The Governance of Social License to Operate in the Forest Industry in Indonesia

Abstract

The concept of Social License to Operate (SLO) has predominantly been applied in the extractives industry, and its understanding and application within forestry has been limited to date. Nevertheless, achieving a SLO is crucial for forest companies, especially given that forestry has long time horizons, high exposure to the global market, and many and varied stakeholders. We examine how forestry companies operating in Indonesia attempt to gain a SLO from their host communities. We analyse the roles of the three main stakeholder groups in forestry operations in Indonesia: companies, communities and governments. We specifically examine:(1) whether the concepts that underpin SLO (legitimacy, credibility, and trust) can be applied to the practices of the forest industry in Indonesia; (2) the general applicability of the SLO concept in the Indonesian context and ( 3) what can be done to improve SLO practices in the Indonesian forest industry. We argue that obtaining and maintaining a SLO is an outcome of complex interactions between many factors and actors, rather than being the direct result of company actions. In the Indonesian context, SLO is a relatively new and not fully understood or utilized concept. Its value has not been fully appreciated by all actors. By examining two forestry companies operating in Central Kalimantan, we scrutinize the roles of companies, communities, and the local and central government in the governance of SLO to create a better understanding of this emerging concept in the Indonesian context.

The Social License to Restore—Perspectives on Community Involvement in Indonesian Peatland Restoration

“…This is evidenced by past attempts of forestry companies to implement SLO in their community engagement practices in Indonesia. Both forestry companies assessed in a case study by [67] struggled to gain legitimacy with communities due to concerns regarding the impacts of forestry on their long-term livelihood activities. The companies could offer little beyond financial compensation, which stands in contrast to government-led restoration initiatives which target long-term peatland rehabilitation [18].…”

“…Successful governmentled restoration should enable a stable, long-term income stream for communities, removing the need to exploit peatlands in the short term. In contrast, privately led initiatives have provided short-term income, but no avenues for long-term economic stability [67]. While short-term income is needed to assist communities in transitioning to more sustainable livelihood practices, roughly USD 200 million have been pledged to the initial stages of the BRG restoration initiative to assist this cause [68].…”

“…SLR adopts this perspective as its foundation and provides specific actions to create a more sustainable relationship between Indonesian communities and the peatlands they occupy. The concept is new to Indonesia and presently confused with similar concepts such as corporate social responsibility (CSR) or FPIC [67]. However, SLR exceeds these approaches by not merely seeking community approval or tolerance but building on it to achieve genuine investment in a mutually beneficial outcome.…”

Improving the good in good organisations: How can the potential negative social impacts of social enterprises be better managed?

“…SLO is applied in many different sectors, such as forestry, mining, oil palm, tourism, hydroelectric power plants, nuclear power plants, gas extraction, operations that affect Indigenous peoples, transport planning, urban projects and integrated coastal zone management (Vanclay, 2012;Hanna et al, 2014;Van der Voort & Vanclay, 2015;Pasaribu et al, 2020;Mottee et al, 2020;Pasaribu et al, 2021).…”