From theory to practice of the Social License to Operate in Mexico City

The search for economic development has promoted the attraction of investors with the adaptation of federal legislation, this to implement projects in the industrial sector such as those related to mining, oil or the construction of homes inside and outside urbanized areas in the country.

Any large project generates changes that, sometimes, bring about serious conflicts with the inhabitants of the surrounding areas because they reach an already established social dynamic, a routine and landscape that has lasted long enough for any change to make those close to them uncomfortable. The changes are understood as impacts, which can be positive or negative, for example: cause greater use of water, more drainage discharges, increase in vehicular traffic, the generation of jobs for nearby inhabitants or environmental responsibility during the different stages of project development. The perception of the impacts can vary, some impacts do not always allow the acceptance of the neighboring communities.

How did the term Social License to Operate arise?

But this has not always been the case. In the 1990s, due to environmental effects caused by chemical spills in mining projects, social conflicts arose that had a direct impact on the perception of the mining industry. Jim Cooney, former Director of International Affairs at the World Bank, emerges as one of the pioneers of the concept of "social license to operate" (SLO) in 1997 during a World Bank conference in Quito, Ecuador [1]. He defined it as the positive way to act to recover the reputation of the industry through the participation of society. Months later, the industry, communities and civil society would begin to adopt this concept.

It was a fact that the acceptance of mining projects was not done automatically, the importance of economic activity was not enough for public scrutiny to accept, much less approve, projects of this nature.

Subsequently, at the 26th Annual Conference of the Business Ethics Network (EBEN) held in Lille, France, in September 2013, the space was allocated to share opinions, experiences on the subject of LSO and the importance of business ethics and social responsibility. This space allowed us to bring the concept a little closer to the rest of the world [2]. It is important to recognize that the concept has had difficulties to be adopted and especially to be applied, since projects continue to operate, in some countries, only with the license of the corresponding authority that allows the start of project construction.

On the other hand, in our country within the margin of the evolution of the concept of LSO, we had a controversial and conjunctural case that allowed to generate a rapprochement between the individual and the interested civil society; that environmental disaster caused by a mining spill in 2014 in Cananea, Sonora, which directly affected bodies of water that provided the vital liquid for life to different nearby communities, causing health problems for residents and economic losses for farmers [3].

Considering this event, two years later, through protests and an amparo, the residents of the community of Bacanuchi, Sonora (cananea neighbors), left a powerful precedent for the right of participation and consideration by society in environmental issues in future megaprojects of different industries in our country. Due to the claim that administrative authorizations to build and operate a tailings dam (from toxic waste produced by a mine) were not previously considered, it allowed the second chamber of the Supreme Court of Justice of the Nation to rule in 2018 that, in effect, they needed to be considered to participate in the authorization process and consult adjacent communities on environmental issues [4].

Mining is currently the second largest industry in Mexico (behind oil, but ahead of tourism) and mining-related activities will continue to be an important component of the Mexican labor market. Let's imagine that the protests in Sonora had continued, that the agreements had not been reached, that the companies had not yielded or accepted their social or environmental responsibility and the authorities rejected legal resources; This scenario without acceptance, in the worst case, would not generate an economic benefit, it would erode trust in the institutions and the privilege of the private sector would affect an entire industry.

The Social License to Operate in Mexico City

Now, let us understand the social license to operate as a non-tangible instrument to generate the acceptance and approval of projects in their different stages, which leaves the private sector as the main supplier of the necessary inputs to achieve it, inputs such as environmental technical information, spaces for dialogue, mechanisms for receiving opinions and perceptions that contribute to achieving it and reducing social conflicts derived from opposition to a new project.

While the role of the State, in this sense, is to be the guarantor of the right to access information, citizen participation and a healthy environment, this last right is a shared responsibility with citizens, since in our hands remains the obligation to preserve the environment for future generations.

Prior to the process for seeking a social license to operate for a project, the company needs to know the social, cultural and legal norms of a community before launching its project. Know the sociodemographic context to which it will arrive and the way in which it can impact it. The LSO is applicable above all in activities and developments that imply an environmental impact.

The search for the LSO should be accompanied by some basic principles such as honesty, transparency of information and processes, dialogue, offering answers, consideration of opinions in the creation of prevention and mitigation measures.

In the case of Mexico City, the country's capital, the LSO concept has left exclusivity in the mining sector and has now been considered by the City Government and implemented by the Ministry of the Environment (SEDEMA) through the Neighborhood Consultation Process for Large Constructions, which was presented at a press conference on December 17, 2019. Secretary Marina Robles mentioned that there will be a process for the social assessment of projects of more than 10,000 m2 before the environmental and urban authorities issue an authorization [5].

The project is presented to the people who are within the area of influence where the developer receives the opinion and perception of the impacts. Through a process in different stages, mechanisms such as a website, information modules, a widely circulated newspaper are used to disseminate the main activities that the promoter must carry out, such as surveys, meetings, workshops or thematic forums to gather opinions, suggestions or perception and build agreements.

This process, in the best scenario, considers the neighbors, provides legal certainty for the developer and generates a social license to operate that legitimizes the project prior to any authorization of an environmental and urban nature. In addition, it avoids social conflicts because the process is supervised by SEDEMA at all times.

Until now, not all the projects that have been submitted for consultation are publicly known, the Head of Government mentioned in the presentation of this agreement that initially between 10 and 15 projects would be considered. Now, from these "trial and error" processes, you will have to learn to really know the interests behind each project, since the presentation of waste generation, job creation and other impacts will not always be well received. The agreements built must be followed up so as not to lose the legitimacy of the project before its neighbors during and after the consultation process, because the social license to operate is not constant and at any time where trust and respect for the agreements are lost, it will be the beginning of a conflict.

Investment in Mexico City is essential at a time when the global pandemic, caused by a new coronavirus, has brought with it an economic crisis of a historic nature. It is time for government institutions to promote the rights to a healthy environment, citizen participation and access to information and, in addition, play a firm role against individuals that generates the trust of civil society and does not remain an abstract concept or as a requirement without agreements to start construction. This together to continue generating an attractive scenario to invest.