The $2.8 billion Atlantic Coast Pipeline was supposed to transform energy infrastructure across Virginia and North Carolina. Instead, after six years of regulatory battles, community opposition, and mounting costs, Dominion Energy and Duke Energy pulled the plug in 2020. The project had permits. It had financing. What it didn’t have was social license to operate.
This isn’t an isolated case. Across the energy sector, projects with sound economics and regulatory approval are stalling, getting canceled, or facing multi-year delays because companies treated community engagement as an afterthought. Meanwhile, the energy transition has made stakeholder dynamics more complex than ever, with heightened scrutiny on everything from carbon capture facilities to battery storage projects.
For mid-market and growth-stage energy companies, the message is clear: your technical and financial success means nothing if you can’t build and maintain the trust of the communities where you operate.
What is Social License to Operate?
Social license to operate (SLO) is the ongoing acceptance and approval of a project by local communities, stakeholders, and society at large. Unlike regulatory permits, social license isn’t granted by a government agency—it’s earned through sustained engagement, transparency, and demonstrated value to stakeholders.
Think of it as the difference between legal permission and genuine welcome. A company might have every regulatory approval needed to build a wind farm, but if the surrounding community opposes the project, that legal permission becomes practically worthless. Protests slow construction. Local officials withdraw support. Investors get nervous. What should have been a straightforward development becomes a reputational and financial nightmare.
Social license to operate exists on three levels: acceptance (stakeholders tolerate the project), approval (stakeholders support the project), and psychological identification (stakeholders see the project as aligned with their values and interests). Most companies aim for acceptance and call it success. Smart companies build toward identification.
Why It Matters More Than Ever in Energy
The energy landscape has fundamentally shifted in ways that make social license to operate both more difficult to earn and more critical to success. Here’s why:
Stakeholder sophistication has exploded. Community groups now have access to technical expertise, legal resources, and digital organizing tools that were once the exclusive domain of large corporations. A neighborhood association opposing a natural gas compressor station can quickly connect with environmental lawyers, hire their own engineers, and mobilize supporters across social media platforms.
The energy transition has raised the stakes. Every new project—whether it’s a solar farm, hydrogen production facility, or electric vehicle charging network—gets scrutinized through the lens of climate action. Communities want to know not just what you’re building, but why it matters for their future and what’s in it for them.
Information travels faster than ever. A poorly handled community meeting in Texas can become a cautionary tale shared in Pennsylvania within hours. Missteps get amplified, but so do success stories. Companies that get stakeholder engagement right build reputational capital that travels with them to new markets.
Regulatory agencies are paying attention to public input. Permitting authorities increasingly factor community sentiment into their decision-making processes. A project with strong local support moves through regulatory review faster than one facing organized opposition, even if both meet the same technical standards.
The Cost of Waiting Until There’s a Problem
Most energy companies approach stakeholder engagement and their social license to operate reactively. They file for permits, then wonder why people are upset about a project they’re hearing about for the first time. This reactive posture creates a cascade of problems that are expensive and sometimes impossible to fix.
Consider what happened with the Atlantic Coast Pipeline itself: costs escalated from an initial estimate of $5.1 billion in 2015 to as much as $8 billion by 2020—a 57% increase before the project was ultimately canceled. For energy infrastructure generally, recent research shows that more than three-fifths of projects experience cost overruns, with delays significantly amplifying these costs when construction periods exceed planned timelines.
But the financial impact goes beyond individual projects. Companies that lack a social license to operate find it harder to site future projects in the same regions. They face increased scrutiny from regulators who remember past controversies. They struggle to attract top talent who don’t want to work for organizations seen as community antagonists.
The reputational damage can be even more costly than the financial impact. In an industry where projects often span decades, a company’s reputation for trustworthiness becomes a strategic asset. Once lost, that trust can take years to rebuild—if it can be rebuilt at all.
