1. Social Licence to Operate
Ethics, law and project risk
NELA State Conference, 1 September 2017
Sally Audeyev _1

2. 1 2 3 The nature of Social Licence to Operate
Aligned with the law and business objectives
Conundrums

3. The nature of
“Social Licence to Operate”

4. MCA
the ‘social licence to operate’ is an unwritten social contract. Unless a company earns that licence, and maintains it on the basis of good performance on the ground, and community trust, there will undoubtedly be negative implications.”
Minerals Council of Australia (2006)

5. Ethics in Community Engagement

6. Ethics in Community Engagement
Courage
Inclusiveness
Commitment
Respect and honesty
Flexibility
Practicability
Mutual obligation
Transparency

7. “It is good business for us to make sure the communities, markets and ecologies in which we operate are strong, open and healthy.” -- Chief Executive BHP (The Australian, 4/7/2017)

8. “The mining industry needs to build better relationships with the communities it operates in if it is to combat rising shareholder activism, more frequent government intervention and higher community expectations, South32 chief executive Graham Kerr says.” Financial Review, 8/6/2017

9. Aligned with
business and the law

10. “Today, the business community is coming to understand that principles and profits are two sides of the same coin”
H.E. Ban Ki-moon
UN Secretary-General

11. Commercial objectives
Reputation
Insurance
Investors
Finance
Project risk

12. Aligned with the law
Native title agreements: authorisation, FPIC, benefits
Anti-bribery
Environmental Protection legislation
Modern Slavery
Directors duties
ASX disclosure rules

13. Approvals processes require broader consultation and evaluation of wider range of factors

14. A new approach?
Using publicity and reputational risk to drive a change in corporate behaviour?

15. Due Diligence Due Diligence is key for prevention and compliance
And regulators are now requiring you to demonstrate it

16. Conundrums

18. Risk management… Documents Reasonable- ness
Demonstrate how you have met regulator polices.
Be prepared for regulator to rely on documents and plans you provide
Documents
Reasonable- ness
Ensure you have provided sufficient information for the regulator’s decision to be considered reasonable _1

19. Risk management… Consultation Legal process
Engage stakeholders to ensure there are no surprises
Engage with stakeholders to prevent procedural challenges
Consultation
Legal process
Follow the process as per law
Regulators give advice only _1

21. Board Directors’ Duties – Edelman J:
“harm” to the interests of the company is not limited to financial interests of the company, but extends to any interest of the company, which could include reputation and ability to comply with the law.
Reporting Obligations

23. A new approach to law
Governments are adopting UNGP HR Principles and using publicity and reputational risk to drive a change in corporate behaviour
A light handed approach to regulation (and government resources) can drive significant change to business practices
The focus is on requiring and demonstrating due diligence
Absence of government enforcement, fines and penalties does not necessarily mean low risk
Statements can be used as evidence of (lack of) due diligence in offence proceedings elsewhere (eg Australia)
Australia
UK Modern Slavery Act
French Vigilance Plans

24. A key role for legal advisors
Due diligence before entering business relationships
Exercise leverage to require compliance contractually
Monitor and review throughout course of business relationship – management and prevention systems
Meet public reporting legal and non-legal standards, with careful verification before release
Treat this as you would a legal compliance issue

25. Wrap up
Ethical engagement results in good business outcomes and puts you on track to comply with the law
Diligence… diligence… diligence

26. Thank you
Sally Audeyev Partner Perth T M