Trust, context and social licence in mining ecosystems

What is trust?

Although it is widely argued that trust is a necessary ingredient for delivering a social licence to operate, the two concepts have not always been adequately defined. In this article we define trust as the willingness of a community to be vulnerable to the project proponent's proposed and or ongoing activities.

By that we mean the extent to which the community will put its future in the hands of a mining organisation with the hope and belief that the mining executives will behave and act in the best interest of the community. Gleaning trust from this definition shows that vulnerability is important in the relationship between a mining firm and the community.

Meanwhile, social licence to operate is a generalised acceptance of the firm by the host community. That is, to what extent are the proposed activities accepted by the community? While some researchers have looked at acceptance as the standard social licence, others have distinguished between acceptance, approval and what they term psychological identification. Acceptance involves communities having no objections to the activities. Approval, which is at a higher level includes support for the project. Psychological identification is when communities associate with the organisation as part and parcel of their citizens. The relationship will be well advanced and trust deep-rooted as the level of social licence increases.

Literature is in agreement that for a meaningful licence to operate, there is need for building trust. Without trust nothing is possible. As Dr Kieren Moffat puts it, "Where there is trust in a relationship all things are possible for mining companies"

What are the dimensions of Trust

Calculus-based trust- This is the trust that is based on the belief that the transaction or relationship will result in more benefits than costs. For example, in mining contexts this includes the benefits from contributions being more than the perceived environmental impacts.

Relational trust-This trust is based on the quantity and quality of contacts or interactions between the mine site and the community. While mine sites often report on the quantity of engagements they have with communities, research suggests that the quality of engagement is more important. There is need for reliability, dependability and superior experience. Some people always ask about what the role of donations is. Donations on their own contribute to calculus trust. However, what we found in research is that when donations are used as a platform for genuine dialogue, they build relational trust. Donations and community development should be intentional.

Institutional-based trust- This trust is built upon exchanges between institutions and individuals. the systems and processes that are viewed as the rules of the game in communities will be important in building this kind of trust.

What conditions are necessary for trust?

What organisations have often overlooked is the role of the context. Trust is relational and context based. One mine site may use certain processes to build trust in one market while the same processes will not build trust in the next environment. This has been a challenge for global mining multinational corporations. They tend to paint all communities with the same brush and wonder why it's not working. The three important context-specific factors are inequalities, power imbalances and institutional voids.

Inequalities- in communities where there are inequalities characterised by the huge income or status differences, mining sites will have a more daunting task to create trust. This is because the people themselves do not trust each other and even if they have representatives, they will not trust them.

Power-imbalances - under conditions of power-imbalances among the stakeholders, and with the mine-site, it will be harder to establish trust. It is therefore in the best interest for mine sites to work towards correcting these imbalances to the long-term sustainability of the licence to operate. Organisations that maintain power-imbalances will know their existence is not necessarily based on social licence but maybe on the fact that they are squeezing personal freedoms, which is unethical.

Institutional voids- Institutions are the rules of the game. These are the processes and systems that govern how business and relationships are conducted. In emerging markets, there are serious challenges of poorly developed institutions in form of rule of law, lack of transparency in resources governance, violent national legacies, civil wars, state-perpetrated violence, dishonest and sometimes undemocratic governments, and unjust/non-equitable laws. It is generally argued that where citizens perceive the future to be bright, they tend to trust more-even strangers!

What does this mean for social licence?

Together, these ideas suggest that for the mining industry to have a full grip at the social licence, now is time to understand the context in which they operate, through research. Armed with an understanding of the context, the industry needs to diligently invest in building trust and actively addressing the historical legacies, where they can, rather than exacerbating them. Community development programs should be diligently executed to address imbalances and inequalities, specifically, ensuring they are not gender and demographics blind!

For further discussion on how to build trust for social licence to operate, even in hostile contexts, please visit voconiq or the author. Voconiq helps mining and other industries to build social licence to operate using engagement science, so that they avoid social risks, even in hostile jurisdictions.