As owner-operators of infrastructure assets, we understand that securing a social license to operate is not only critical for strengthening the sustainability of our businesses but also to safeguarding and enhancing the value of those businesses.
What do we mean by social license to operate and why is it critical?
The legal right to build, operate or maintain an infrastructure asset is derived from a concession or contract, however, a conducive, long-term operating environment requires something less tangible but equally important: social licence. Social licence is earned; it is not a given nor can it be inherited from a previous owner/operator.
Assets which secure a strong social license are significantly ‘de-risked’ because they are less likely to suffer disruption, operational delays and backlash, all of which are not only costly but can lead to reputational harm and brand damage. Securing goodwill with local stakeholders goes a long way to minimising such risks. It’s also important to remember that when we speak of local stakeholders and communities, we are also often speaking of our workforce. Our workers and communities are fundamental to the success of our businesses; their wellbeing and socio-economic empowerment are at the heart of a just transition.
The Actis Way
At Actis, we are laser-focused on social licence right from the due diligence stage, where we assess relations with local stakeholders. We diagnose any shortfalls /issues and develop a community investment plan. Our management teams are highly aligned with us. Our companies develop community investment plans and engage proactively and early with the community to listen to their needs and viewpoints and to co-develop initiatives. Our focus is on long-term transformational community benefits, which can materially change socio-economic prospects of families and households. We avoid tactical ‘quick-win’ initiatives which have limited enduring value to beneficiaries.
Actis brings deep experience and a long track-record of investing to deliver measurable positive impacts for people and environment. Our community initiatives have encompassed:
- employability – through direct job creation
- economic empowerment – through skills training, vocational courses, forming cooperatives and access to market
- education / health – ensuring primary development needs in the community are met via mobile health clinics and supporting primary education resources
- gender / diversity focus – many projects are focused on women/girls, or those who are marginalised (youth, elderly, single parents, unemployed, indigenous groups etc.)
- local infrastructure – access roads, village halls, electrification
beneficiaries of community investment
total community projects spend by Actis in 2021 and 2022
To deliver these initiatives requires collaboration with multiple stakeholders (local governments, our contractors, workers, the community and NGOs) and deep local relationships. C-suite level support from portfolio company management is essential.
Actis portfolio companies in the same country have collaborated on community projects (a fantastic example is the educational project INSPIRE in South Africa, backed by both BTE and Lekela) and we have ‘exported’ our most successful initiatives across funds and portfolio companies to leverage our experience and deliver positive impacts rapidly.
A few other examples of Best Practice Guidance notes include Responsible Procurement and Supplier Code of Conduct, solar supply chain and human rights, use of third party armed security forces and labour accommodation standards.
Values Drive Value
We support our portfolio companies on their institutionalisation journey to become sustainability leaders. This includes securing their social license through successful community development initiatives which are valued by all beneficiaries. This ‘shared value’ delivery is at the heart of the Just Transition concept, and at the heart of Actis investing. Our investments are more resilient, more impactful and more valuable as a result.