Who is this guide for?
Corporate Sustainability Professionals
Local Operators and Suppliers
What should companies do to improve their investment practices and to bring about more equitable investment projects? What does it mean for you as a global buyer to support responsible land practices within your supply chains? How can a producer-level company engage communities to build constructive relationships?
Whether acquiring land or purchasing agricultural crops from smallholder producers, understanding tenure-related risk in the context of land-based agricultural investments in emerging markets can be complex.
This Model Guidebook for Business Enterprise includes instructions and tailorable tools for business professionals seeking to design and implement an agricultural investment in a socially responsible manner that recognizes and protects community land rights.
The RIPL Guidebooks build on existing guidance and internationally recognized standards with the objective of synthesizing best practices, contributing concrete examples to address existing gaps, and leveling the playing field by developing guidance tailored to multiple investment stakeholders.
Phase 1, 2 and 3 are intended for a new investment. Phase 4 is designed for existing investments.
Corporate Sustainability Professionals
Local Operators and Suppliers
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In established market economies, the policies, laws, regulations, and state administrative and judicial systems that govern land transactions are known as land governance frameworks. Ideally, these frameworks reflect the best practices listed above. In places where this is true, most land investments can be said to be responsible investments, typically the result of agreements between informed, willing buyers and informed, willing sellers. In places where this is not true (i.e. where state laws do not follow best practices or the state lacks capacity to implement best practices), a legal investment may still be carried out in an irresponsible manner
In a well-functioning land governance framework, for example, no sale, lease or change in the use of a land asset occurs without notice, consultation, negotiation and consent. Inequitable and non-beneficial land deals are less frequent, and if there is a dispute or breach of an agreement, judicial and administrative remedies are accessible, effective and just.
Unfortunately, many emerging economies lack governance frameworks embodying these best practices. If they are in place, the capacity of the government and landholding communities is often insufficient to implement them. Complicating the situation, individuals possessing land rights – especially women – frequently hold their interests and rights informally. Even if their rights are formally documented, prevailing norms and traditions may mean that women are excluded from consultation and decision-making processes even when their interests are clear. In many places laws are imperfect, government capacity to implement is lacking (particularly at the local level), and the informal land situation is unique, requiring that business enterprises take special care to understand whether and in what way to proceed with an investment.
Understanding tenure-related risk in the context of land-based agricultural investments in emerging markets can be complex. Land records – if they exist – often do not reflect ground-level realities as understood by the communities and individuals owning or using the land. Land rights are likely to be unclear and poorly documented; they may even be disputed or overlapping.
The existence of underlying disputes or undocumented land rights and uses may come as a surprise to a company accustomed to operating in established markets, particularly if it learns about these communities and disputes after a land purchase or lease is made. This kind of situation can lead to conflict, resulting in wrongful displacement of a community, uncompensated loss of livelihoods, community protests and unexpected operational delays, or even a failed investment.
Fortunately, situations like these can be mitigated by looking to international standards and best practices for responsible land investments. A great deal of global attention is focused on implementing these standards through government and corporate commitments to improve land governance and investment practices. The consensus is clear: land deals should be done responsibly.
However, knowing what steps to take to implement standards and best practices across diverse local contexts and investment models can be a challenge. For example, it is not always clear how a company can meaningfully engage and consult with all community members. Nor is there clarity around how to meaningfully include women in situations where they are not customarily included, such as community meetings and land transaction processes. Limited government capacity poses a further barrier to effective enabling frameworks: governments may need help to maintain and enforce equitable land practices. This guidebook will help investment stakeholders understand the challenges and determine what is required to create fit for purpose solutions that address localized issues.
With support from the United Kingdom’s Department for International Development (DFID) Land Governance for Economic Development (LEGEND) Program, Landesa’s RIPL Project is addressing these challenges by making international guidelines and best practices into guidebooks. These guidebooks offer country- and audience-specific step-by-step instructions for how to implement best practices and international standards. The goal of these guidebooks is to make it easier for businesses, governments and communities to all do their part to create a responsible land investment.
The guidebooks support the application of existing, internationally recognized standards by providing concrete steps and tools to support their implementation. The guidebooks build on existing guidance with the objective of synthesizing best practices, contributing concrete examples to address existing gaps, and leveling the playing field by developing guidance tailored to multiple investment stakeholders.
The guidance is grounded in field research on current investments in sub-Saharan Africa, as well as Landesa’s experiences directly supporting companies in the Global South, including Asia and South America, to develop land rights policies and implementation guidance. Landesa brings over 50 years of experience working with governments to support the development of pro-poor and gender-equitable land policy and legislation and with local civil society to support the implementation of those policies on the ground.
It is important to note that the RIPL Guidebooks are not about rectifying historic land grabs[i] but can help stakeholders identify issues. Businesses (and governments) should always look very carefully at who currently uses and claims rights to the land, and then look at how they came to use or control the land.
It should also be noted that the RIPL Guidebooks are not intended as legal advice, but rather as tools to aid stakeholders in navigating the process of designing and implementing a responsible investment. Furthermore, the best practices described in this Guidebook should be seen as the basic minimum standard for responsible land-based investment, which all stakeholders should strive to exceed. Guidelines in the RIPL Guidebooks may exceed the minimum legal requirements at local, national, or international levels, but extra measures are suggested to safeguard against international condemnation for land grabs and to protect local land holders and users.
[i] Although there is scant literature about the legacy issue, two recent publications present detailed analyses of the subject. See L. Cotula, T. Berger, & P. Sutz, “Addressing Legacy Land Issues in Agribusiness Investments,” LEGEND Analytical Paper 2 (2016), available at https://landportal.info/library/resources/legend-analytical-paper-2/addressing-legacy-land-issues-agribusiness-investments; N. Flanders & J. Jenks, A Guidance Note on Managing Legacy Issues in Agribusiness (2015), available at https://toolkit.cdcgroup.com/assets/uploads/CDC_Land_Legacy.pdf
The focus of this guidance is on supporting stakeholders in implementing best practices related to understanding and respecting land rights in the context of an investment. It is intended to be used alongside additional resources that focus on other critical aspects of investment design and implementation, such as guidance and best practices for understanding and mitigating environmental impacts.
While many of the best practices and steps outlined in this guidebook can be applied across sectors, the focus is on land-based investments in agriculture. These investments can be both direct acquisition of land (through lease or purchase) and/or procuring agricultural commodities directly from smallholder farmers.
This guidance is intended to be adaptable to different contexts and investment models. It is worth noting, though, that a significant amount of the field research used to inform the guidance took place in sub-Saharan Africa.
The guidebooks assume three broad investment stakeholders: the business or investors; government; and CSOs and community (including individuals within the community) and its representatives. Each of these audiences has different needs, roles and responsibilities in an agricultural investment transaction. The RIPL project has, accordingly, produced a different guidebook for each stakeholder group and identified a specific user for each guidebook.
Achieving a responsible investment is too difficult for any single actor to accomplish: it is imperative that communities, governments and businesses work together to uphold best practices and ensure that transactions in land are sustainable and responsible.
This Guidebook for Business Enterprise is intended for a company representative tasked with evaluating and facilitating a prospective investment or managing an ongoing investment.
Businesses play an important role in upholding best practices in a responsible investment: as the entity with potentially more resources and capacity than government, they must take the lead in helping to ensure community and individual rights are respected throughout the process of acquiring or investing in land, otherwise they will be left exposed operationally and reputationally.
