” ‘Social license’ is an invalid concept also because business does not require a license to operate from society nor the government. It merely needs others wanting to trade with it and must not violate others’ individual rights, which government must protect.” — Janna Woiceshyn

 

Environmentalists, led by New York-based Natural Resources Defense Council (NRDC), have launched a campaign against the TransCanada Corp.’s proposed Energy East pipeline. Energy East would transport oil from the Alberta oil sands fields to the Atlantic coast for tanker shipping to further markets. The environmentalists, of course, want to ban the pipeline because it would, they claim, damage the environment. (See Claudia Cattaneo’s report in the Financial Post).

Environmentalists in the United States managed to have TransCanada’s other pipeline project, Keystone XL, banned by President Obama, on the claim that Alberta oil sands are contributing to ‘devastating man-made’ climate change and therefore pipelines transporting oil produced from them should not be allowed. Never mind that the contribution of Canada’s entire oil production to global greenhouse gas emissions is less than 0.5%.

Despite that fact, the Canadian governments, recognizing the importance of oil production to Canadians’ well-being, have misguidedly sought to obtain ‘social license’ for Canadian oil companies with stringent targets for greenhouse gas reduction and profit-eroding carbon taxes. Many of the major oil companies have meekly applauded these measures, implicitly apologizing for the sin of making profits by providing us with affordable, abundant and reliable energy.

Have the governments succeeded in appeasing the environmentalists by obtaining ‘social license’ for oil production and transportation? Of course not. The environmentalists did not respond to the governments’ greenhouse gas-slaying measures with sanction of the fossil fuels. They merely changed the argument: Energy East should not be built because oil tanker transport will lead to catastrophic oil spills that will devastate marine life. Never mind that 80 percent of the oil in the world is transported by tankers already, and that tanker spills have declined significantly in the last 40 years and are rare (an average of 1.8 spills a year 2010-2015) and effectively contained with modern technology. We have learned a lot since Exxon Valdez and BP Deepwater Horizon (the latter of which was not a tanker spill).

While we need the affordable, reliable energy that oil companies produce, we don’t need governments and companies to plead for a ‘social license’ from environmentalists and the ‘public’ for oil companies to operate. Pursuing such a license is futile, for two reasons: 1) the concept ‘social license’ is invalid, and even if it were valid, 2) the environmentalists would never grant it.

‘Social license’ is an invalid concept, first, because ‘social’ refers to society ‘as a whole’ giving license to business to operate. ‘Society as a whole’ does not exist as an entity that thinks, acts or grants licenses; there are only individuals who constitute a society by interacting with others according to certain rules, such as respect for individual rights. At most, ‘social license’ could be construed as the permission given by the majority of people to business to operate, but a majority rule can be very hazardous to human flourishing, as the majority can always vote to violate the rights of those in the minority.

Even if ‘social license’ were a valid concept, the environmentalists would never grant it to business because their standard of value is not human flourishing or the human environment conducive to human flourishing. The environmentalists’ standard of value is pristine nature without any human footprint, and therefore no sacrifice of human well-being and prosperity is ever enough for them. The environmentalists want no fossil fuels and all humans reduced to pre-fossil fuel poverty and misery.

Businesses or governments should not waste any time pursuing social license from the environmentalists or any other ‘social’ group. TransCanada CEO Russ Girling has recognized this. As Cattaneo reports, “TransCanada has given up to meet [the environmentalists’] demands.” Girling is known as a staunch defender of his company and industry, based on the tremendous benefits of oil to human flourishing, while at the same time recognizing and astutely managing the risks involved in moving oil via pipelines.

As appeasement and pursuit of ‘social license’ is futile, other oil and pipeline executives should follow Girling’s example and defend their companies on moral grounds for the great value they provide. Governments, for their part, should cease their welfare-destroying climate change policies and focus on protecting individual rights instead.

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Jaana Woiceshyn teaches business ethics and competitive strategy at the Haskayne School of Business, University of Calgary, Canada. She has lectured and conducted seminars on business ethics to undergraduate, MBA and Executive MBA students, and to various corporate audiences for over 20 years both in Canada and abroad. Before earning her Ph.D. from the Wharton School of Business, University of Pennsylvania, she helped turn around a small business in Finland and worked for a consulting firm in Canada. Jaana’s research on technological change and innovation, value creation by business, executive decision-making, and business ethics has been published in various academic and professional journals and books. “How to Be Profitable and Moral” is her first solo-authored book. Visit her website at profitableandmoral.com.

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