Certified Environmental Social and Governance Analyst (CESGA) EFFAS Practice Test 2025 – Your Complete Study Guide to Success!

Question: 1 / 400

What does the term "social license to operate" refer to?

The government's approval for business operations

Stakeholder acceptance of a company's operations

The term "social license to operate" refers to stakeholder acceptance of a company's operations. This concept emphasizes the importance of gaining and maintaining the trust and approval of various stakeholders, including local communities, employees, investors, and consumers. Unlike formal licenses granted by governments or regulatory bodies, a social license is not legally mandated but rather stems from the perceptions and attitudes of those affected by a company’s activities.

Gaining a social license involves actively engaging with these stakeholders, addressing their concerns, and demonstrating a commitment to social and environmental responsibilities. This acceptance can significantly influence a company's ability to operate successfully; when stakeholders feel positively about a company’s impact, they are more likely to support its operations, which can lead to long-term sustainability and success.

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The company’s permit to conduct business

The social activities conducted by a company

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