The Governance of Social License to Operate in the Forest Industry in Indonesia

The concept of Social Licence to Operate (SLO) has predominantly been applied in the extractives industry, and its understanding and application within forestry has been limited to date. Nevertheless, achieving an SLO is crucial for forest companies, especially given that forestry has long time horizons, high exposure to the global market, and many and varied stakeholders. We examine how forestry companies operating in Indonesia attempt to gain a SLO from their host communities. We analyse the roles of the three main stakeholder groups in forestry operations in Indonesia: companies, communities and governments. We specifically examine: (1) whether the concepts that underpin SLO (legitimacy, credibility, and trust) can be applied to the practices of the forest industry in Indonesia; (2) the general applicability of the SLO concept in the Indonesian context; and (3) what can be done to improve SLO practices in the Indonesian forest industry. We argue that obtaining and maintaining a SLO is an outcome of complex interactions between many factors and actors, rather than being the direct result of company actions. In the Indonesian context, SLO is a relative new and not fully understood or utilized concept. By examining two forestry companies operating in Central Kalimantan, we scrutinize the roles of companies, communities, and the local and central government in the governance of SLO to create a better understanding of this emerging concept.