WHAT IS A SOCIAL LICENCE TO OPERATE (SLO)?

Contributor: Tammy Marshall

WHAT IS A SOCIAL LICENCE TO OPERATE (SLO)?

Rules and regulations are par for the course when you run a business but things get a bit murkier when you venture into the sharing economy. 

Business models like Airbnb, Uber, Airtasker and bike-share schemes are increasingly controlled by government-mandated laws but there’s still a grey area when it comes to community impact. 

Airbnb has been accused of impacting housing affordability in popular tourist city cities like Barcelona, while on the other hand, it has been being lauded as a solution to the housing affordability crisis – as well as a solution to the lack of available tourist accommodation – in places like New York and Sydney. 

Bike share schemes have emerged as a new sustainable transport option but they have also attracted negative attention due to the bikes being left in inappropriate places. 

While all of these sharing platforms have been criticised by some community members, there are others who support – and earn money from – the economic shifts they are enabling.

Detractors refer to the dark side of the sharing economy, claiming that the ‘gig economy’ is eroding industry standards and endangering the public. 

For example, Transport for London declined to renew the regulatory licence of Uber, citing ‘a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications’ (Transport for London, 2017), including the reporting of serious criminal offences.

News stories abound to support these fears. There was a recent case where a guest who had failed to pay for a second night of accommodation was beaten to death by his Airbnb host. 

But despite some the grey areas of legislation and negative press, the sharing economy continues to thrive and will have an estimated value of USD335 billion by 2025 (Yaraghi and Ravi, 2017). 

So what exactly is a social licence to operate?

In short, it’s what’s granted when a community supports or gives permission to a particular business or activity.

The term social licence was first coined in relation to the mining and forestry industries where community acceptance is a critical factor in the businesses ability to operate.

Experience in the mining sector shows that losing your social licence can have very real consequences, like the risk that governments step in and impose new regulations or that the costs of doing business become much higher.

SO HOW CAN YOU NEGOTIATE A SOCIAL LICENCE?

According to B Hive Founder Tammy Marshall, the key factors involved in the process are trust, the distribution of benefits and costs, communication and decision-making processes, and a company’s ability to adapt when conditions change.

“We have learnt from that mining sector that you need to prioritise meaningful contact with the local community and make small promises early on that you then go on to keep in order to prove your trustworthiness as a business.

“When things like negative media coverage, protests, accidents or economic disruptions that lead to job losses or a loss of investment occur, that’s when you need to demonstrate that the business is operating with the community’s interests in mind and not just the interests of business owners and shareholders,” says Marshall. 

Do you support the social licences of sharing economy businesses or are you opposed to them? We would love to hear your thoughts in the comments below. 

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