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We should discuss social licensing

By Paulo Nassar and José Nalini*

What do you do when large companies cause accidents that kill, enslave, and violate human rights? Given the slowness of the judicial system, social licensing appears as a pact between companies, society, and the State. Even though it is not provided for by law, it seems to be an option that gains increasingly rooted features. It is the symbolic license granted by the company that should have as counterpart the democratic debate between different points of view and narratives about an enterprise. Together, they must discuss possible problems and mitigate the risks involved in a given project.

In fact, this license has been withdrawn by society and its representatives when operational risks turn into tragedies. We are talking about the environmental and human tragedies resulting from extractive activities seem to demonstrate in Brazil, both by the number of deaths and by environmental, social, and governmental impacts. Such dramatic events have been predictable. A retrospective view will show that, at the end of the 20th century, the sociologist Ulrich Beck brought to light, in the book “World Risk Society”, the new evidence of risk globalization. A UN report also denounced in 2008 cases in which global corporations, directly or indirectly, committed crimes, especially in countries plagued by corrupt leaders or in fragile democracies.

However, corporate punishment remains a gritty one. First, because international treaties that could ensure punishments to organizations date back to the end of World War II when global corporations still did not hold as much power as they do now. Secondly, because it is only recently that the authorities have been looking at the possibilities for these corporations and their leaders to have clear legal obligations. Lastly, because the reparation and application of the fines are slow.

Although Brazil has advanced legislation, especially concerning environmental rights, the concept of justice dances according to narratives about it. In summary, the Brazilian judicial system is an archipelago that gathers the Courts of Justice of the States and the Federal District, an identical number of Regional Electoral Courts, 23 Regional Labor Courts and Courts of Military Justice, in addition to the Federal Supreme Court. There is more: the National Council of Justice was created in 2004 to control, supervise, and plan the Judiciary. Does this heavy structure work?

In this context, social licensing is an idea that has been developed amid corporate crises that are harmful to millions of citizens and even for business continuity. As a result of these crises, large corporations have stopped operations partially or totally. Not only due to losses of legal and political authorizations but stemming from a strong rejection of public opinion.  Nowadays, economic benefits can no longer overlap with social aspects and the risks involved in the production.

Organizational crises aggravated by damage to the identity, image, and reputation of institutions, companies, and leaders – still unaccustomed to an armed society of smartphones and voices in social networks – could be avoided or minimized through good communication and effective narratives. The social license is built in the correct or misleading communication and relational processes of companies and institutions. Indeed, they are processes that should emanate and be driven by the organizational command.

Consequently, companies need to consolidate themselves within the narrative territory. They strengthen organizations and move through a relational and dynamic environment. They give meaning to the environment of society and its public networks to the history and actions of the enterprise and its members. But it does not do any good for the narratives to say one thing and do the opposite. It is in daily narratives and relationships that the identities, images, brands, and reputations of companies and their leaders are built.

Society requires that CEOs and boards of directors, take care of the aspects that constitute the symbolic of organizations beyond going after the financial results and productive processes. Among these many aspects, the administration of the true, coherent, and well-understood narratives legitimize the company and consolidate its the social licensing to operate.

Published in Correio Braziliense, on April 12, 2019.

José Nalini, law-writer, professor (Uninove), and a magistrate. He was a judge of the Court of Justice of the State of São Paulo and Secretary of Education of the State of São Paulo

Paulo Nassar, director president of the Brazilian Association for Business Communications (Aberje) and full professor at the University of São Paulo (USP)