceptability of an institution or its activities or projects. Social license to operate (SLO) is the social approval of those affected by a certain business activity, and it is receiving increasing attention, especially in the context of controversial projects such as mining and public works.

Moral legitimacy provides ethical support to SLO. Drawing from the Aristotelian-Thomistic tradition and taking substantive justice and the common good of society as the key references, this paper applies the Triple Font of Morality Theory and proposes four criteria which serve to evaluate moral legitimacy: (1) contribution of the project or activity to the common good in a better way than other alternatives (intended end),
(2) morality of the means and procedures employed (means elected),
(3) ethical evaluation of the situation including stakeholder concerns and needs (concurrent relevant circumstances), and
(4) ethical evaluation of reasonably foreseeable consequences associated with the project and how to minimise possible damage or risks, and balance foreseeable negative consequences and benefits. The application of these criteria is illustrated through a project, presented as a case study, which certainly involved controversy and problems with SLO. The project was the construction of a rail tunnel for a high-speed train near the foundations of the Sagrada Familia, the well-known monumental church in Barcelona, Spain.

Find out more at: Domènec Melé & Jaume Armengou. 2016. Moral Legitimacy in Controversial Projects and Its Relationship with Social License to Operate: A Case Study.
Journal of Business Ethics, 136(4), 729-742.


Community religion, employees, and the social license to operate 
The World Bank recently noted: “Social license to operate has traditionally referred to the conduct of firms with regard to the impact on local communities and the environment, but the definition has expanded in recent years to include issues related to worker and human rights” (World Bank 2013, http://go.worldbank.org/FZ88VMOM90).

In this paper, Cui, Jo & Velasquez examine a factor that can influence the kind of work conditions that can facilitate or obstruct a firm’s attempts to achieve the social license to operate (SLO). Specifically, the authors examine the empirical association between a company’s employee practices and the religiosity of its local community by investigating their fixed and endogenous effects.

Using a large and extensive U.S. sample, the researchers find a positive association between the “employee friendly” practices of a firm and the religiosity of the local community after controlling for several firm characteristics. In addition, after mitigating endogeneity with the dynamic panel system generalised method of moment and after employing several other econometric tests, they still find a robust positive association between the religiosity of the local community and employee-friendly practices. Since recent research has shown that the firm’s treatment of its stakeholders is a key to achieving an SLO, and since employees constitute a highly significant stakeholder group, Cui et al. interpret their results as supporting the view that religion is an important influence on the kinds of employee practices that can increase the likelihood that a firm will acquire the SLO.

See the full paper at: Cui, J., Jo, H. & Velasquez, M.G. 2016. Community Religion, Employees, and the Social License to Operate.
Journal of Business Ethics, 136(4), 775–807.