Treating public permission to operate as a core asset, rather than an optional extra, defines a social licence. For Australian companies, this distinction increasingly separates genuine business value from merely shifting costs onto society (Grigg et al., 2026; Roe, 2026a; AICD, n.d.; Sustainable Business Council, n.d.; August, n.d.; Breakey et al., 2022; Molloy, 2021; Connor, 2022).

What is a social licence?

A social licence to operate is the ongoing acceptance and approval of an organisation’s activities by its stakeholders and the broader community. Unlike a legal licence, it is not granted by a regulator once and filed away; it is implicit, conditional, and must be continually earned (AICD, n.d.; Sustainable Business Council, n.d.; August, n.d.; Breakey et al., 2022; Molloy, 2021).

It depends less on legal compliance and more on perceptions of integrity, respect, and responsibility toward employees, communities, customers, and the environment (Sustainable Business Council, n.d.; August, n.d.; Breakey et al., 2022; Connor, 2022).

Legal compliance sets the minimum standard. Social licence sets the standard society uses to decide whether to support, tolerate, or oppose a business and its projects (August, n.d.; Breakey et al., 2022; Connor, 2022; Sustainable Business Council, n.d.).

Beyond the law: why social licence is not optional

Some push back on the idea that social licence is “required” to operate, arguing that if a company meets legal obligations, it has the right to do business. However, law and legitimacy are not the same thing. The BHP and Officeworks stories illustrate why (Roe, 2026a; Jonson et al., 2026; Roe, 2026b; Grigg et al., 2026).

In BHP’s case, internal documents show the company walked away from a Pilbara processing plant that could have cut global emissions by an estimated 1.7 million tonnes a year, describing it as an “excellent social value opportunity” but not profitable enough compared with other projects. The decision was legal – yet it has triggered public scrutiny of whether BHP is serious about its social and climate commitments, and whether short‑term economics are trumping long‑term responsibility (Jonson et al., 2026; Knaus & Morton, 2026; Grigg et al., 2026).

Similarly, Officeworks’ decision to offshore hundreds of roles to India and the Philippines may be lawful and defensible on a narrow cost basis. However, for local workers and communities, it raises questions about loyalty, national capability and what “everyday low prices” mean when jobs are exported to lower‑wage markets. Again, the issue is not legality; it is whether the business is acting in a way that maintains public trust and a sense of fairness (Roe, 2026b; Daily Insight AU, 2026; Roe, 2026a).

Survival Without Social Licence

A company can survive for a time without a social licence – especially if it operates opaquely, has complex supply chains, or has limited visibility into its impacts. However, over the long term, eroding social licence invites community opposition, reputational damage, regulatory backlash and loss of talent and customers. Public tolerance is not a nice‑to‑have; it is part of the risk and cost base of doing business (Breakey et al., 2022; Molloy, 2021; Bice & Moffat, 2014; Sustainable Business Council, n.d.; August, n.d.).

Social licence and business value: profit vs cost to society

This is where the link to “business value” becomes critical. If a business ignores social licence, it might still book a profit – but it is not generating net value. It is transferring costs to society.

When companies offload emissions, underinvest in safety, underpay workers or hollow out local jobs in favour of lower‑cost jurisdictions, they reduce their own costs while increasing social, environmental and economic burdens for others. Those burdens show up later as public health impacts, social instability, political backlash, or the need for governments and communities to step in and repair damage (Knaus & Morton, 2026; Bice & Moffat, 2014; Grigg et al., 2026; Roe, 2026a; Sustainable Business Council, n.d.; Breakey et al., 2022; Roe, 2026b).

Operating with a social licence means internalising more of those impacts into business decisions instead of treating them as externalities. It means asking: (Connor, 2022; Sustainable Business Council, n.d.; August, n.d.).

• If we took full responsibility for our environmental, social and workforce impacts, would this still be the right decision?
• Are we building community capacity, skills and resilience, or quietly extracting value and leaving others to carry the consequences?

From this perspective, profit without social licence is not value creation; it is value extraction that ultimately shows up as a societal cost. A business only truly creates value when its outputs enhance, rather than erode, the wellbeing and capabilities of the communities and environments it depends on (Bice & Moffat, 2014; Sustainable Business Council, n.d.; Breakey et al., 2022; Connor, 2022).

