Partner highlight: Social Cohesion and the Social License to Operate: A Framework for the SA Renewables Sector

The Renewable Energy Independent Power Producer Procurement Programme (REIPPPPP) process is an ambitious government plan to introduce renewable energy into the national energy mix and deliver on local socio-economic requirements for South Africans, particularly in impoverished rural areas, where most of the initiatives are located. The REIPPP requires IPP contractual obligations to contribute to local social and economic development in the geographic vicinity of the respective projects for the 20-year duration of the Power Purchase Agreements (PPA) between IPPs and Eskom.  The challenge is to invest the currently committed R1.17bn in a manner that results in maximum developmental benefits and minimal possible unintended consequences. The timeframes extend to 20 years to identify locality specific, appropriate and sustainable ways to govern and invest this money[1].

As Wlokas points out in his 2015 “A review of the local community development requirements in South Africa’s renewable energy procurement programme[2]” that, despite the specific attention to local communities in the REIPPP, there is no guidance for engagement with the local communities around projects. The degree to which communities participate in decision-making around the project’s local economic development investments seems therefore to be at the sole discretion of each company. In this respect, despite NSP and general commitments to socially cohesive participatory democratic engagements between the REIPPP sector and affected communities, the current practice is fragmented and siloed. Government policies are repeating the input/output checklist approaches that informed the Mining Social and Labout Plans fragmented and often conflictual experiences.

Failing to build a well-considered and stakeholder-informed development strategy can result in failed development initiatives and ongoing headaches that undermine the broader strategy of the IPP. Private sector, government, communities and civil society have the opportunity to collaborate and build capacity in order to translate these significant investments into a meaningful contribution towards the country’s developmental goals as embodied in the government’s strategic infrastructure projects (SIPs) and the National Development Plan (NDP)[3].

The NDP describes social cohesion as ‘the anchor strategy’ without which all efforts to promote growth, create jobs and eradicate inequality would flounder. It is centred on building trust within communities and among all sectors of society. Shared objectives for increased investment in critical sectors of the economy, enterprise and job-creating economic growth and better outcomes in education and health can only be achieved if we build on the basis of social cohesion. Social Cohesion is defined by Monson et al 2012 as, “the positive nature of relationships between individuals, groups, and institutions within a shared space, community, or society”, noting “a cohesive community to be the one which is able to deal with its [inevitable) conflicts [and tensions] in ways that do not result in violence, chronic tensions or extreme marginalization of certain sub-groups[4].

The Social License to Operate (SLO) concept can assist IPPs in framing their engagement strategies with impacted communities and stakeholders in a manner that contributes to building greater social cohesion at local and broader levels. SLO has evolved fairly recently from the broader and more established notions of “corporate social responsibility” and “shared values’ and refers to the level of acceptance or approval by local communities and stakeholders of organisations and their operations. SLO is based on the idea that institutions and companies require ’social permission’, not only regulatory permission, to conduct their business. This ‘permission’ rides on developing (measurable) relationship legitimacy, credibility and trust with affected communities and stakeholders and is becoming a tangible consideration for financiers and proponents of major renewables projects. 2020 is the second straight year where nearly half (44%) of global mining and metals executives rank losing social support as the most pressing threat to their operations[5].

A loss of social support is not only a risk to the companies’ bottom lines, but also to the surrounding communities. Further, given the significant proposed investments the REIPPP sector is committing to often-impoverished rural areas, also to regional and national concerns. ‘Loss of social support’ can translate into fractured social cohesion through conflicts that arise as a result of the exclusion of vulnerable groups in credible decision-making processes as to who benefits from these socio-economic resources. Especially if they impact on the livelihoods of these groups, this has the possibility of exacerbating exisiting inequalities already prevalent within that community.

A study of over 200 renewable energy projects perfomed by the  Inter-American Development Bank has direct application in SA. The main drivers of conflict are only too well known by the mining sector in SA and consist of, 1) inefficient planning and lack of adequate consultation (this was the highest source of conflict reported), 2) a Lack of meaningful and sustainable community benefits, and 3) reduced access to resources: This led to conflicts where local communities were concerned about losing access to agricultural and marine resources they depend on for their livelihoods and daily income as well as complex indigenous land ownership structures, and the influence of context specific legacy issues[6]. These are the very issues that have historically characterised the high levels of conflict and mistrust between mining companies and the communities that host them. In many cases these trust deficits exist because of decades of failure to meet mutual commitments and expectations by both mining companies and other stakeholders.  SLO is a process over time beween industry and communities where trust is built as a result of having a similar vision for a positive future together.

