Evaluating and Measuring the Social License to Operate

Today, obtaining legal permits is no longer sufficient for companies aiming to operate sustainably. Firms are increasingly expected to gain the trust and acceptance of the communities in which they operate. This concept is known as the Social License to Operate (SLO). This paper explores how SLO influences businesses performance, especially in sectors where environmental and social impact is significant. The paper analysis the evolution of the SLO concept, presents a number of approaches of measuring the SLO, and highlights some challenges associated with applying it in various industries.

The purpose of the study is to understand the role of SLO in the financial performance of businesses which face pressure from stakeholders, regulators, and investors to demonstrate social and environmental responsibility. Also, this paper examines the evolution of SLO and presents the measurement methodologies including the challenges and connections with overall business performance. The paper analysis how businesses generate stakeholder trust, as well as the financial and operational risks of failing to obtain an SLO. Afocus area is measuring the SLO. The paper highlights some models described in the literature and analytical research that quantifies stakeholder sentiment across various industries and regions. The study shows that companies with a strong Social License to Operate tend to win greater investor confidence, experience fewer delays in project approvals, and face lower reputational risks. Companies that dismiss the importance of their SLO face the consequences—financial and operational issues, and a loss of investor confidence. To avoid this, businesses should focus on being transparent and building a real relationships with its stakeholders.