This influential 2014 study by Franks et al. shows that social and environmental conflicts can cause mining project delays of 2–3 years and cost overruns of up to 40%. These losses are avoidable through early social risk identification, community grievance mechanisms, and shared monitoring. The research proves that proactive engagement not only reduces conflict but also improves financial resilience—making social license a strategic business imperative, not just a moral one.
A key insight from Franks and colleagues is that these cost premiums are avoidable—if companies proactively invest in robust social risk management. This entails early identification of social and environmental hot spots, such as Indigenous land rights or water contamination, and designing mechanisms to address these issues before they escalate. The research highlights the value of structured risk assessment tools, community grievance systems, and joint monitoring agreements in reducing both the magnitude and frequency of disruptive conflicts. In practical terms, embedding these systems into project planning leads to smoother operations and more stable investor returns.
Furthermore, the study emphasizes how governance breakthroughs—like integrating artisanal mining into formal supply chains or deploying transparency portals—can significantly reduce conflict premiums. Where community-based monitoring and shared decision-making were implemented, project delays were halved and cost overruns reduced by over 10%. This validates lessons from the OECD Forum and Peru’s EITI reforms: social license to operate is not just a moral imperative—it’s a business one. Projects that weave legitimacy, accountability, and inclusion into their core strategy consistently achieve better operational reliability and financial resilience.