A Study on the Relationship between SLO and the Social Contract Theory in the Context of Business and Human Rights

A Study on the Relationship between SLO and the Social Contract Theory in the Context of Business and Human Rights

The concept of Social License to Operate (“SLO”) is getting more attention as a key component of Corporate Social Responsibility in the context of the UN Guiding Principles on Business and Human Rights (“UNGPs”). It provides a new perspective on social concerns associated with corporate activities, similarly as the framework of legal licenses, to contemplate in more concrete terms who and what constitutes the license and the process. Korea has implemented the “business and human rights standard manual” to public institutions in 2018 and a similar guideline for private sector companies is going through public hearings as of 2019, ostensibly in preparation for the legislation in the future. This comes in the backdrop of the ‘French Corporate Duty of Vigilance Law’ promulgated in 2017 and a similar German draft bill surfaced earlier this year. This paper argues that, in order to clarify the content of the SLO, the expanded notion of the social contract provides a conceptual framework where terms of SLO reflect, and are informed by, the ‘terms of the social contract.’ In other words, there is an active process of dialogue between SLO and the social contract where the process of coming to consensus on key issues of the society (social contract process) determines, or at least informs, the terms of SLO. The business and human rights regime, then, is one key component of the social contract “negotiation” and discussion that occurs on various levels of the society and stakeholders. For corporations, SLO represents their participation in the social contract process of the society as a corporate citizen and, on that basis, demonstrates their commitment to becoming part of the solution for harms caused by corporations. Whether solutions are readily found or not, the participation goes a long way to legitimize their effort to fulfill social responsibility. UNGPs provide a methodology to engage in the process from the human rights point of view. Therefore, given this construct, UNGPs offer an opportunity for Korean conglomerates to participate in an active dialogue between SLO and the social contract to improve their weak SLO.

The concept of Social License to Operate (“SLO”) is getting more attention as a key component of Corporate Social Responsibility in the context of the UN Guiding Principles on Business and Human Rights (“UNGPs”). It provides a new perspective on social concerns associated with corporate activities, similarly as the framework of legal licenses, to contemplate in more concrete terms who and what constitutes the license and the process. Korea has implemented the “business and human rights standard manual” to public institutions in 2018 and a similar guideline for private sector companies is going through public hearings as of 2019, ostensibly in preparation for the legislation in the future. This comes in the backdrop of the ‘French Corporate Duty of Vigilance Law’ promulgated in 2017 and a similar German draft bill surfaced earlier this year. This paper argues that, in order to clarify the content of the SLO, the expanded notion of the social contract provides a conceptual framework where terms of SLO reflect, and are informed by, the ‘terms of the social contract.’ In other words, there is an active process of dialogue between SLO and the social contract where the process of coming to consensus on key issues of the society (social contract process) determines, or at least informs, the terms of SLO. The business and human rights regime, then, is one key component of the social contract “negotiation” and discussion that occurs on various levels of the society and stakeholders. For corporations, SLO represents their participation in the social contract process of the society as a corporate citizen and, on that basis, demonstrates their commitment to becoming part of the solution for harms caused by corporations. Whether solutions are readily found or not, the participation goes a long way to legitimize their effort to fulfill social responsibility. UNGPs provide a methodology to engage in the process from the human rights point of view. Therefore, given this construct, UNGPs offer an opportunity for Korean conglomerates to participate in an active dialogue between SLO and the social contract to improve their weak SLO.