At the same time, these resources put the business in a position of power. In combination with a clear interest in obtaining land, this power can too easily be used in a way that can be perceived to be threatening to land rights holders.
Whether this is fair or not, businesses should be responsible for implementing international standards to ensure communities are treated with fairness and respect throughout the investment process. This means businesses upholding human rights more broadly as part of their core business activities in line with the United Nations Guiding Principles on Business and Human Rights (UNGPs). This means that businesses have a responsibility to:
It is important to note that best investment practices cannot simply be imposed upon communities and their leaders. All land rights holders must have the meaningful opportunity to be a part of fair land deals. There must be attention, consideration and response from the community throughout the investment process, and the business holds a responsibility to ensure that happens because government often is unable to meet their obligations.
Government also plays an important role in responsible investment. At a high level, the government’s role is to ensure that all parties are adhering to pertinent local, national and international laws and to provide an enabling and receptive environment for a business that embraces best practices. As such, it may need to act as a facilitator or guide during the investment process.
This guidebook envisions three general government stakeholders for land-based investment:
The government, in particular local officials, should support businesses and communities in implementing best practices to ensure responsible investment. Importantly, their level of involvement will depend on the type of investment. The role of local officials is to engage directly with business and community representatives in achieving the following objectives:
The national government also plays an important role in responsible investment. At a high level, the national government’s role is to ensure that all parties are adhering to pertinent local, national and international laws and to provide an enabling and receptive environment for a business that embraces best practices. As such, it may need to act as a facilitator or guide during the investment process. This is the primary responsibility of the Governmental Investment Agency: to link prospective investors to communities while promoting and ensuring responsible investment.
The government is also responsible for:
These responsibilities also feed into the government’s other general responsibilities with respect to environmental conservation, food security and domestic security, which all depend on an effective and equitable land tenure regime
The Guidebook for Communities is intended to be used by CSOs supporting representatives in communities engaging with government or business about a potential investment or attempting to address issues related to an ongoing investment project. This guidebook refers to the group of people representing the community as a Land Investment Committee with a sub-group of members called the Negotiation Team.
Communities and their leaders must be empowered to participate fully in any investments affecting them to help shape the terms of the investment and decide whether the investment should proceed. Though they may benefit from a land-based investment, rural communities and smallholders are also the stakeholders that have the most to lose when land deals take place. It is important to note that investments – even undertaken with best practices – cannot simply be imposed upon communities. Women and men in communities must have the capacity to be a part of fair land deals, and have an opportunity to participate in the final decision. There must be community attention, consideration and response – from both women and men. This means that communities and their leaders may need to:
This Model Guidebook for Business Enterprises includes instructions and tailorable tools and resources that businesses can modify as they design and implement an agricultural investment in a responsible manner.
The material is organized by four phases of an investment process, with each phase consisting of two tasks that have detailed steps. Each task contains step-by-step guidance organized in a linear manner to provide structure to an investment process that is often times complex and cyclic in nature. The information within each step is a combination of analysis, principles, recommendations, tools and resources.
At the outset of each task, the guidebook includes detailed best practice statements that reflect the international standards and principles for socially responsible investments in land.
When applying the RIPL Guidebooks to an investment, it is important to recognize that the context of an investment will shape how best practices can bring about a socially responsible investment. The Guidebooks will help to identify and contexualize variables that are unique to the investment context. Examples of the contextual variables include:
All of the phases have resources and tools to help businesses translate best practices to the specific needs, risks and opportunities of their agricultural investment project. These resources are all available online here.
There is also information organized by thematic area in our primers. Primers are approximately 10-page briefs designed to complement the step-by-step guidance. They provide more detailed information on several key topics referenced throughout the guidebook. An understanding of these topics will be central to contextualizing and accomplishing the best practices. Some primers will be referenced throughout the guidebook where appropriate, and all primers are available online here.^ Collapse ^
Responsible agricultural investment includes more than just following the letter of the national law. It also means adhering to international standards and best practices. While the local government and communities may not be bound by these international standards, the investing company and their funders will be. As such, the investing company may need to insist on standards over and above or different to local or national policies.
The basis for these best practices comes from two key documents that embody all the agreed upon principles and best practices. The aim of the RIPL Guidebooks is to help operationalize these four recent well-known instruments:
At a high level, these standards call on business to work equitably with communities and individuals with legitimate land rights. This includes (but is not limited to):
A great deal of global attention is now focused on supporting the implementation of these practices to achieve fair, informed, inclusive and choice-driven processes that respects the land rights of all.
Underpinning and stemming from the best practices listed above are two key concepts for acceptable engagement with communities:
Both of these concepts, particularly FPIC, are important for business enterprises to understand prior to engaging in a land investment.
For business enterprises to be successful, it is important that they gain the trust and confidence of the communities and all land holders and users that they will be interacting with. This trust, which takes work to both secure and maintain, is known as social license to operate. Social license can be defined as the measure of trust and confidence society has in a business to behave in a legitimate, transparent, accountable and socially acceptable way.[i]
Social license is built upon or damaged by the way that people view the individuals, activities, statements or policies of a business. In other words, it is based on perceptions by a number of stakeholders. Social license is not formally granted on the basis of legal or regulatory compliance: legal compliance on its own is not sufficient to ensure that a company has an enduring social license, though the existence of social license is often linked to such compliance and usually reflects perceptions of behavior in light of standards or norms.
Without this social license, business enterprises will likely face difficulty. This is true even if that very same business has a legal right to operate. In other words, it is in the best interest of the business to work with the community in a socially responsible land investment, generating an enduring social license to operate. This idea is at the heart of much of the guidance presented in this guidebook.
Social license is most evident when it is lacking. When social license erodes, a business begins to see the risks and damage that a loss of social license can cause. Risks and damages for businesses vary, but may include labor strikes, theft, vandalism, encroachment and general hostility towards the company and its staff.For example, a 2014 analysis found that “a major, world-class mining project with capital expenditure of between US$3-5 billion will suffer roughly US$20 million per week of delayed production in Net Present Value terms due to land tenure issues.” In Chile, an investor abandoned a hydro electric plant due to failure to address land rights of indigenous peoples. Losses exceeded US$75 million and scrapped plans to invest more than US$1billion in the country.[ii]
Mitigating these issues can be costly and time consuming. Such mitigation can be avoided by establishing and maintaining a relationship of fairness and trust with land holders and users from the outset of an agricultural investment project. Businesses that are able to create and maintain a social license to operate tend to:
The phases and tasks in this guidebook are designed to help businesses ensure these actions are taken.
Another necessary part of developing a high level of trust between an investor and communities is obtaining free, prior and informed consent. FPIC carries with it the element of choice to accept or reject the transfer of land or change of its use that accompanies the proposed investment.