Perhaps most importantly, reactive engagement puts companies in a perpetual defensive position. Instead of shaping the narrative around their projects and securing a social license to operate, they’re constantly responding to criticism and trying to correct misperceptions. This defensive crouch makes it nearly impossible to build the kind of authentic relationships that support long-term business success.
What Proactive Companies Do Differently
Leading energy companies treat social license as a strategic function that begins long before the first permit application gets filed. They understand that trust is built through consistent action over time, not through polished communications during a crisis.
They start early and stay engaged. These companies begin stakeholder mapping and community outreach during the project development phase, often before they’ve finalized site selection. They use this early engagement to identify potential concerns, understand local priorities, and sometimes even adjust project parameters to better align with community needs.
They listen more than they talk. Instead of leading with technical presentations about their projects, sophisticated companies start by asking questions: What are your biggest concerns about energy infrastructure? What would make this project valuable to your community? What would you need to see to feel confident in our approach? The best stakeholder engagement feels more like a conversation than a presentation.
They create value beyond the project itself. Smart companies look for ways their projects can contribute to broader community goals. A geothermal development might partner with local schools on STEM education programs. A battery storage facility might provide backup power for critical community services during outages. These value-creation efforts demonstrate genuine investment in community welfare.
They build relationships, not just communications plans. Proactive companies invest in long-term relationships with key stakeholders—elected officials, community leaders, business groups, and advocacy organizations. They show up to community events unrelated to their projects. They provide expertise on energy issues when asked. They become trusted members of the community ecosystem.
They prepare for opposition professionally. Even the best stakeholder engagement won’t eliminate all opposition, but proactive companies handle criticism more effectively. They acknowledge legitimate concerns directly, provide clear information about mitigation measures, and maintain respectful dialogue even with persistent opponents.
Our Approach: Strategic Social License Systems
At our firm, we help energy companies build social license as a repeatable strategic capability rather than a project-by-project scramble. Our approach integrates stakeholder engagement with business operations from day one.
We start with stakeholder mapping that goes beyond the obvious players to identify informal influencers, potential allies, and emerging opposition. We help companies understand not just who their stakeholders are, but what motivates them, where their interests align with project goals, and where conflicts are likely to emerge.
Our engagement strategies are designed around business objectives, not just communications goals. If a company needs to accelerate permitting timelines, we design engagement activities that demonstrate broad community support to regulatory agencies. If the goal is to attract investment capital, we help companies build stakeholder relationships that reduce perceived project risks.
We also help companies institutionalize stakeholder engagement across their organizations. Too often, community relations gets siloed in communications or external affairs departments while operational teams make decisions that affect stakeholder relationships. We work with companies to embed stakeholder considerations into project development, construction planning, and ongoing operations.
Perhaps most importantly, we help companies prepare for success. Social license to operate isn’t just about preventing opposition—it’s about building the kind of community relationships that enable companies to expand, develop additional projects, and create lasting value in the regions where they operate.
The Strategic Imperative
Energy companies can no longer afford to treat social license to operate as a nice-to-have or a communications afterthought. In today’s environment, stakeholder relationships are a core business capability that directly impacts project economics, development timelines, and long-term growth opportunities.
The companies that recognize this reality early will have a significant competitive advantage. They’ll move faster through permitting processes, face less organized opposition, and build reputational capital that opens doors in new markets. They’ll attract better talent, more patient capital, and stronger partnerships. And that is the true benefit of investing in your social license to operate.
Those that continue to approach stakeholder engagement reactively will find themselves fighting harder battles for smaller wins. They’ll spend more time and money defending their right to operate rather than focusing on operational excellence and growth.
The choice is clear: start building trust before you need it, or keep fighting for permission after it’s too late. In the energy business, your social license to operate isn’t just about community relations—it’s about competitive positioning in an industry where trust has become the scarcest resource of all.
Ready to build your social license strategically? Contact us to learn how forward-thinking energy companies are turning stakeholder engagement into a competitive advantage.
