achieve magazine recently spoke to Bruce Harvey, Global Practice Leader - Communities and Social Performance, Rio Tinto about the concept of a social licence to operate, defined as the basic permission that society gives to any corporate organisation to conduct its activities.
achieve – Tell us about your work as Global Practice Leader – Communities and Social Performance. What does that encompass?
Bruce Harvey – Communities in Rio Tinto means people who are directly affected by the activities of our operations, ie the people who live in the valley of the mining operation or in the shadow of the facility. Social performance embraces all the things that we promise to do with them and actually follow through to make sure we do what we said we would do.
achieve – We’ve heard of corporate social responsibility and other terms like sustainability development. How does social licence to operate differ to those established structures?
Bruce Harvey – Corporate social responsibility and corporate citizenship are more like narratives that try to encapsulate some thinking. Social licence to operate is a little different in the sense that it reflects a contemporary expectation of society. If we think about what’s happened in the world in the last 50 years, previously the resource sector secured its licence to operate at the discretion of government. In fact, we still do. And that’s called a legal licence and permits and licences are granted and we live up to the expectations and they are maintained. But in the world of globalisation and in an increasing world of scrutiny and mobilisation of local voices, if you don’t have the broad based support of local people for what you want to do, then you won’t get your legal licence. And even if you’ve got your legal licence and you’ve got 5,000 very disgruntled local people protesting at your doorstep, it’s a very brave politician that’s going to roll over 5,000 constituents. So in order for us to maintain our legal licence, we have to earn our social licence and we have to deliver that up to the government and say we’ve done our job, now you do yours. So it’s much more... it reflects a direct engagement and a direct broad-based social contract with the host community around what they expect of us and thence we go on and secure our legal licence.
achieve – Well let’s focus on some geographies in particular, say West Africa, Mongolia, South America, places where Rio Tinto is active. You’ve had lots of international experience. From what we gather, you’re the first person on the ground when Rio is looking at a new venture. So tell us about social licence to operate in those geographies.
Bruce Harvey – New projects are going to be developed in economic frontiers, whether they are in northern Australia, central Asia, northern Canada or even parts of the US. They are economic frontiers, there’s no infrastructure, there’s no large population of skilled people. And we’ve done it very successfully in Australia and there’s no reason why we can’t develop these projects and economic frontiers elsewhere in the world. So the principles are pretty much the same except for arguably the degree of the rule of law and that’s really the difference. But remember that conduct – people’s conduct and societal conduct – is largely driven by societal norms, not by law. And the key thing about societal norms is that they are maintained and kept in place by peer pressure and peer review. So we should be earning our social licence through fitting in and adapting to the prevailing social norms and acceptable social norms and the legal requirements are simply a complementary element to that.
achieve – So in the course of trying to fit in, what kind of issues could arise to threaten an industry’s social licence to operate?
Bruce Harvey – When a major mineral project is going to be developed, we’re talking about huge psychological and sociological impacts so it’s inevitable that there’s going to be a great deal of disruption to the way life is lived around that location, and all sorts of disruptions are unleashed by that thought. So there are power imbalances, local authority hierarchies are disturbed, and it brings about a great deal of angst in the community and potential for disruption – worse than disruption – the potential for the fabric of that society to be actually pulled apart. Firstly, we have to listen to what’s going on, what people are saying and not react to the first thing that’s said. It’s a bit like in meeting psychology: storming, norming and performing. You’re going to have to expect that for a year or two there’s going to be a lot of storming and then you might get to some norming and then as things sort of settle down and shake out, you might actually get to performing if you go about it properly. So we have to genuinely listen to what people are saying to us and not just glibly presume that we’ve heard it properly.
achieve – How important is cultural heritage to gaining and maintaining social licence to operate?
Bruce Harvey – I think it’s very important. People want economic progress. They want access to the economic opportunities that our operations and the development of them engenders, particularly for their children and grandchildren. But they want to be able to do that within a pace of their own perspective of life and recognising the idiosyncrasies of their own way of living. My experience shows that if we pay attention to what’s important to other people, they will come around and pay attention to what’s important to us – and sooner than you may think. So recognising people’s cultural perspectives on life and not just the physical manifestations of rock art or carvings – the non material, the songs, the dance, the language, the stories, the things that grandmothers tell their children on their knee – because that’s what brings about societal stability.
achieve – Looking at the big continents like South America and Africa, history tells us that local communities and the world’s indigenous people have received very little benefit from development over the centuries, very little from mining in particular. So what’s changed today?
Bruce Harvey – Things are changing because I think under the conditions of globalisation, people are seeing and recognising the power and the desire and the aspirations of strong, small nations of people, particularly those who have preserved their languages. Europe has actually got strong small nations of people: Slovenians and Finnish and the Swiss. If you think about the really strong, small nations of Europe, they are the ones that have preserved their identity and preserved their language and some of them very nearly lost it in the 19th century. So it’s a fascinating area and most certainly we are moving as a company to recognise the local demographic presence and frequently it’s the majority presence in those economic frontiers where we’re operating and provide for their economic participation in our projects. So Australia is a good example. Ten years ago less than 0.5 per cent of our workforce were indigenous Australians. Now nine per cent of our workforce are indigenous Australians. We’re rapidly approaching 2,000 Aboriginal employees in Australia, the largest employer of indigenous people outside the public sector. It’s a result we’re very, very proud of.
achieve – Is there a temptation that social licence to operate might be treated as nothing more than hard-headed risk management?