FPIC is enshrined in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP);[iii] it is also included in other international legal instruments and domestic legal frameworks.[iv] Numerous business enterprises have agreed to FPIC as part of their commitments to responsibly invest in land.[v]
Under UN principles FPIC is reserved for indigenous communities, while consultation and participation are seen as the minimum standard for interactions with non-indigenous communities.[vi] Importantly, UNDRIP states that individuals and communities have the right to self-determine whether they are indigenous or not, which can be in the absence of the government making such a determination.[vii]
That being said, it is often broadly interpreted as best practice to obtain the FPIC of all communities that maintain customary rights to or uses of land and natural resources.[viii] Moreover, the principles of FPIC overlap considerably with the principles of good contracting: no party ever parts with land without saying “yes,” and any party asked to enter into a contract has the right to say “no.” That is, fair business deals always have the element of choice. FPIC is therefore central to land-based investment projects seeking to transact responsibly. Finally, as some businesses have learned, it is difficult to maintain a social license when surrounded by displaced land holders and users who did not have a choice. The legacy of an irresponsible land investment can beset a company and community for generations. Therefore, leading companies are treating all affected communities under the higher standard afforded to indigenous communities.[iv] “Affected communities” refers to all communities and individuals whose land rights, uses, and livelihoods may be impacted by an investment.
Choice must be fully informed. Unlike in a normal buyer/seller relationship, corporations have an unfair advantage in the relationship with local communities which must be balanced for achieving truly informed consent. For land-based agricultural investments, FPIC requires that affected communities:
Achieving unanimous consent from a community will be difficult. Given this, defining consent will need to be determined on a case-by-case basis and in consultation with the community. But to mitigate risk potential risks and ensure buy-in from community members, consent should be obtained from as many people as possible. See the FPIC Solutions Dialogue from Solutions Network for further guidance.
For more information, consult the FPIC Primer.
Broad stakeholder participation is critical at every stage of community engagement. In order to make sure all community members who may be affected by the investment participate in the business’s consultation efforts, the business should follow these best practices when holding community meetings:
Publicize meetings to achieve diverse representation. It is likely that the investment will impact people and groups differently so their participation is needed to contribute different perspectives and help anticipate and mitigate potential issues.
Ensure broad representation. Reaching groups who are frequently underrepresented in decision making forums, such as women, youth and ethnic minorities (see Vulnerable Groups Primer), often requires more concentrated effort than just inviting them to information meetings, so make specific efforts to include the following individuals:
Structure the meetings into three parts to ensure broad participation.
Develop a meeting agenda facilitation plan to ensure the following is achieved:
Document the meetings.
Schedule additional meetings.
Obtain consent from community members.
[i] See Sustainable Business Council, Social License to Operate Paper (2013) [hereinafter “New Zealand Report”], available at https://www.sbc.org.nz/__data/assets/pdf_file/0005/99437/Social-Licence-to-Operate-Paper.pdf.
[ii] See The Financial Risks of Insecure Land Tenure: An Investment View. 2012. The Munden Project. pg. 25-27.
[iii See UN General Assembly, United Nations Declaration on the Rights of Indigenous Peoples: resolution / adopted by the General Assembly, A/RES/61/295 (Oct. 2, 2007), available at http://www.un.org/esa/socdev/unpfii/documents/DRIPS_en.pdf.
[iv] See e.g., UN Department of Economic and Social Affairs, An Overview of the Principle of Free, Prior and Informed Consent and Indigenous Peoples in International and Domestic Law and Practices (2005) (detailing how Philippines, Malaysia, Australia, Venezuela, and Peru implemented legislation relating to FPIC).
[v] See e.g. The Coca-Cola Company, The Coca-Cola Company Commitment: Land Rights and Sugar (2013), https://www.coca-colacompany.com/content/dam/journey/us/en/private/fileassets/pdf/2013/11/proposal-to-oxfam-on-land-tenure-and-sugar.pdf; Nestlé, Nestlé Commitment on Land & Land Rights in Agricultural Supply Chains (2014), http://www.nestle.com/asset-library/documents/library/documents/corporate_social_responsibility/nestle-commitment-land-rights-agriculture.pdf; PepsiCo, PepsiCo: Land Rights Policy (2014), https://www.pepsico.com/Assets/Download/PepsiCo_Land_Policy.pdf; Unilever, “Responsible Sourcing Policy,” https://www.unilever.com/Images/responsible-sourcing-policy-interactive-final_tcm244-504736_en.pdf/ (last visited July 30, 2018); Illovo, “Illovo Group Guidelines on Land and Land Rights” (2015), http://www.illovosugar.co.za/Group-Governance/Group-Guidelines-on-Land-and-Land-Rights (last visited Jan. 29, 2016).
[v]i See UN-REDD Programme, Guidelines on Free, Prior and Informed Consent (2013), available at https://www.uncclearn.org/sites/default/files/inventory/un-redd05.pdf.
[vii] FAO, Free Prior and Informed Consent: An Indigenous Peoples’ Right a Good Practice for Local Communities 12 (2016), available at http://www.fao.org/3/a-i6190e.pdf.
[viii] See id. (stating it is good practice to extend FPIC to local communities, although it is a right of indigenous peoples).
[iv] For example, as part of its policy of “zero tolerance” for land grabs, Coca-Cola committed to adhering to FPIC with respect to all communities it works with. Tirit Amir, Coca-Cola Leads the Way on Land Rights, OXFAM (Nov. 8, 2013), https://politicsofpoverty.oxfamamerica.org/2013/11/coca-cola-leads-the-way-on-land-rights/.
This phase is about getting the company ready to take on a responsible land investment by gathering the information it needs to assess whether to move forward with the investment.
Business drafts or revises existing company land-based investment policies.
Business develops an implementation plan.
Business operationalizes and promotes responsible land-based investment policies.
Business conducts initial research on the national investment context.
Business researches the national legal framework.
Business compares national framework to international standards.
Business maps investment stakeholders.
To achieve socially responsible investments in land, a business enterprise needs strong systems and safeguards that start with clear and comprehensive land investment policies. These policies should:
A number of business enterprises have made their land policies and associated implementation guidance available online. These policies can provide a useful starting point for developing a policy that suits the particular needs of the business. See Supplemental Resource: Sample Business Enterprise Policies for examples of land policies and implementation guidance that companies have adopted and made public.
Adopting best practices start at the company level. This is why the first step is to review the company’s existing policies to see how they address land-based investments. Policies should address all types of land-based investments:
Company policies should reflect a commitment to respect the rights and interests of land holders by upholding international standards and best practices, like those called for above and explained in the following sections of this guidebook. If existing policies do not reflect these commitments, then take time to revise them so they do. Companies should consider the following when evaluating their policies:
Setting a realistic timeline is important for the implementing new policies. Companies will likely come across many hurdles to make the process fully fair and inclusive of all stakeholders, which might lengthen the timeline. The company should first address and understand the impact of implementing the RIPL process in new acquisitions, but also look to apply it to existing holdings, those with legacy issues, and finally bring these processes to suppliers.
To see example policies developed and made public by business enterprises, see Supplemental Resource: Sample Business Enterprise Policies.
As part of developing or revising existing policies, the business must consider what it will take to operationalize its commitment to achieving responsible land investments. Ideally, the business should create an action plan that includes realistic indicators.. The plan should be a “working document” that is revised regularly (such as annually or as otherwise determined by the planning team) as the business continues to learn and refine its approaches and tools.
As part of the implementation plan, consider the following targets:
Implementation of policies will require support from third-party experts and auditors. Experts in land and resource tenure can help shape company policies and implementation plan from their inception, helping the business to identify potential tenure related risks and articulate best practices. Businesses may also seek specific guidance for implementing concepts identified in the remainder of this guidebook to tailor implementation to their circumstances.
