David Murray, former chair of troubled investment firm AMP, has been called out as being unfit to meet shareholder expectations of modern boards, due to what many believe are outdated views on risk and governance frameworks.
One of the points of criticism is that Murray had criticised the notion of “the social license to operate” in a campaign against including this term in the ASX Corporate Governance Guidelines.
Does David Murray have a point? Do we even know what a social license to operate entails?
While businesses are arguably being held to a higher social standard than before, it is questionable whether the social license to operate, as a concept, is fit for purpose.
In a forthcoming book chapter, I examine concepts such as the “social license to operate” as well as similar notions such as “corporate purpose” and “stakeholder capitalism”.
The research concludes that the use of these concepts is unlikely to result in structural changes to ways of doing business – and their use is more likely to uphold the status quo.