According to the seminal Thomson and Boutilier framework[7], SLO exists in a four-level hierarchy. To advance in the hierarchy, the project must meet criteria of legitimacy, credibility, and trust. At the lowest level, SLO does not exist, and projects cannot proceed, as the community perceives them as illegitimate. At the highest level there is a perception that relations between the stakeholders’ institutions and the company are based on an enduring regard for each other’s interests.

Thomson and Boutilier claim that the level of SLO granted to a company is inversely related to the level of socio-political risk a company faces. Losing a social license represents extremely high socio-political risk. The next highest level of SLO is acceptance of the project. If the company establishes its credibility, the social license rises to the level of approval. Over time, if trust is established, the social license could rise to the level of psychological identification, where the level of socio-political risk is very low.

These go through various stages: A) Economic legitimacy: is the company perceived to offer benefits to the community? If this is not the case, the initiative is often fatally stalled. B) Socio-political legitimacy:   does the company contribute to the well-being of the region and act fairly? C) Interactional trust: does the company engage in mutual and transparent dialogue, and encourage gemnuine reciprocity D) Finally, institutionalized trust where communities understand that relations between the representative organizations and the company are based on an ‘enduring regard for each other’s interests’[8]. This of course sounds like building social cohesion (as stated above) as  “the positive nature of relationships between individuals, groups, and institutions within a shared space, community, or society.[9]

 In the end its not about “show me the money”, as it is about how we talk to each other, build trust and credibility between key players, balance out power relations, and share decision-making processes and institutions in transparent and accountable manners. The SLO model may assist IPPs to make sense of the confusing array of challenges raised by the contractual obligations to contribute to local social and economic development and the complexity of our social cohesion project.

[1] https://www.futuregrowth.co.za/newsroom/reippp-comes-of-age/

[2] Wlokas, H.L., A review of the local community development requirements in South Africa’s renewable energy procurement programme WWF Technical Report 2017

[3] Holle L. Wlokas1*, Peter Westoby2, Sue Soal “: Learning from the literature on community development for the implementation of community renewables in South Africa” Journal of Energy in Southern Africa 28(1): 35–44

[4] Tamlyn Monson, Kathryn Takabvirwa, Jessica Anderson, Tara Polzer Ngwato and Iriann Freemantle “Promoting social cohesion and countering violence against foreigners and other ‘outsiders’” October 10, 2012  Policy Briefs

[5] https://www.mining.com/stakeholder-pressure-ethical-investing-make-losing-licence-to-operate-biggest-threat-to-miners/

[6] International Finance Corporation “Local Benefit Sharing in Large-Scale Wind and Solar Projects” Discussion Paper June 2019 World Bank Group. https://www.commdev.org/wp-content/uploads/2019/06/IFC-LargeScaleWindSolar_Web.pdf

[7] Boutilier, R. G. (2011) Modelling And Measuring The Social License To Operate:- Fruits Of A Dialogue Between Theory And Practice https://www.socialicense.com/publications/Modelling%20and%20Measuring%20the%20SLO.pdf

[8] Thomson, I. & Boutilier, R. G. (2011). Social license to operate. In P.Darling (Ed.), SME  Mining Engineering Handbook (pp. 1779-1796). Littleton, CO: Society for Mining, Metallurgy and Exploration

[9] Monson et al 2012

Shirlane has extensive programme management experience in both the public, private and civil society sector as well as working with the donor and international development community. Much of her work has focused on managing public health and poverty alleviation programmes that range across many disciplines. She has had the privilege of learning from many communities and leaders scattered across Southern Africa and this has translated into rigorous development practice rooted in both evidence based approaches and participatory methodologies. At various employments, Shirlane has been brought in to initiate and scale up programmes. Partnership development has been a key thread in her management style and has produced a number of successful collaborations.

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