Consider joining an industry group or network as another path to finding support. A number of international and regional forums, such as the Interlaken Group, exist to promote the exchange of best practices. Businesses can use the opportunity to position themselves as an industry leader and build brand reputation. Multi-stakeholder networks—which include business enterprises, government, civil society, academics and donors—will also provide the opportunity to learn from actors with different perspectives. Annual conferences, such as the United Nations Forum on Business and Human Rights and the World Bank Conference on Land and Poverty, can be another venue for information exchange.
Once the business has created its policies and has an initial implementation plan, it must move its commitments into action. While the implementation plan will include many actions, one essential step is communicating and promoting the new policies.
The company’s board of directors, shareholders, various committees, managers, employees and suppliers will all need to know about the new policies and how the company will implement them. Consider promoting the policy publicly to customers, industry group partners and other interested parties. This can create reputational and accountability benefits.
Simply handing over a document describing the policies will likely not be enough, particularly for individuals who will be directly affected. To communicate effectively, the business may need to develop training materials, operational guidance, questionnaires, checklists and other materials identified in its implementation plan.
The need for training will vary based on the roles and responsibilities of different stakeholders. For instance, employees responsible for receiving and addressing land-related grievances in the course of an investment will need more detailed checklists and resources than an executive. That said, all stakeholders are likely to benefit from some information on the following:
For an example training presentation covering these issues, see Supplemental Resource: Why Land Matters: Communicating Your New Land Commitment. This resource is intended to serve as a template to support the communication of key principles of the policy and basic land concepts, but it will need to be tailored to each company’s unique needs. Each slide contains speaker’s notes to provide the presenter with detailed information to accompany each slide. It is divided into three modules: (1) the business case for company commitments to land rights protections; (2) overview of land rights, land-related issues and best practices; and (3) introduction of the company policy and implementation plan.
At the outset of a potential investment process, it is imperative to learn as much as possible about the context the company is entering. Doing so will help identify and mitigate or eliminate issues and risks the project may pose to the business, communities, and individuals who rely on the land that might be acquired and used for an investment.
This is called acting with due diligence. Acting with due diligence will help the business avoid infringing on the legitimate interests and rights of land holders.[i]
Due diligence should:
This section primarily covers due diligence activities that the company should complete prior to the design and planning of a project. Research conducted prior to on-the-ground engagement will rely primarily on secondary sources and is often referred to as “desk research.” This is the starting point for the due diligence process.
In subsequent investment phases, the business will continue to revise its initial research and analysis as it learns more about the specific land investment site within the country and holds consultations with stakeholders, including government, civil society, academics, and community leaders and members.This can set a framework that will lead to a clear management plan after community members and leaders.
Even after a signed agreement is in place and the project is mid-implementation, due diligence activities should continue. For example, any expansion or change to an investment or the addition of a new supplier to the company’s supply chain is an opportunity for the company to practice due diligence.
The business can conduct due diligence through audits and self-reporting, but it should also consider engaging the services of a third party that is experienced in identifying land-related risks and familiar with the local context. Additionally, the evaluation should include input from government, CSOs, individual land holders and users (both women and men) and communities in potentially affected areas, and other stakeholders.[ii]
When exploring an investment opportunity in a particular country, it is important to first build an understanding of that country’s investment context. This includes gathering both general and sector-specific economic information, along with any relevant policy statements, growth targets, incentives or investment objectives that the national or local governments have produced. Questions to ask at this stage include:
These questions should serve as a jumping-off point; the list is not intended to be exhaustive.
Both international and domestic agencies conduct primary research on the economic, social and political environment of countries around the world. Examples of organizations that can provide key data for this stage of due diligence include:
After scoping out the broader investment context, a responsible investor should investigate the host country’s legal framework pertaining to land and land-based investments. This will involve consideration of three primary areas:
As an example of legislative instruments that should be reviewed, the table below provides a list of Tanzanian laws that have direct bearing on land tenure security.
|Tanzanian Laws and Policies|
The ultimate product is a memo outlining the relevant laws and policies alongside gaps and obstacles for implementation.
Questions to ask at this stage include:
Again, these questions should serve as a jumping-off point, and the list is not intended to be exhaustive. The following resources can be useful for answering these questions and mapping legal frameworks:
This Guidebook will help business identify gaps between the national framework and best practices and assess the risk such gaps pose to achieving a successful, responsible investment. Other phases and tasks in this guidebook will help the business consider what actions need to take during the investment process to meet best practices.
As the business identifies potential investment sites within a target country, it will need to continue to update this due diligence to include gaps between on-the-ground realities and best practice. Phase 2 of this guidebook discusses this is further detail.
In addition to the VGGTs, companies may want to consider other relevant treaties and protocols, such as:
As with any significant venture, responsible investments require interfacing with stakeholders at many different levels. As part of desk research, identify government agencies, community organizations, business entities and other relevant stakeholders, such as donors and academic institutions. The business will use this map in the next phase to support initial consultation and validation of its desk research. Supplemental Resource: Stakeholder Mapping Template provides a template for identifying common stakeholders in the context of land-based investments.
[i] FAO, Voluntary Guidelines on the Governance of Tenure, Fisheries, and Forests in the Context of Food Security 7-9 (2012), available at http://www.fao.org/docrep/016/i2801e/i2801e.pdf.
[ii] See United States Agency for International Development, Operational Guidelines for Responsible Land-Based Investment 16 (2015).
This phase provides steps for engagement and consultation with land holders and users to learn how the investment may impact their livelihoods.
Business registers in the target country.
Business identifies potential investment locations within target country.
Business investigates the potential investment site and begins to understand the communities and individuals who use it.
Business identifies a community entry point and facilitator.
Business holds initial meetings with community leadership.
Business conducts initial meetings with community members.
Business provides initial notice of intent to invest.
Business encourages and respects each community’s decision to halt or proceed.
Business seeks support from a neutral third party to assist in each community assessment.
Business introduces assessment process and develop assessment engagement plan.
Business works with third party to conduct the community capacity assessment.
Third party conducts the ESIA, including assessing impacts on land rights, users and livelihoods.
Business develops a LRP or RAP, if necessary
Third party conducts land valuation.
Business develops compensation package.
For an investment to succeed over time, the business must foster strong interactive relationships with communities through regular community consultations. This should be done in accordance with FPIC.
The engagement and consultation process should be in accordance with FPIC, which is a legal principle originating from the United Nations Declaration of the Rights of Indigenous Peoples (UNDRIP). It recognizes the right of land holders and users to say “yes” or “no” to proposed changes in their land use. It is also understood to be a legal principle of good contracting – the party being asked to enter into the contract has the right to say “no”. FPIC stands for Free, Prior and Informed Consent:
For more information, see the FPIC Primer, as well as FAO’s guide, Respecting Free, Prior, and Informed Consent (2014), and USAID’s Operational Guidelines for Responsible Land-Based Investment, (2012).
Before consulting with stakeholders about a possible investment, the law may require the business to file an application to register as a company in the country. Most countries have an investment promotion center that will help with processing applications. Typically there is a website that contains the relevant information that will help the government respond to due diligence inquiries from the government.
After the business completes the initial due diligence on the national investment context under Phase 1, it should identify specific locations available for investment.
To do this, reach out to the ministry or government entity responsible for land governance based on the research conducted in Phase 1. A department within the government is often able to provide support and information during this process. Some countries have specific offices dedicated to investment promotion; others have “land banks” that catalogue available land for investment.
This government entity should also facilitate engagement with other government agencies.
