electro mag Mar 25 (2) - Flipbook - Page 15
Conversely, negative social currency can result
in:
Loss of customer trust and reduced sales.
Damage to brand reputation and a
decrease in market value.
Increased scrutiny and pressure from
stakeholders.
Understanding and leveraging social currency is
crucial for modern businesses. It not only
influences public perception but can also have
direct implications for financial performance.
According to The Ethics Centre, the social
licence to operate consists of three
components:
Legitimacy – the extent to which the
organisation adheres to community norms –
legal, social, cultural, formal or informal.
Credibility – the company’s transparency
and willingness to provide true and clear
information to the community and fulfil its
commitments.
Trust – this takes time and effort to create.
The very real time example we have seen in
2025 where a company has lost its social
license to operate is, of course, the Tesla
debacle. There’s been much commentary on
this, but the long and short of it is, it seems
Tesla has forgotten their mission. The world,
and their customers, have not.
Importantly, The Ethics Centre confirms that a
social license to operate is not something that
can be purchased by community grants and
investments. You can’t just build a local
swimming pool and expect that your license is
safe.
Companies like Patagonia, whose values
authentically define their business have
prospered, arguably because of their social
license to operate, while companies which
betray the values of their customers and
stakeholders, like Tesla, may suffer sufficiently
to bankrupt them.
We’ve seen time and time again examples of
companies splashing out on
