ESG RISK 10: Community Acceptance and Social Licence
Overview
ESG Risk 10 – Community Acceptance and Social Licence assesses the risk that a hydropower project, once publicly visible, will lack the consent and ongoing support of local communities and broader stakeholders. Early-stage evaluation focuses on indicators of legitimacy, credibility, transparency and trust—factors shown to underpin durable social licence. Key signals include the developer’s track record, demonstrable community benefits and robust engagement processes. Pre-existing anti-hydro protests or absence of meaningful local value creation heighten risk. Projects with extensive social, economic or environmental footprints face greater challenges securing support. An Extreme Risk score here warns of potential shutdowns, blockades, boycotts, violence, legal challenges, delays, cost overruns or reputational harm.
Additional Guidance
Community acceptance refers to the general approval or support from the potential project-affected communities for a hydropower project. Community acceptance is important for hydropower project development because it ensures that the concerns, needs, and perspectives of local communities are considered and addressed throughout the project lifecycle, fostering social acceptance, minimising conflicts, promoting sustainable development, and enhancing the project's overall success and long-term viability.
A closely related concept is social licence, or social licence to operate, which refers to the broader societal approval or consent for a project and its operations by its stakeholders and the general public.
Engagement and transparency are critical for gaining community acceptance and social licence. Stakeholder engagement involves the systematic identification, analysis, planning and implementation of sharing information, obtaining local knowledge and views, and responding to stakeholder inputs and views with actions. Transparency refers to the clear, open, and accessible communication of information and decision-making processes by the project developer to stakeholders (including affected communities, government agencies, NGOs, and the general public) regarding project plans, environmental and social impacts, mitigation measures, and regulatory compliance. A high degree of attention to both fosters trust, accountability, and informed participation throughout the project lifecycle
Acceptance of projects can be facilitated through a well-considered programme of project benefits. This strongly overlaps with regional development opportunities, but looks more closely at how the project concept can potentially bring better outcomes for project-affected communities.
Whilst project benefits can include aspects of project development (e.g. employment, roads), benefits additional to the core project can be designed to have positive outcomes for both the project and the community. An example is a catchment protection programme that pays households to maintain or improve vegetation cover, thus reducing soil erosion and improving water quality in rivers and streams.
Some benefits are entirely oriented towards community interests and outcomes, as a result of a deliberate effort by the project to contribute to local area development. Examples include contributions to local infrastructure, local services, and livelihood enhancement opportunities. Such contributions may be in-kind or financial, and may be temporary during construction or permanent. Additional benefit delivery could be, for example, through a community development fund or a revenue-sharing arrangement.
Benefit sharing in the context of hydropower developments refers to the equitable distribution of socio-economic benefits, such as revenue, employment opportunities, infrastructure development, and environmental conservation, among project-affected communities to ensure that all community members share in the positive outcomes generated by the project. Revenue sharing is a specific type of benefit sharing involving distributing a portion of the income generated from the sale of electricity or other project-related activities for the benefit of project-affected communities.
Sources of information that can inform help ratings for ESG Risk 10 Community Acceptance and Social Licence include:
Identification of potential project-affected communities through analysis of the overlay of key project option features on map views that show community locations.
Media and potential stakeholder website and social media analyses to discern any strong past or current views or positions taken on aspects that may be affected by the project option.
Web and media research to find examples from other developments in the country or region in which benefit sharing was prioritised.
Published assessments using the Hydropower Sustainability Tools on the Hydropower Sustainability Alliance (HSA) website to see what initiatives other hydropower projects have taken to address project benefits and benefit sharing.
Opportunities for early stage actions that could reduce the risk for a project might include:
Developer commitments to public disclosure and transparency policy, and processes to ensure commitments are consistent with actions.
Analyses of potentially project-affected communities to form an early view on any discernible social profiles.
Plans for and implementation of engagement and disclosure as early in the project development life cycle as possible.
Development of a robust communications and consultation strategy. This should ensure that: consultations are meaningfully timed to project life cycle stages and community-affecting project activities; offer opportunities for local influence; and cater for local needs of particular community sub-groups (e.g. the aged, youth, illiterate, language differences, internet access, ethnicity, remoteness, etc).
Development of a stakeholder engagement and communications plan (including disclosure, grievance mechanisms, etc) to implement during project preparation.
Research into stakeholder engagement, such as provided by the Association for Project Management.
Research into social licence and how to gain and measure it, such as from The Social Licence to Operate website.
Clarification on the developer interest, capacity and likely extent of potential for project benefits and benefit sharing.
Plans to build developer, government and key stakeholder capacities in this area.
Investigation of specific opportunities to embed project benefits in the proposed project concept.
Allowing extra budget and resources to ensure the ability to deliver on project benefits over the long-term.