After identifying potential investment locations, the business needs to learn about the institutional, environmental and social situation at each potential investment site. It is important to gather as much background research as possible on the local land context, as different regions of a country may have entirely different land governance practices and customs.
It can be challenging to find locally-specific information through desk research, so it will likely be necessary to consult with the government, civil society and other experts with experience on legal and social issues related to land tenure and land-based investment.
Use the stakeholder map developed in Phase 1 to identify appropriate national, regional and local civil society organizations or local associations with whom to consult. This research will prepare the business for subsequent steps to engage directly with community leaders and members. See Supplemental Resource: Stakeholder Mapping Template for a sample mapping framework.
Consultations with government, civil society and experts should build on the initial desk research conducted in Phase 1. Pay particular attention to how the local context at the investment site may differ from findings from desk research on the national context. Given governance gaps in many emerging market countries, local practices often develop without reference to laws and regulations. In settings where customary land governance systems are prominent, local customs may generate completely different land practices from one region to another. Government land administration and registration practices may also vastly differ region to region.
Refer to Supplemental Resource: Site-Specific Questionnaire to guide conversations with community members. Site-specific background research should be guided by the following objectives:
These considerations should accompany other background research the business typically conducts as part of its investment preparation, such as research into the local supply chain, existing infrastructure for commodity transport, and potential environmental impacts related, for example, to protected habitats or conservation and protection of water, soil and forests.
The business will verify and revise this background information in subsequent consultations and assessments as it engages directly with communities.
Now that the business has initial information to structure a productive and culturally appropriate interaction, it is time to approach community leaders and community members in each prospective investment site. While it is important to begin by engaging with the government (supported by consultations with other experts), it is imperative to also speak with local leaders and community members to validate the availability and status of the land and understand how the investment will impact each community.
In preparation for engaging with community leaders and members, the business will need to identify an appropriate entry point. Each community is likely to have customary protocols for approaching community members for a consultation.
The business will also need to engage a qualified facilitator. This should be a neutral third-party who is familiar with the customs of the local community. It may be a government agency, a district official or another person or entity (such as a local CSO) with knowledge of the local landscape and context. In its Community Land Protection Facilitators Guide, Namati outlines the hallmarks of good facilitation and outlines important traits in an effective facilitator.
With the support of a facilitator, hold an initial meeting with community leadership to:
Work with community leadership and the facilitator to coordinate an initial meeting with each affected community group to introduce the business and the potential project. Equipped with the site-specific background research, invite as many local rights holders and land users as possible to the initial consultation.
Research conducted on a land concession in Ghana shows the importance of ensuring both women and men are included in the investment process. In the proposed investment area, women generally grew a variety of food crops within and around the yams and cassava being grown by men. Community members were told that they would be compensated for all crops being grown. However, farmers reported compensation for crops predominantly grown by men. Crops traditionally grown by women were not considered for compensation according to focus group respondents. The exclusion was not due to the company’s decision to exclude women from the process. Rather, the third-party firm who was hired to value community assets did not account for women’s crops because they were not being farmed at the time of the survey.
Use Supplemental Resource: Community Consultation Checklist as a resource to help guide these consultations, and refer to Best Practices for Holding Community Meetings earlier in this guidebook.
Following initial consultation, synthesize and analyze the information. Seek to answer questions raised by community leaders and members during the consultation and hold follow-up consultations as agreed with community leaders and members.
If after initial due diligence on the investment site and consultation with communities and leaders the business decides to move forward with the investment in this location, it next needs to provide initial notice of intent to invest to the broader community. Giving initial notice is both a best practice and an important step in effective and socially responsible engagement.
Look to national laws and policies to identify specific notice requirements that apply to the investment. Generally, the business should provide notice in a language, format and location that is accessible to community members, including women and other vulnerable groups. The notice should include key project details, such as the name of the investor, intended land use, a map of the affected area and contact information. Widespread public postings are one way to distribute the notice.
Once the business has presented all of the information to the community, and once all community members have had the opportunity to raise questions, concerns and complaints, it is time for the existing land users and right holders to decide whether to halt or proceed with exploring the investment further.
This is not an agreement to proceed with the project itself, but rather an agreement to continue discussions and to negotiate in good faith. In other words, a community may have agreed to move forward, but there are still many steps remaining (including assessment, negotiation and contracting) before the transaction is complete.
In some cases, the business and community may decide to use a letter of intent (LOI) or memorandum of understanding (MOU) as a resource to support inclusive negotiations by laying out the terms, conditions and stakeholder roles for the negotiations process. Refer to Supplemental Resource: Template for LOI/MOU for an example of an MOU. Additional resources include:
[i] See FAO, Respecting Free, Prior and Informed Consent 23 (Governance of Tenure Technical Guide 3 2014), available at http://www.fao.org/3/a-i3496e.pdf.
[ii] See id. at 33.
To inform whether both the business and the community/communities should proceed with the investment, the business is responsible for hiring neutral and experienced third parties to conduct three community assessments that examine community capacity, environmental and social impacts, and the value of land.
Although there are overlapping aspects and steps to each assessment component, for the sake of clarity, this guide presents each component as a standalone assessment:
These assessments will also be utilized in the case that alternatives are exhausted and displacement is unavoidable, leading to building of LRP and RAP.The business should ensure that community members are informed about the assessments, can participate meaningfully in them and have assessment findings communicated to them in a form that they can understand.
Given the complexity of these assessments, and to promote objectivity and fairness, the business should hire one or more experienced third parties to design and conduct the capacity assessment, ESIA and land valuation. Inadequate assessments often result from the failure to secure appropriately trained and credentialed technical professionals with experience working with communities. An expert third party brings reliability and technical expertise.
A third party also lends credibility and objectivity to the findings. It is important that each assessment team is trusted and respected and that their relationship to the business enterprise is structured in a manner that supports their independence, as the experts will need to act on behalf of both communities and the business enterprise and navigate real and perceived conflicts of interest. To promote objectivity, the selection of a third party could be done through a tender process based on qualifications and experience. The services, financial payments and transaction could also be managed by a party that does not have an interest in the investment project, such as an escrow company or a financial services provider. Seek input from community leaders on the candidates before hiring them to ensure the community is comfortable with the parties that will be conducting the assessment.
In addition to possessing the requisite technical experience and professionalism, in building the assessment teams the business should consider the following:
By now, consultations with community members should have made the community and its leaders aware that an assessment could be conducted during the investment feasibility determination. Now, the business should hold a meeting explicitly to inform them of the desire to perform an assessment and ask for their informed consent (either orally or in writing) before activities begin. Use this meeting to introduce the planned assessment teams, answer questions, develop an assessment engagement plan and confirm the community is comfortable moving forward. Refer to Best Practices for Holding Community Meetings to conduct this step.
The community capacity assessment looks at the capacity of community leaders and community members who use land to listen, comment, disagree, ask questions, and ultimately negotiate benefits, compensation and other terms of a contract. This will lead to designing and implementing robust, locally adaptable projects.
It is not uncommon for communities and individual land holders and users to lack experience with commercial land transactions. In the event the community capacity assessment identifies gaps in the community's ability to meaningfully participate in the process, the business will need a plan to address those gaps, such as through trainings or technical support. Without such support, if proceeding with the investment would fail to comply with international best practices such as FPIC and could produce unintended risks and consequences for the investment, the company and the community.
