You keep saying “social licence.” You don’t mean what you think you mean.

Every boardroom in Australia has heard the phrase. “We need to protect our social licence to operate.” It gets dropped into strategy sessions, scribbled onto risk registers, nodded at solemnly by people in good suits. It sounds right. It feels responsible. It has just enough gravity to make everyone in the room think they’re being serious about something important.

There’s just one problem. Most of the time, they’re using the wrong word for the wrong thing. And because they’re using the wrong word, they’re solving the wrong problem.

What social licence actually means

Social licence, properly understood, refers to something specific. It’s the acceptance an organisation earns from the communities directly affected by its operations. The town near the mine. The neighbourhood around the factory. The employees on the floor. The customers who actually use the product.

It’s relational. It’s local. It’s earned through proximity, consistency, and a track record of doing what you said you’d do. It’s the kind of trust that forms when people can see you, talk to you, and hold you to account over a beer at the pub.

That’s social licence. And it matters enormously.

But here’s where the problem starts. When most executives say “social licence,” they’re not talking about that. They’re talking about everything. Public sentiment. Media coverage. Government relations. Brand reputation. Community trust. They’ve taken one specific concept and stretched it until it covers the entire surface area of how an organisation relates to society.

Which makes it almost useless as a strategic tool.

A mining company facing regulatory hurdles in Canberra is dealing with a fundamentally different challenge than one facing community protests at a project site.

A concept that’s been asked to do too much

Imagine you went to a doctor and said, “I feel unwell.” The doctor nods, writes “unwell” on your chart, and prescribes you a general vitamin. No blood test. No examination. No differentiation between a cold, a fracture, and a cardiac event. Just “unwell” and a multivitamin.

That’s what happens when organisations collapse everything into “social licence.” They know something matters. They know they need to pay attention to it. But because they’ve lumped every form of societal permission into a single bucket, they can’t diagnose what’s actually going wrong, or where the real risk sits.

A mining company facing regulatory hurdles in Canberra is dealing with a fundamentally different challenge than one facing community protests at a project site. A bank with pristine compliance credentials but terrible public trust after a royal commission has a different problem again. Calling all of these “social licence” doesn’t just oversimplify. It actively misdirects resources, attention, and strategy.

Three licences, not one

Here’s a more useful way to think about it. Organisations don’t operate on a single licence from society. They operate on three, each granted by different people, for different reasons, and revocable in different ways.

Public licence is the formal permission granted by institutions. Regulators, legislators, courts, government bodies. It’s codified. It’s enforceable. It’s often binary: you’re compliant or you’re not. Think operating permits, planning approvals, professional accreditations.

Social licence (the real one) is acceptance from the communities directly affected by your operations. Employees, local residents, customers, suppliers. It’s informal, it’s earned through relationship, and it requires constant maintenance. You can’t file for it. You have to show up for it.

Popular licence is the tolerance of broader society. General public perception. Media narrative. Cultural acceptability. It’s diffuse, it’s volatile, and it’s shaped almost entirely by story. A single viral moment can grant it or destroy it.

Each of these operates on its own logic, its own timeline, and its own stakeholders. Conflating them isn’t just imprecise. It’s strategically dangerous.

The place where an organisation’s real permission to operate sits is in the overlap of all three. Call it societal capital.

Why the distinction changes everything

When you can separate the three, you can actually diagnose where you stand and what’s at risk.

Consider the tobacco industry. For decades, tobacco companies maintained impeccable public licence. They were legally compliant, properly regulated, operating within every framework required of them. But their popular licence eroded over decades as public health narratives shifted. Eventually, that erosion in popular licence circled back and reshaped their public licence through advertising bans, plain packaging, and excise increases. The public licence they’d relied on was dismantled by the popular licence they’d ignored.

Or consider the ride-sharing platforms that launched with enormous popular and social licence (people loved them, drivers wanted to work for them) but virtually no public licence at all. They were operating in regulatory grey zones everywhere. That asymmetry was inherently unstable, and it resolved, sometimes through regulatory accommodation, sometimes through crackdowns.

Or consider the classic Australian story of a major infrastructure project. Government approval locked in. Public licence secured. But the local community hasn’t been brought along, and suddenly there are protests, injunctions, and project delays that no amount of regulatory compliance can fix. Strong public licence, weak social licence. The gap becomes the crisis.

These are three different problems requiring three different strategies. Lumping them into “social licence” makes it impossible to see that.

The Venn diagram that actually matters

The place where an organisation’s real permission to operate sits is in the overlap of all three. Call it societal capital. It’s the compound trust that forms when formal permission, community acceptance, and public tolerance all align.

When you have all three, you’re in the most stable position an organisation can be. Not invulnerable, but resilient. You have reserves of goodwill that absorb shocks. When something goes wrong (and it will), people give you the benefit of the doubt.

When you’re missing one, you’re unstable. And the missing piece tends to contaminate the others over time. A company beloved by the public but hated by its neighbours will eventually find that local resistance bleeds into media coverage, which bleeds into political scrutiny, which bleeds into regulatory review. The system seeks equilibrium. Usually downward.

The other part of the problem is cultural. “Social licence” has become a compliance-era phrase dressed up in stakeholder-era clothing.

Why boards keep getting this wrong

Part of the problem is structural. In most organisations, the responsibility for what we’re calling societal capital is fragmented across a dozen functions. Government relations handles the public licence. Community engagement handles social licence. Corporate affairs and marketing handle popular licence. Each function reports to a different executive, uses a different framework, and speaks a different language.

Nobody owns the whole picture. And because nobody owns the whole picture, nobody can see when the licences are moving in different directions, which is precisely when the risk is highest.

The other part of the problem is cultural. “Social licence” has become a compliance-era phrase dressed up in stakeholder-era clothing. It gives boards the feeling of being responsible without requiring the rigour of actually mapping where they stand across each licence type, where the gaps are, and what happens when one starts to erode.

It’s the strategic equivalent of putting a Band-Aid on a misdiagnosis.

What this means in practice

If you’re sitting in a boardroom, a strategy session, or an executive team meeting, and someone says “social licence,” ask them which one they mean.

Are they talking about regulatory risk? That’s public licence. Are they talking about community opposition? That’s social licence. Are they talking about reputational damage, media narratives, or a general public that’s turning sour? That’s popular licence.

The answer changes the strategy. Public licence problems require legal and regulatory engagement. Social licence problems require relationship, presence, and credibility at the local level. Popular licence problems require narrative, transparency, and values alignment.

You can’t fix a popular licence problem by hiring more lobbyists. You can’t fix a social licence problem with a PR campaign. And you certainly can’t fix any of them by throwing the phrase “social licence” at a risk register and hoping someone figures it out.

The real question

Societal capital isn’t a new idea dressed in new clothes. It’s a more honest description of something most organisations already intuit but haven’t yet articulated. You need formal permission, community acceptance, and public tolerance to operate sustainably. You need all three. And you need to understand that each one has its own logic, its own stakeholders, and its own failure modes.

The next time someone in the room says “social licence,” don’t nod. Ask them to be specific.

Because the last thing any organisation needs is a confident answer to the wrong question.