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Risk of losing 'Social Licence' is now key for projects in Africa

Published: 01 July 2017 |  African Decisions

Among the range of risks that companies face in Africa today, the social licence to operate is now becoming key. Accor­ding to Vis Reddy, MD of SRK Consulting South Africa, the company's expertise in a range of technical engineering disciplines has, in the last 40 years, expanded steadily into the fields of environmental management, social engagement and  good governance.

'Whether we are working with clients in mining, energy, water, waste or civil infrastructure, our environmental, social and governance experts are increasingly involved to help manage the growing risks posed to the clients' social licence to operate,' says Reddy.

The field of environment, social and governance addresses solutions across a number of business risk areas right through the project life cycle. These range from authorisations, permitting, policy development and governance assessment, as well as stakeholder engagement and facilitation, and decommissioning and closure. Reddy says the number of incidents where projects being delayed or even cancelled due to community disruption or other breakdowns in stakeholder relationships was testament to the pressing need for these professional interventions.

According to Darryl! Kilian, SRK Consulting partner and principal environmental consultant, it is no longer enough for companies to simply comply with in-country legislation. Strong and positive relationships with all stakeholders are now a vital part of project sustainability.

'Risks to social licence are increasing as socio­ political environments become more complex,' says Kilian. 'Stakeholders like local communities are now more vocal when they feel their human rights are not being respected, and shareholders generally  want  to  avoid  reputational damage.'

He says companies today need to move along the sustainability continuum - from reactive to proactive, and further towards creating shared value. To do this effectively, they need to imple­ ment a comprehensive stakeholder engagement plan for all stages of  their projects and  operation.

More than that, this process requires fully integrating environmental and social management into core business practice, says Kilian, a shift that would also call for stronger alignment between corporate purpose and mission on the one hand, and operational structures on the other.

'As greater pressure is exerted on companies by governments, communities and shareholders, it will be impossible to pursue "business as usual" by compliance alone. The growing risk to their social licence to operate is pushing companies to inte­ grate environmental, social and governance impe­ ratives across the entire organisation - rather than leaving these issues to a specific business unit.'

He emphasises that financial institutions are also concerned about borrowers' governance risks, and so lenders such as the African Development Bank apply their own benchmarks and standards for environmental and social impact assessments, which are frequently more stringent than those in-country.

'SRK therefore brings expertise to mitigate social licence risks. We understand the full range of institutional requirements, and we apply industry good-practice tools and experience to empower clients as they work towards sustainability,' says Reddy. 'Our global teams work in over 45 offices across 19 countries, and collaborate across borders and disciplines for best results.

African Decisions Risk of losing Social Licence is now key 01Jul17

Vis Reddy, MD, principal scientist (geochemistry) | SRK Consulting / Darryll Kilian, partner, principal environmental scientist/consultant | SRK Consulting

SRK Africa