Social license: industry can’t bank its reputation

Social license: industry can’t bank its reputation

Scott Morrison’s proposed levy on the major banks is the latest example of what can happen to industries who don’t look after their reputation with the community.

In the public relations industry, we refer to this as managing ‘social license’, or the license the community gives industry to conduct its business.  Put simply, if the community feels industry is doing the right thing by them, the community will do the right thing by industry.

Unfortunately, Australians are increasingly skeptical about whether big companies are acting in the interest of the community.  To be fair, it’s not hard to see why.

Concerns over the behaviour of banks are well established within the community.  On top of this, the nightly news is full of stories about rapidly rising electricity prices, and associated gas shortages on the east coast; the overuse of overseas labour; tax minimisation through the offshoring of profits; jobs increasingly lost to automation.

Campaign Capital recently polled Christian Porter’s once safe Liberal seat of Pearce, finding almost two thirds of voters think big companies pay too little tax, and don't do enough to create local jobs or support local businesses. 

Taxes paid by big companies

Local jobs created by big companies

Community sentiment like this makes industry highly vulnerable to policy shifts, such as we have seen in recent weeks on gas exports, overseas labour and now the banking levy.

With a growing number of Australians feeling financial stress through unemployment or underemployment, or feeling insecure in their current jobs, the Australian electorate is becoming increasingly receptive to initiatives that take a harder line with big companies.

The instinct of industry appears to be to fight each policy battle as it arises, evidenced by the Australian Bankers Association threatening a major public campaign in response to the budget. However, if industry is to win the war, it needs to acknowledge the contribution it has made to its own reputational issues, and that the consequences of the resulting loss of social license will get worse, if not addressed.

If predictions that up to half of existing occupations will be replaced by automation over the next 20 years are anywhere near true, then the number of Australians who are unemployed, underemployed or insecure in their jobs will grow rapidly.  The ability of this group of people to decide elections will increase, and they will be impatient with those who promise, but don’t deliver.

Unless industry is seen by the community as an active partner in providing solutions, then industry will have solutions increasingly imposed upon it.  The threat to major political parties from the new generation of populist politicians makes this inevitable.

Given this threat, industry needs to completely rethink its approach to social license.

The framework with which companies have approached ‘corporate and social responsibility’ over the last 20 years has typically involved a mix of community (largely arts and sports), diversity and environmental initiatives, with commitments to improved outcomes for Indigenous communities also prominent in Western Australia.

While each of these is worthy in itself, they do not address the basic concern of a growing number of Australians that they have a diminishing stake in the modern economy.

In the modern economic and political environment, the surest path for industry to improve its reputation and mitigate the risk of policy shifts that affect profitability is to refocus its corporate and social responsibility activities towards the creation of local jobs and opportunities.

While the majority of voters in Pearce believe that big companies pay too little tax and don't do enough to create local jobs, their overwhelming view is that the most important benefit big companies can deliver to the community is jobs, not taxes.

Most important contribution big companies can make

To take advantage of the opportunity this sentiment represents, industry needs to adopt a real commitment to local content, to apprenticeships and training and the prioritisation of local workers.  Where it is possible to drive the diversification of the local economy through the activities of industry, these opportunities should be embraced.  Of course, some industries will be better placed to do this than others; the point is, there are high social license returns on offer for industries who deliver in this space.

Industry only needs to look at recent elections and referenda in Australia and around the world to see how effective a jobs narrative is.  Whether it is Brexit, or Trump or the recent Western Australian election, the winning political argument has been the argument most aligned to the promotion of local jobs.

And industry needs to get much better in communicating its story.  It needs to recognise that the primary audience for social license communications is the growing group of people who are unemployed, underemployed or insecure in their jobs.  These are the people who politicians will increasingly listen to.  They value authenticity, and they don’t take kindly to fluff and spin.

The response of the big banks to Scott Morrison’s second budget indicates they don’t recognise the reputational issues they have, and that the banking levy is only possible because of the sector’s poor standing in the community.   Industry across the country would do well to learn from this.

CGM Communications influences and inspires action through connection and the sharing of stories. We support strategic communication with the community, government and media.