Above the minimum: why law is the floor, not the ceiling

One of the most important aspects of social licence is that it deliberately sits above legal compliance. Laws are designed as minimum standards that can be applied uniformly across a whole economy, often lagging social expectations and complex realities on the ground (Sustainable Business Council, n.d.; Breakey et al., 2022; Bice & Moffat, 2014).

Social licence, by contrast:

• Responds faster than formal regulation to emerging harm, expectations and norms
• Reflects local values and stakeholder perspectives, not just abstract rules
• Requires genuine engagement, transparency and accountability, not just box‑ticking

Companies that treat law as the ceiling (“we will do everything the law allows”) are out of step in a world where communities, employees and customers expect more. Companies that treat law as the floor (“we will comply and act in line with our values and stakeholders’ expectations”) are the ones that maintain legitimacy through shocks, scrutiny and change (Molloy, 2021; August, n.d.; Connor, 2022; Sustainable Business Council, n.d.).

This is why social licence is central to sustainability. Long‑term sustainability is about maintaining the ecological, social, and economic systems that businesses depend on. Operating only to the letter of the law may technically keep you in business today. Operating with a social licence keeps your business model viable tomorrow (Breakey et al., 2022; Molloy, 2021; Sustainable Business Council, n.d.).

What operating with a social licence looks like

In practical terms, operating with a social licence means integrating integrity, accountability and respect into core decision‑making – not relegating them to a CSR report (August, n.d.; Molloy, 2021; Sustainable Business Council, n.d.).

Key characteristics include:

Ethics at the strategy table

Major decisions – investments, closures, offshoring, automation, restructures – are tested not only for financial returns but also for their impact on workers, communities, the environment, and national capability. Leaders ask, “Should we?” as rigorously as “Can we?” and “What does it return?” (Molloy, 2021; Sustainable Business Council, n.d.; Breakey et al., 2022).

Transparent trade-offs

When there are difficult trade-offs, the company is upfront about them, explains the rationale in plain language, and engages with those affected rather than hiding behind PR spin. Trust grows when people can see how and why decisions are made, even when they disagree (Connor, 2022; Sustainable Business Council, n.d.; August, n.d.).

Shared value over short‑term extraction

Projects are designed to create mutual benefit – for shareholders, employees, communities and the environment – rather than treating one group’s loss as another’s gain. This might mean investing in local skills, supporting transition pathways for workers, or choosing lower-emission options that slightly reduce margins but dramatically reduce long-term risk (Sustainable Business Council, n.d.; Molloy, 2021; Connor, 2022).

Accountability when things go wrong

When harm occurs, the company responds quickly, accepts responsibility where appropriate, and focuses on remedy and learning rather than defensiveness. That behaviour is often more important to social licence than the original incident (August, n.d.; Breakey et al., 2022; Sustainable Business Council, n.d.).

Embedding values into systems

Integrity and respect are reflected in incentives, governance, risk frameworks and day‑to‑day processes, not just value statements on a wall. Social licence becomes “how we do things around here”, not a project with a logo (Molloy, 2021; Sustainable Business Council, n.d.; August, n.d.).

Social licence and the wealth of nations

From a national perspective, social licence is tied to the question: what kind of economy are we building? If we reward only the narrow pursuit of profit, we risk hollowing out capabilities, trust and social cohesion. If we expect companies to internalise more of the social and environmental consequences of their decisions, we lay the groundwork for more resilient, fair and productive societies (Daily Insight AU, 2026; Roe, 2026a; Roe, 2026b; Breakey et al., 2022; Connor, 2022; Sustainable Business Council, n.d.; Molloy, 2021).

Economies that understand this will back business models that:

• Build local skills and high‑value capabilities, not just low‑cost labour arbitrage.
• Strengthen communities instead of fracturing them.
• Align private investment with long‑term public goals, from decarbonisation to digital inclusion.

In that sense, social licence is not a constraint on business; it is part of the enabling infrastructure of a healthy market economy. It is how societies signal what kinds of value creation they are willing to support – and which models they will eventually push back against (Breakey et al., 2022; Connor, 2022; Sustainable Business Council, n.d.; Molloy, 2021).

