When we ask our Social Impact Assessment (SIA) expert Weronika Felcis for a brief description of Social License to Operate (SLO) in the renewable energy industry, she points out that SLO represents an intangible, implicit agreement between companies and the communities they operate within.

Ecosoul Social Impact Assessment expert Weronika Felcis
She also mentioned that performing Social Impact Assessment does not guarantee Social License to Operate, but it is the best first step you can take to obtain it.
Without a social license to operate the project carries high risks of ignoring the needs for timely information through adequate communication channels, accurate mitigation measures and well calibrated benefits for the local community, eventually resulting in negative perceptions and adverse social impacts.
Weronika underlines that from a business perspective, lacking SLO can incur both immediate and long-term costs. Not obtaining a SLO for a renewable energy project can lead to several costs and challenges, for example:
Delays and Increased Costs: Without community support, projects can face delays due to protests and legal challenges. These delays can increase the overall cost of the project.
Reputation Damage: A lack of social license can harm the developer's reputation, making it harder to gain community support for future projects. This can also affect relationships with investors and other stakeholders.
Reduced Market Value: Projects without community backing may be less attractive to potential buyers, reducing the market value of the project. Buyers may be wary of inheriting community opposition and the associated risks.
Operational Challenges: Even if the project is completed, ongoing community opposition can lead to operational disruptions, increased security costs, and potential sabotage.
Regulatory and Legal Risks: Developers may face increased scrutiny from regulators and potential legal challenges, which can result in fines, additional compliance costs, or even project shutdowns.
Loss of Economic Benefits: This may also lead to the realization that certain competitors’ projects provide more significant advantages for local communities. Consequently, local governments might feel compelled to restrict the issuance of permits and approvals to developers.
Performing Social Impact Assessment does not guarantee Social License to Operate and without such the project carries high risks of negatively affecting the local community.
Conversely, possessing SLO cultivates a positive reputation and enables organizations to respond quickly to challenges. However, once lost, regaining SLO can prove to be an arduous task.
SLO is fostered through early and comprehensive engagement, consistent actions, transparency, timely communication, and community-led development initiatives. The importance of representation and the delivery of timely, detailed information in an accessible format cannot be overstated.
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