Photo: Supplied/ Greenpeace
It's very valuable but you can't buy it, and if you lose it there can be serious consequences. Why a social licence to operate is a must now for corporates.
Air NZ, Fonterra and the power giants have two things in common. They're all accused of charging customers too much and making big profits.
They're also accused of putting their social licence at risk.
For Fonterra it is about the price of butter; Air New Zealand's is regional flights and ticket prices. The Post's Andrea Vance wrote that for "this taxpayer-funded symbol of home" its social licence is fraying as "the emotional connection wears thin, especially on regional routes where there's no competition".
Add in the forestry industry and its poor reputation for clogging beaches and rivers with slash, and big business doesn't look good when it comes to public trust and confidence.
The Detail looks at the power of social licence and why companies take it seriously.
"The commercial fishing industry has lost a lot of social licence over bottom trawling," Newsroom business reporter Andrew Bevin says. "You've got the forestry sector following (Cyclone) Gabrielle's slash and silt. Power companies, banks making mega profits while Joe Public is in a cost of living crisis."
Social licence is a difficult concept to grasp. You can't put a dollar figure on it and you can't apply for it. One expert who has written about it for years resists using the phrase.
"It's sloppy," says Kevin Jenkins, a business consultant.
Ask people to explain it and you'll get multiple descriptions, he says.
"It's a bit like economists - three economists; four opinions. Three people, four or five opinions about what social licence is."
He prefers using the phrase 'trust and confidence'.
It is a current topic with the Institute of Directors but it is nothing new, says Jenkins. A mining industry boss coined the phrase in the 1990s after the Marcopper mine disaster in the Philippines when dozens of people were killed.
"One of the mining company executives came out after and said, 'we need to rebuild our social licence'.
"So it actually came from the corporate side not the NGO side."
He thinks it has had a second coming with debate about ESG, or environmental, social and governance; a set of standards used for evaluating a company's ethical and sustainable practices.
The phrase has recently been used in Air NZ's annual reports; the Ministry for Business, Innovation and Employment talks about it in its Aerospace Strategy. "We will emphasise social licence, awareness raising and inspiration in the Aerospace Strategy through Pillar Three, 'Aerospace Nation'," its report says.
'Making sure we're good people'
The Australian-owned forestry company One Forty One became all too aware of the importance of social licence when it angered outdoor groups for blocking most of its access routes for months on end, year after year, to Mt Richmond Forest Park at the top of the South Island.
Shaun Truelock, One Forty One's general manager. Photo: Tim Cuff
Last year, fed up with the lack of progress, Federated Mountain Clubs complained about One Forty One in a submission to the Forest Stewardship Council.
The council was about to audit the company for certification, a globally recognised label that says it complies with environmental, social and economic standards.
Federated Mountain Clubs said OneFortyOne was failing to fully meet industry standards because it didn't support local communities' economic and social activities, and called for a working group of interested parties.
One Forty One New Zealand executive general manager Shaun Truelock admits relations were strained.
"It's fair to say there was probably a few upset people in the community, and it was just a clear understanding on what our impact was having on the community and how we can address it," he tells The Detail.
In an industry known for its dangers, Truelock says the company's priority was safety, hence the closure of access routes. But he says it was important for the business to have a good relationship with the community and for its workers not to be ashamed to work at One Forty One.
"Although we're a big corporate company, we've still got employees and mums and dads working with us with young kids and they form part of the community as well.
"For us this social licence is making sure that we're good people to work with, that we look after our communities but more importantly that we create a work environment that our staff feel comfortable with and being proud of being part of OneFortyOne."
Jenkins is part of a New Zealand team working on the chapter of a book about social licence. His team is writing about the aerospace and aviation industry.
"Aviation in New Zealand, there's loads of issues. One is regional connectivity...people are grumbling about that."
Also, governments all over the world are grappling with the growing plethora of "flying machines" from drones to electric airplanes to spaceships.
"How the heck do you regulate those?"
People might feel that they have no power over behemoths like Meta and Google, which seem to abuse their social licence but Jenkins says they are also grappling with ways to stay relevant in a world where AI seems to be taking over.
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