Consult Supplemental Resource: Community Capacity Assessment when planning and conducting the assessment. The assessment team will need to:
The ESIA that the company conducts to comply with widely-accepted human rights standards[iv] and domestic laws and policies should include an assessment of impacts on land rights, users and livelihoods in the community. Below are the actions the business should take in planning and conducting the ESIA.
Develop research methodology. Supplemental Resource: Land Rights Assessment Tool Kit contains resources and information to develop a customized assessment to identify potential issues and risks related to economic, environmental, social, and land rights issues. The research methodology should describe:
Identify land boundaries and map rights holders and users. Work with government officials, community leaders, and other parties as established in the assessment engagement plan to determine an appropriate mapping exercise to demarcate and map the boundaries of land parcels and the location and extent of various land uses.
Consider identifying a technology solution to help gather, analyze and share information quickly using smartphones and other devices. The Cadasta Platform is one option that could help the assessment team design a fit-for-purpose collection tool, enable it to quickly collect satellite and drone imagery, and allow it to share the data with the government and community.
The team will need to:
Conduct the assessment. Implementation should be in accordance with the research methodology.
Analyze findings and identify risk. The framework in Supplemental Resource: Risk Mitigation Analysis will help the business identify investment effects on different types of land uses and how they will impact the livelihoods of land holders and users. As the impact assessment reveals possible or actual negative effects on land rights and uses, the project should be reconfigured as feasible to minimize breadth and depth of the impacts and eliminate them where possible. Some options include:
Present findings and proposed mitigation measures. Share and present findings to the community for comment, correction and ratification. Seek input, questions and opinions from community members. Listen for input that suggests something may have been missed during the assessment. Follow the assessment engagement plan and hold as many meetings as necessary to reach all impacted land rights holders and users. Refer to Best Practices for Holding Community Meetings for these meetings.
Present revised findings to government officials and external experts. After validating the findings with the community and making any necessary revisions based on their feedback, have the assessment results reviewed and approved by external experts and government.
Update proposed investment project documents based on assessment findings. Update the design of the investment project to reflect assessment findings. Share the project document with government authorities, community leaders and other parties per the agreed upon assessment engagement plan.
Displacement is rarely acceptable and will lead to international scrutiny and condemnation, so it only should be used as a last resort. USAID Land Tenure Guidelines calls for limiting displacement, but if unavoidable, to the minimum program requirements for specific programs and a specific length of time, using the minimum land necessary. A Resettlement Action Plan or a Livelihood Restoration Plan is necessary to serve impacted land holders and users.
According to USAID, a Resettlement Action Plan will address the impacts of displacement with a resettlement plan compliant with international standards. This RAP may include:
IFC Performance Standard 5 also highlights the importance of minimizing the impact on displaced land holders and users if displacement is unavoidable, and developing an effective Livelihood Restoration Plan for affected communities. Companies may use other community assessments to gauge the number of individuals and households impacted to judge who would be eligible for compensation as part of a holistic, sustainable restoration of their livelihoods following displacement. The company needs to acknowledge the basic cost of the LRP and additional costs that might arise to ensure compensation is sufficient, such as the cost to develop land adequately for the community’s uses. Procedures should also be in place to continuously monitor and evaluate the implementation of the LRP or RAP.[viii]
The Royal Institute of Charter Surveyors (RICS), a professional body promoting and enforcing internationally recognized standards in valuation, provides useful guidance on best practices. The RICS Valuation – Global Standards, commonly referred to as the RICS Red Book, is a comprehensive resource with practical implementation guidance.
The following are high level principles that should be taken into account by the assessment team:
For additional detail see the Valuation and Compensation Primer.
Engage with each community and the land rights holders and users to determine who is entitled to compensation and then begin constructing the compensation package. The valuation calculations should serve as the basis for compensation, as well as local people's perception of value and their requirements for the compensation value.
Compensation for displacement as part of a LRP or RAP should also be based on the value determined and generally exceed the determined land valuation to enhance the livelihoods if affected populations.
Remember that national law usually provides a floor, rather than a ceiling, for compensation.[xiv] Look to supplement the base monetary value of the land with additional compensation and other ways of restoring and improving livelihoods. At a minimum, compensation should be such that livelihoods are made no worse off over the full term that the land is not available for use by current users.
The business will need to:
[i] See African Union (AU), Guiding Principles on Large Scale Land Based Investments in Africa 15-16 (2014), available at https://www.uneca.org/sites/default/files/PublicationFiles/guiding_principles_eng_rev_era_size.pdf.
[ii] FAO, Voluntary Guidelines on the Governance of Tenure, Fisheries, and Forests in the Context of Food Security 4 (2012) (“Business enterprises should act with due diligence to avoid infringing on the human rights and legitimate tenure rights of others.”). See also UN Office of the High Commissioner for Human Rights (OHCHR), Guiding Principles on Business and Human Rights 5 (UN Human Rights Council 2011), available at: http://www.business-humanrights.org/Documents/UNGuidingPrinciples (“In order to identify, prevent, mitigate and account for how they address their adverse human rights impacts, business enterprises should carry out human rights due diligence. The process should include assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed.”).
[iii] Nigel Edmead, Technical Workshop Presentation on “Gender Issues in Designing and Setting Up Land Information Systems and Databases: Experiences from Ghana, Zambia and Uganda” (May 2011).
[iv] See African Union (AU), Guiding Principles on Large Scale Land Based Investments in Africa 6 (2014) (“Decisions on the desirability and feasibility of LSLBI are made based on independent, holistic assessment of the economic, financial, social and environmental costs and benefits associated with the proposed investment, throughout the lifetime of the investment.”); FAO, Voluntary Guidelines on the Governance of Tenure, Fisheries, and Forests in the Context of Food Security 4 (“Business enterprises should act with due diligence to avoid infringing on the human rights and legitimate tenure rights of others.”); UN Office of the High Commissioner for Human Rights (OHCHR), Guiding Principles on Business and Human Rights 5 (UN Human Rights Council 2011) (“In order to identify, prevent, mitigate and account for how they address their adverse human rights impacts, business enterprises should carry out human rights due diligence. The process should include assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed.”); World Bank Group, Human Rights Impact Assessments: A Review of the Literature, Differences with Other Forms of Assessments and Relevance for Development (2013), available at http://siteresources.worldbank.org/PROJECTS/Resources/40940-1331068268558/HRIA_Web.pdf.
[v] All elements were sourced from Namati, Community Land Protection Facilitators Guide 148 (2015), available at https://namati.org/resources/community-land-protection-facilitators-guide/.
[vi] See id. at 141, 168.
[vii] See Guidelines on Compulsory Displacement and Resettlement in USAID Programming, USAID May 2016. Available at https://www.land-links.org/wp-content/uploads/2016/09/USAID_Land_Tenure_Guidelines_CDR.pdf
[viii] See International Finance Corporation Performance Standard 5: Land Acquisition and Involuntary Resettlement, January 1, 2012. Available at https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-ifc/policies-standards/performance-standards/ps5
[vix] See e.g. United Republic of Tanzania, Valuation and Valuers Registration Act §38(1) (prohibiting any person from assisting a valuer in carrying out a valuation without certification).
[x] International Finance Corporation (IFC), Guidance Note 5 ¶ GN34 (2012).
[xi] For guidance on methods to capture the value of community lands and natural resources, see Namati, supra note ii, at 73-78.