Bruce Harvey – Well to some extent it is. We don’t make any apologies about that. We don’t do it because we’re good people. We are good people, but we don’t do it for that reason. We do it because it’s good business and we want to have societal stability to sustain our operations across two or three generations.
achieve – If you take away the ethical and moral dimension from it though, you’re just left with your financial focus. What are the pitfalls of being that cynical?
Bruce Harvey – What we want is long run stability. The financial focus is largely driven by steady state, stable systems. Long run enduring value to our shareholders is predicated on running an operation in a host society that is still going to be around in two or three decades’ time. So it’s all about understanding the dynamics of where you’re working, understanding the rapidly changing social dynamics of your host community, because they are rapidly changing. We come into communities saying, We’re going to dig a very large hole in your backyard or we’re going to construct this very large facility that is going to emit various kinds of gases and everything and it’s going to change your social and physical landscape. Things are changing anyway, but this is going to rapidly speed it up. There are other effects, but at the same time, we recognise that this is a big decision for us all to make and we’re all in it together. So how are we going to work in this rapidly changing social landscape over the next two or three generations?
achieve – Let’s take a look at a couple of recent very high profile case studies: The BP Deepwater Horizon rig disaster in the Gulf of Mexico and perhaps the coal seam gas industry in the US and Australia. Do those highly contentious operations have a social licence to operate today and, if so, how?
Bruce Harvey – There’s no question that BP lost its social licence in the Gulf of Mexico. It destroyed lots of livelihoods momentarily; it disrupted people’s lives, it lost their trust. I think I read last week that they’ve been issued a licence to resume drilling so they’ve got their legal licence back. And one presumes that they are working hard to get their social licence back. In Australia, the coal seam explorers have been behaving appallingly and as a geologist, I wonder why they would be doing that. As a young geologist I was working in many parts of Australia in pastoral and farming locations. I always went and spoke to the farmer. I always closed the gate and never went into someone’s property without them knowing that I was going to be there. I didn’t knock down fences. And if these things are happening now, I wonder what’s happened to simple human decency. I think a lot of the opprobrium and the sting of retribution coming from those farming communities in Queensland is due to the poor behaviour of some individuals.
achieve – What’s the ideal definition for the optimum state of relationship? Peaceful co-existence?
Bruce Harvey – I would like a co-existence of a critical and responsive engagement. I think that’s generally how societies work. It’s unrealistic to think that we’re going to receive high praise constantly, that we’re never going to get complaints about the inevitable dust that blows one day a year in a very high wind and we need to wake up to that fact. It’s a struggle. It should be a struggle; we should be prepared to adopt that struggle and anyone who thinks it’s ever going to be easy and that it can just be fixed with a few, simple, upfront protocols and then all just carry on the way that we’ve always been, is deluding themselves. This is a critical, rate determining step and a critical performance parameter right across the management structure of any organisation. They have to engage with it and they have to respond to it.
achieve – Give us a snapshot of what you think is a more robust structure.
Bruce Harvey – We call it community agreement-making. It’s something that was virtually pioneered for us in Australia. It’s a result of the land rights wars with Aboriginal people as they were known in the 1980s and early 90s. We now have full-blown participation agreements with all of our Aboriginal host communities in the Kimberley, in Cape York and in the Pilbara. They provide more than a social contract. It’s a formal contract and there’s a comprehensive provision of everything that we expect from each other, including mutual obligation. We have the provisions to hold each other to account; to keep the promises that we say we’re going to make. This worldwide trend is part of a tie to history. If I look all around the world, I’m seeing legislation more and more that I could generally call social consent and economic empowerment legislation. In Australia, it just happened to take the form of native title. In South Africa, it’s the mining charter and broad-based black economic empowerment. In Peru, it’s in the form of the new mining act. And everywhere in the world, local communities are more and more empowered to share in the economic opportunities that are engendered and to have some direct say over how those projects will proceed.
achieve – How do you get to the starting point of making these agreements better than the way we currently do it?
Bruce Harvey – I think we do it pretty well to be honest. It’s not a short process, it’s not transactional, it can’t be done by commercially focused lawyers. It must be made in a multi-disciplinary way with sociologists, anthropologists, with legal help and with resourcing to community groups. You go through a long process of struggle to determine what’s important to you and what’s important to us. We prefer to think of it as an interest-driven approach rather than a position-driven approach and so far we’ve been very successful, particularly in Australia. We haven’t had one project delay or cost overrun in 10 years because of a social issue in Australia and increasingly in other parts of the world it’s the same. In northern Canada, in parts of Africa, these are the expectations in Peru. So ironically, Australia has come very late to this process, but we may well have taken a leap-frog over the rest of the world and much like the rest of our mining expertise and technology it’s applicable elsewhere.
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© Sinclair Knight Merz
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