In Mongolia, obtaining a social license to operate in mining is becoming one of the most important issues in the sector. In addition to obtaining legally required licenses to operate mines from the government and other regulatory agencies, a social license has been increasingly needed to operate mining activities in the country within the last few years. This trend has also been observed on a global level.
There is no one commonly accepted definition of a social license to operate. A social license to operate, in a broad sense, refers to the ongoing acceptance of a company or industry's standard business practices and operating procedures by its employees, stakeholders, and the general public. A social license does not refer to a formal agreement or document but to the real or current credibility, reliability, and acceptance of organizations and projects. A social license to operate is created and maintained slowly over time as the actions of a company build trust with the community it operates in and other stakeholders. The concept has evolved fairly recently from the broader and more established notions of “corporate social responsibility” and “social acceptability,” and is also closely tied to the concept of sustainability. During the last two decades, the concept of a social license to operate has become more significant.
Why has social licensing become more important? One reason is that communities are becoming more aware of and concerned about the industrial activities in their neighborhoods and the ways in which those activities can affect local livelihood and the environment. On the other hand, as sustainability has become a more salient issue, companies and governments are paying more attention to the environmental and social impacts of industrial activities. The central idea is that some things that make sense from a cost-cutting perspective can cost a company or an economy much more in the long run if it endangers their social license.