Column: Social License in Canada
On 20 April, Alan Ross, a partner in Borden Ladner Gervais’ Calgary office, was invited to offer his insight to the Senate of Canada’s Transport and Communications Committee on their ongoing study of the transport of crude oil in Canada.
At its essence, social license is the demand on, and expectations for, business enterprise that emerges from neighborhoods, environmental groups, First Nations, communities, and other members of the surrounding civil society. It is not a literal licensing arrangement but a “metaphor to encapsulate values, activities, and ideals that companies must espouse within society to ensure successful operation.”
Social license issues have become part of any sophisticated corporate risk management strategy. In sectors with highly visible business activities, long-term horizons, high exposure to global markets, or a wide range of stakeholders keen to influence the business, the need for a social license to operate is even more important.
In the current climate for pipeline development, companies are generally viewed as responsible for obtaining social license. The role of government is sometimes obscured in that debate. However, governments, as both regulators and recipients of a share of resource rents, have an important role to play. Both federal and provincial governments’ role in the social license debate arises from their powers to exercise reasonable control over persons and property within their jurisdictions respecting security, environment, health, safety, and welfare, among other interests. The federal government can address social license by improving regulatory processes that exist to ensure public trust. Alternately, governments and regulators through legislation, public policy, or ensuring public trust in institutions, can facilitate social license and the public acceptance necessary for new energy projects.
Social license is largely untested as a regulatory concept, but can be considered a form of regulation by drawing from market forces and norms that encourage certain types of behavior. Because there are consequences for failing to comply with social license conditions, such as reputational damage, delay, or ultimately preclusion of a natural resource project, it is nonetheless a de facto form of regulation.