The role of corporate social responsibility and stakeholder engagement on social licence to operate in the mining industry

Abstract

Mining companies need to attain their social licence to operate (SLO) from their host communities and municipalities to operate. However, SLO is a challenging variable to measure or quantify, with there being no agreement on its measurement. SLO literature points toward an inverse relationship between socio-political risks and SLO. Mining companies, therefore, need to attain and retain SLO to minimise socio-political risks. This research aimed to quantitatively determine the role of corporate social responsibility (CSR) and stakeholder engagement (SE) on the level of SLO for mining companies in South Africa. Secondary data from a mine in South Africa, spanning five years, was collected. This panel data was analysed using descriptive statistics, Ordinary Least Squares (OLS) model, Fixed Effects and Random Effects empirical models. The research showed that there is a statistically significant relationship between CSR and SE and between SE and SLO. However, the relationship between CSR and SLO was found to be statistically insignificant. The findings of this research demonstrate that SE is a key construct in the attainment and retention of SLO and that there is little benefit in CSR spend in isolation.