The right to operate in a sustainable future

Ultimately, the “right to operate” in a 21st‑century economy is more than a legal permission. It is a social contract: a recognition that companies benefit from public infrastructure, an educated workforce, stable institutions, and natural resources – and, in return, they are expected to contribute more than just short-term profits (Sustainable Business Council, n.d.; Breakey et al., 2022; Molloy, 2021).

Operating with a social licence places a company above the minimum legal standard and aligns it with the real expectations of the communities and nations that host it. It is central to the sustainability equation: without it, business outputs are ultimately reclassified as societal costs; with it, business becomes a partner in building shared prosperity (Connor, 2022; August, n.d.; Sustainable Business Council, n.d.).

For boards and executives, the question is no longer “Do we have to worry about social licence?” The question is:

“Are we prepared to run a business that may be legal, but lacks legitimacy – or are we committed to building one that society genuinely wants to see succeed?”

REFERENCES

AICD. (n.d.). What Is Social License to Operate and Why Is It Important for Organisations? [Professional Education]. Australian Institute of Company Directors Limited. Australian Institute of Company Directors Limited. https://www.aicd.com.au/company-policies/corporate-social-responsibility/socially-responsible-companies/social-license-to-operate.html

August. (n.d.). What is social licence and why should it affect the way you communicate with stakeholders? [Advertising]. August. https://www.august.com.au/archive/what-is-social-licence-and-why-should-it-affect-the-way-you-communicate-with-stakeholders

Bice, S., & Moffat, K. (2014). Social licence to operate and impact assessment. Impact Assessment and Project Appraisal, 32(4), 257–262. https://doi.org/doi.org/10.1080/14615517.2014.950122

Breakey, H., Sampford, C., Bossi, L., & Marshallsay, R. (2022). The Social License to Operate: Ethical Peril and Legitimacy Promise [University]. Griffith University. Griffith University. https://doi.org/10.1007/978-3-030-74725-1_23-1

Connor, J. (2022, December 3). What is a ‘Social Licence’ and why is it critical that businesses understand this term [Business]. Compliance Quarter. Compliance Quarter. https://www.compliancequarter.com.au/what-is-a-social-licence-and-why-will-is-it-critical-that-businesses-understand-this-term/

Daily Insight AU. (2026, May 29). The Real Reason Aussie Jobs Are Heading to India | Friday Focus [Information]. @DailyInsightAU. YouTube. https://www.youtube.com/watch?v=wz_5LV56jxs&t=84s

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J-Z

Jonson, A., Buckley, T., & Pollard, M. (2026, May 26). Up is not down: BHP in spotlight as epic decarbonisation walk-back revealed [News]. Renew Economy. Renew Economy. https://reneweconomy.com.au/up-is-not-down-bhp-in-spotlight-as-epic-decarbonisation-walk-back-revealed/amp/

Knaus, C., & Morton, A. (2026, May 25). World’s biggest miner BHP backtracks on climate action with key projects put on ice, leaked documents reveal [Information]. Climate Energy Finance. Https://Climateenergyfinance.Org/. https://climateenergyfinance.org/wp-content/uploads/2026/05/Guardian_Worlds-biggest-miner-BHP-backtracks-on-climate-action-with-key-projects-put-on-ice-leaked-documents-reveal.pdf

Molloy, F. (2021, February 25). How social licence is driving innovation in the mining industry [Government]. CSIRO. CSIRO. https://www.csiro.au/en/news/all/articles/2021/february/how-social-licence-is-driving-innovation-in-the-mining-industry

Roe, I. (2026a, June 1). Officeworks staff say plan to offshore Sydney jobs all about replacing them with cheap labour [News]. ABC. ABC. https://www.abc.net.au/news/2026-06-01/sydney-officeworks-offshoring-jobs-cost-cutting-staff-say/106739754

Roe, I. (2026b, May 29). Officeworks to offshore hundreds of Sydney and Melbourne jobs to India and Philippines [News]. ABC. ABC. https://www.abc.net.au/news/2026-05-29/nsw-officeworks-to-offshore-hundreds-of-jobs/106733660

Sustainable Business Council. (n.d.). Social Licence to Operate Paper [Informational]. Sustainable Business Council. Securityhumanrightshub.Org. https://www.securityhumanrightshub.org/media/pdf/resources/Social-Licence-to-Operate-Paper.pdf