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Establishing a License to Operate

Sustainability Is Key for Resource-Intensive Industries
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  • Resource-intensive companies can maintain a “license to operate” by successfully managing their social and environmental footprint.

  • As competition for resources intensifies, a license to operate is becoming as important to these companies as advanced technologies and engineering equipment.

  • Sustainability-driven actions can lead to a range of business benefits, including competitive advantage and operational innovations.

 

Resource-intensive industries such as mining and oil and gas (O&G) are embracing sustainability with a far greater sense of urgency than many other industries, according to a series of collaborative studies on approaches to sustainability conducted by The Boston Consulting Group and MIT Sloan Management Review. (See Exhibit 1.) Companies in these industries are finding that when they successfully manage their social and environmental footprint, they are able to maintain a “license to operate.” In the context of sustainability, this is not a formal agreement but the implicit consent of government and society to allow companies to carry out their commercial activities with a minimum of regulatory interference or opposition from local communities.

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As oil, gas, and other minerals grow increasingly scarce and as competition for access to resources intensifies, a license to operate is becoming as important to companies in resource-intensive industries as advanced technologies and engineering equipment. This is partly because of the need to manage their reputations, for in a Web-enabled world, news of human rights abuses or toxic spills can spread around the globe in minutes. Moreover, a company that successfully manages its social and environmental footprint can gain a competitive edge, helping it secure contracts, become a preferred partner, and build long-term relationships with the communities and governments on whose favor it depends. Savvy companies in the mining and O&G industries recognize that sustainability is not just about doing the right thing. It is critical to their very survival.