Licensing and Permitting

Governments today face a number of complex economic, social and environmental challenges. At the same time, public trust in governments is under strain, and visible results are urgently needed. In this context, smart, simple and streamlined regulatory frameworks are essential to enable timely action and manage interconnected risks.

Licensing and permitting are among the tools available to governments for managing risks while supporting growth. When used appropriately, they can help prevent or reduce potential harms before certain activities begin, particularly in areas where significant risks to health, safety or the environment cannot be effectively managed otherwise. Targeted L&P can contribute to public trust by setting clear standards for entry, compliance and competition, while also building confidence and stability into regulatory frameworks that enable investment and growth.

However, governments can over-rely on L&P as a default option, driven by risk aversion or the need to collect information or revenue. This over-reliance can lead to practices that are burdensome, slow, complex, rigid, and misaligned with the objectives of risk management. Over-use of L&P creates barriers to market entry and can stifle innovation, delay critical investments, distort competition, and weaken government’s ability to respond effectively to crises. Fragmented L&P practices across sectors and jurisdictions further generate confusion and distrust, while public expectations can exceed what L&P can realistically achieve.

For L&P to have positive effects, governments and licensing authorities must balance the protection of public goods with market development and innovation. Governments and licensing authorities need to ensure L&P are used only when needed and avoid complex and burdensome processes and requirements. The type of intervention and the level of requirements should be proportionate to the level of risk. L&P should, as far as possible, also be consistent across jurisdictions or domestically in different regions and municipalities, except where regional variations are needed, for instance to address specific geographical or market risks. Licensing authorities should ensure that individuals and businesses are well-informed about the procedures for requesting L&P and understand their obligations to promote compliance.

The Best Practice Principles on Licensing and Permitting aim to support governments in designing and implementing L&P where they are needed, in a way that restores public trust, ensures fairness and transparency, supports growth and competition, and helps manage risk in a rational and evidence-based manner. By promoting a proportionate and outcomes-focused approach, the BPPs help create enabling conditions for innovation, timely crisis response – such as the swift approval of essential goods such as protective equipment or hand sanitiser during public health emergencies – and the digital and green transitions, for example by streamlining procedures for the production, storage, transportation and use of renewable fuels. They also offer a common reference to align L&P practices across OECD Members and beyond, reducing fragmentation and enhancing regulatory coherence.