[xii] IFC, Guidance Note 5 ¶ GN22.
[xiii] See Royal Institution of Chartered Surveyors (RICS), Valuation – Professional Standards: Incorporating the IVSC International Valuation Standards 20 (2015); International Valuation Standards Council (IVSC), Code of Ethical Principles for Professional Valuers 9-10 (2011), available at https://www.ivsc.org/standards/international-professional-standards/consultation/code-of-ethical-principles#tab-documents.
[xiv] USAID, Operational Guidelines for Responsible Land-Based Investment 43 (2015).
[xv] See True Price, Towards a Better Protocol on Fair Compensation in Cases of Legitimate Tenure Changes: Input Document for a Participatory Process 5 (2016), available at http://landportal.info/sites/landportal.info/files/TowardsFairCompensationProtocol-FinalDraft.pdf.
[xvi] IFC, Performance Standard 5: Land Acquisition and Involuntary Resettlement ¶ 5 (2012), available at http://www.ifc.org/wps/wcm/connect/3d82c70049a79073b82cfaa8c6a8312a/PS5_English_2012.pdf?MOD=AJPERES.
[xvii] Nigel Edmead, Presentation on “Gender Issues in Designing and Setting Up Land Information Systems and Databases: Experiences from Ghana, Zambia and Uganda” (May 2011).
[xviii] IFC, Guidance Note 5 ¶ GN22.
[xx] Id. at ¶ GN24.
[xxi] USAID, supra note 11, at 45.
[xxii] IFC, Performance Standard 5 ¶ 9.
[xxiii] See FAO, Compulsory Acquisition of Land and Compensation 40 (Land Tenure Studies No. 10 2008), available at http://www.fao.org/3/a-i0506e.pdf.
[xxiv] IFC, Performance Standard 5 ¶ 15.
This phase will help ensure that the contract is fair and equitable to all parties and establishes clear rights, responsibilities, and processes to ensure the long-term sustainability and equity of the land transaction.
Business and community prepare to develop and sign a Letter of Intent to negotiate the terms of the contract in good faith.
Business and community negotiate and agree to the terms in the LOI.
Business and community develop a contract and ensure it embodies internationally recognized principles and best practices.
Parties begin negotiation of the terms of the agreement.
Business updates proposed investment project documents based on contract negotiations.
Business submits lease document to the appropriate government agency for its concurrence.
Business solicits and obtains final community consent to the investment terms.
Community receives notice of intent to transfer of land, and the business enterprise obtains formal lease.
Business convenes meeting for final contract signing.
Business shares contract with the community.
The business has the obligation to ensure that all stakeholders are able to participate equally when negotiating. The process should be non-discriminatory, gender sensitive and include the participation of all community members in the investment area.[i] The business enterprise should provide comprehensive information to land holders and users (both women and men) and communities to ensure all relevant people are engaged and informed.[ii]
Depending on the needs of the community, continued community engagement may require the business enterprise to inform community members of their rights and assist them (including by providing professional assistance, which most likely will be required)[iii] in developing their capacity to negotiate full compensation, benefits and other terms of agreements.[iv]
A land investment contract document plays an important role in memorializing the clear rights, responsibilities and processes that have been defined during engagement, consultation and assessment. The contract document should also include a variety of additional provisions to provide needed clarity about the terms of the agreement.
It is the business’s job to make this happen. This means:
Laws, policies and practices in some countries prevent communities and/or individual land holders and users from participating as informed and empowered contracting parties. By omitting or limiting the involvement of the full community, the process contravenes principles of good contracting.
A Letter of Intent (LOI) mapping out expectations for appropriate inclusivity, consultation, and consent is an important starting point for the contracting process between the business and the community.[v] The LOI outlines the principles that will govern the rest of the contracting process.
A sample LOI can be found in Supplemental Resource: Template for LOI/MOU. Important elements to consider when drafting an LOI and the resulting contract are listed in Supplemental Resource: Key Contract Elements. In addition, the LOI should include:
The business enterprise should work with the community to develop an LOI. The consultation and engagement process largely mirrors the steps in the previous sections of this guidebook. The key component of this step is that the business should organize and conduct a series of meetings with the community to discuss the project and the intent to negotiate a full contract.
Supplemental Resource: Community Consultation Checklist can guide the business in preparing for and conducting community consultations. While the resource is designed as a guide for the initial consultation with a community described in Phase 2, many aspects of the checklist will be relevant to conducting consultations for developing a LOI. Any consultation with communities should follow best practices for holding community meetings.
In most countries, the requirements of domestic law fall short of the requirements of international best practices. Therefore, the contracting process must go further than domestic law to comply with international best practices. Oftentimes, standard government-business contract provisions fail to include important clauses pertaining to communities.
Two important guides specific to agribusiness investment contracts provide guidance about the main provisions that should be included in land lease agreements:
Before drafting a contract, use the information gathered during due diligence to understand the legal requirements including what responsibilities the business owes to the community. Additionally, review the results from the ESIA and land valuation to identify information that will likely be useful to inform the contracting process.
Ensure that the contract:
See Supplemental Resource: Key Contract Elements for a list of terms and elements that should be included in a responsible land investment contract.
Depending on the laws, policies, and practices, the community might not be a direct party to the contact and could be left out of the negotiation and contracting process. A lack of community engagement combined with a lack of transparency could jeopardize the legitimacy of the investment deal.[vi] The business enterprise and government could be labeled as land grabbers and the business’s social license with the community could be jeopardized.
There are few publicly available examples of responsible investment contracts that have been developed and executed according to international standards. Because transparency is key to a responsible investment, the lack of published examples is an indication of the shortage of ideal investment contracts. This makes it all the more important that, going forward, business enterprises adhere as closely as possible to best practices and ethical standards.
To best ensure a responsible contract and investment, make sure that anyone representing the business who is directly engaged in the negotiation is explicitly told to pursue a project agreement that will:
It is imperative that the business address any social impacts and rights issues pertinent to the contract. Even in instances where a community might not fully understand contract terms or might not fully be on equal footing with the investor, the business must ensure that land use interests and tenure rights are acknowledged and respected in the contract. This may include offering other kinds of support, such as independent legal counsel or paralegal support that would be paid through a trust or escrow fund.[vii] During this critical stage, the community can offer meaningful and socially binding consent only if:
By meeting these four elements, the company can rectify any shortcomings in representation of community interests by official community representatives or by other parties to the contract. The business enterprise should host a series of negotiation meetings with all stakeholders to explain the proposed project details and discuss the proposed contract terms with all community members. This should be done with the assistance of a facilitator and, if possible, with the assistance of local or regional government. The community meetings should be conducted according to the community consultation guidance described in Phase 2; refer also to Supplemental Resource: Community Consultation Checklist to help guide the consultations.
The contract should not be signed until it all documents are reviewed by the government and final consent obtained from the community, covered in Task 2 of this Phase.
If contract negotiations have materially changed the project concept, the business enterprise should update the investment project document to reflect those changes. In addition, the business should share the information with government authorities and community leaders per the engagement and consultation plan.
After these revisions, the business enterprise should consult Supplemental Resource: Final Contract Checklist, as well as its due diligence research, to ensure that the contract complies with relevant standards.
[i] FAO, Voluntary Guidelines on the Governance of Tenure, Fisheries, and Forests in the Context of Food Security 23 (2012).
