Getting to 'Yes' in Company-Community Agreements for Forests

When Stora Enso – a global paper, packaging and wood-products company – established a pilot eucalyptus plantation in the southern part of Lao PDR in 2014, it was required to pay concession fees to provincial and district governments. The company was not, however, required to recognize the customary rights of the people who had traditionally used those lands, even though these communities comprise some of the most vulnerable people in the country.

Nevertheless, Stora Enso opted to engage with community members, eliciting their participation in decision-making and co-managing a Village Development Fund to compensate villagers and improve their livelihoods. The corporation ultimately concluded that the benefits of working with communities to obtain their Fair, Prior and Informed Consent (FPIC) greatly outweighed the costs by significantly reducing the risk of conflict.

FPIC is based on the principle that long-standing communities, and particularly indigenous peoples, have the right to give or withhold their consent in decisions that could affect their rights. FPIC is one of many approaches to resolving issues of rights to land and resources, and can be implemented in many different forms. In Towards Consent: Case Studies and Insights on Company-Community Agreements in Forest Landscapes, supported by The Forests Dialogue (TFD) and PROFOR, author Kristen Hite examined the case of Stora Enso as well as three other corporations working in South Africa, Indonesia and Uruguay.

The case studies in Towards Consent highlight the challenge of finding collaborative company-community arrangements where land tenure regimes are uncertain. But reaching an agreement, whether through FPIC or other means, is crucial in the forest sector. On one hand, very few of the local communities and indigenous peoples who depend on forest resources actually own those lands. On the other hand, global demand for wood products is rising, and commercial forest operations often require a secure and predictable supply of trees over many years. “When done correctly, company-community partnerships have the potential to bring significant benefits to communities through jobs, markets for their wood, and community resources that might be garnered,” noted Diji Chandrasekharan Behr, Senior Natural Resources Economist at the World Bank. “Reaching sustained company-community collaboration requires thoughtful engagement, and the case studies from this report provide insights about how achieving FPIC can contribute to such collaboration.”

The report draws a number of key lessons and recommendations from the FPIC case studies, including:

·         Meaningful stakeholder engagement requires a solid understanding of the legal context, both statutory and customary. Grievance mechanisms and community development funds are options for ensuring that all participants share in the benefits of a company-community arrangement. All of the selected case studies featured a grievance mechanism, ranging from a company ombudsman in Lao PDR, to a telephone complaint hotline in Uruguay.

·         An early social impact assessment is important for identifying the relevant stakeholders and cultural, social and economic factors that could influence the agreement. In the Lao PDR case, Stora Enso commissioned environmental and social impact assessments that highlighted high levels of poverty in the project area, as well as important considerations for biodiversity protection.

·         Truly “informed” consent may entail sharing information in a variety of languages and formats, including building capacity for genuinely collaborative partnerships. In the South Africa case study, capacity building was crucial for continuing operations on government lands that were returned to community ownership.     

·         Should stakeholder consent be revoked or denied, alternative arrangements need to be made to accommodate all parties involved. In the Indonesia case study, this entailed modifying the company’s concession to exclude areas where villages were opposed to the arrangement.

·         Outside experts and government officials may play important roles as third-party negotiators and in resolving disputes, as was the case in the Indonesia example.

·         Strong corporate policies may be significant for securing consent and broader development outcomes. Stora Enso, for instance, already had high level policies addressing potential operational risks, which heavily influenced how it implemented the Lao PDR project. 

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Last Updated : 12-16-2016