[iii] Id. at 22.
[iv] African Union (AU), Guiding Principles on Large Scale Land Based Investments in Africa 15-16 (2014).
[v] While this model guidebook recommends the use of an LOI, a Memorandum of Understanding (MOU) or a Terms Sheet may serve a similar function.
[vi] See generally TMP Systems, The Financial Risks of Insecure Land Tenure: An Investment View (2012), available at http://rightsandresources.org/wp-content/uploads/2014/01/doc_5715.pdf.
[vii] See African Union (AU), Guiding Principles on Large Scale Land-Based Investments in Africa 15-16 (2014).
Good contracting practices require that the contracting process remain transparent and participatory and that all affected communities be brought to an equal footing with investing business enterprises and governments. This means that:
The contract should not be signed before support is obtained from all stakeholders.[ii] If affected communities do not support the project, it cannot legitimately proceed.
The domestic laws and policies identified in Phase 1 play a key role in the development and implementation of a contract. The enforcement of these laws occurs through the national and district level authorities identified in during stakeholder mapping. Use the results of these Phase 1 processes to navigate the domestic legal and institutional environment.
Some jurisdictions require that the final lease agreement be presented to appropriate government agencies for review and approval. In such cases, it is important to include all potentially relevant information. The project documentation should ideally include:
Consent must be provided before project implementation begins. The business enterprise should hold a final community meeting to ratify and memorialize the community’s decision to halt or proceed.
The government should provide the community with final notice of intent to transfer land over to the business enterprise.
Additional cycles of sensitization, consultation and engagement might need to occur to the extent that public comment signifies a need for them. At the most basic level, an oversight and consultation committee should be formed and comprised of representatives of the business enterprise, district officials and community leaders to monitor the process.[vi]
The final contract should be signed by the parties that were identified in the LOI and contract negotiation process, or by those who have replaced them in the case of death, illness, or migration. To support transparency and clear communication among all stakeholders, the final signing of the contract should be well-documented and witnessed by as many people as possible. Representatives from each major community group identified from the community in consultation process in Phase 2 of this guidebook should also sign the contract as witnesses. Photographs and video are one common way of documenting final contract signing events.
If the community is not an actual party to the agreement – which could be the case in some countries – it is critical that an MOU is signed with the community as discussed in the previous task.
Once the investment contract has been finalized and signed, the company must make copies available to affected community members for review and validation.[vii] If contracts are between individuals, the company needs to have a contract document for each individual instead of a single community document. Copies should be distributed and/or publicly posted in local languages, taking care to ensure that copies are accessible to affected women, migrants, and other vulnerable groups.
[i] USAID, Operational Guidelines for Responsible Land-Based Investment 51 (2015).
[ii] Agence Française de Developpement, Guide to Due Diligence of Agribusiness Projects that Affect Land and Property Rights 24 (2014), available at http://www.landcoalition.org/sites/default/files/documents/resources/Guide-to-due-diligence.pdf.
[iii] UN-REDD Programme, Guidelines on Free, Prior and Informed Consent 20 (2013).
[iv] Agence Française de Developpement, Guide to Due Diligence of Agribusiness Projects that Affect Land and Property Rights 24 (2014).
[v] UN-REDD, supra note i, at 20.
[vi] See USAID, Operational Guidelines for Responsible Land-Based Investment (2015).
[vii] See FAO, Respecting Free, Prior and Informed Consent 43 (Governance of Tenure Technical Guide 3 2014).
Because even the most diligent preparation and community engagement cannot account for all potential challenges when implementing an investment project, this section of the guidebook discusses the importance of implementing the project in accordance to the agreement and monitoring and evaluating community impacts.
Land-related issues that escalate to a significant dispute between a community and business enterprise can create reputational and financial risk for the operation. Managing this risk during project implementation is a large part of establishing and maintaining a company’s social license to operate in the community.[i] To best establish and maintain social license, commitments made to the community in a contract or other agreement must be strictly met, and unanticipated impacts and concerns must be identified and addressed as soon as possible. To maintain the community’s trust while resolving unanticipated challenges, the company should:
Guidance in this section can be applied to:
Although the challenges that arise for each endeavor are context-specific, conflict can arise if the livelihoods are not reasonable and quickly restored or improved. There are some common themes and challenges that frequently appear as problems for land-based investments. A few of these themes are discussed below.
One common issue resulting from poor investment planning is the assumption of abundant available land for development. Land that may appear to be unused or underutilized is made available for investment but is often in fact used for multiple non-agricultural purposes, such as transit or pastoral grazing. Additionally, communal land use practices may create situations where, despite a lack of clear ownership, the development of particular tracts would disrupt the livelihood of multiple families. Finally, environmental conditions such as erosion and drought can exacerbate scarcity and heighten tensions around land use. Land scarcity issues increase likelihood of land-related disputes and the weakening of all land rights, including those of women.
An investment region that is being used for sugarcane production in Tanzania is experiencing land scarcity issues. Profitable production of cane increased the demand for land with nearly all available land being converted to cultivating sugarcane. The lack of available land has increased disputes in the region between farming communities as well as between farmers and pastoral societies that are competing for land and other natural resources.
Allegations of encroachment arise where one user is accused of extending their land use into the neighboring user’s claim. Encroachment typically occurs when the encroacher knows that they do not have a right to the land but feel historically disadvantaged by an investment, or they simply view idle land not used by an investor as an opportunity to meet their livelihood needs. It could also occur when an investor builds a structure beyond its property line and into a neighboring community or another individual’s property.
A sugarcane investor has quality land in the area that is experiencing land scarcity issues due to a population boom. Because cane is profitable, the opportunity to grow sugarcane is leading to encroachment issues between individuals and communities and creating land conflicts.
Issues around compensation create some of the most common obstacles to a successful responsible investment in land and property. Compensation issues can include receiving different amounts than were promised in the contract, delayed payments, or payments going to a head of household or community leader who does not distribute them appropriately. Other common problems, like encroachment or displacement, often develop after initial faults in compensation.
Fair and adequate compensation requires consideration of many factors. In one Ghanaian investment, community members raised complaints after initial compensation did not account for crops traditionally grown and sold by women. This illustrates the importance of inclusive community engagement at the start of and then throughout the life cycle of an investment.
Perhaps the biggest challenge with project implementation is that it will almost inevitably involve problems that were not anticipated during project planning, negotiation, and contracting. Even the most diligent preparation and community engagement cannot account for all potential challenges and changing circumstances.
Continued engagement with communities throughout project implementation is therefore essential to maintaining a productive relationship with the local community and identifying implementation challenges and unanticipated impacts as early as possible.[iii] This is particularly important for longer-term projects, as there is a higher likelihood that activities will deviate from the initial plan as implementation proceeds and unanticipated challenges arise.
Multiple channels of two-way communication should be established to facilitate clear, well-planned, and frequent consultation and engagement with communities.[iv] Approaches should address how women face particular barriers to accessing information and participating in consultations.[v] Communication should be structured to:
A factor central to responsible business investment in land and an enduring social license is whether a company ensures access to remedy by establishing a functioning, effective and accessible grievance mechanism for handling land-related disputes.[vii] Consult the Grievance Mechanism Primer for more guidance when carrying out this step.
Guidance relating to responsible land-based investment emphasizes the need for business-based, non-judicial grievance mechanisms to complement any existing state-based, judicial grievance mechanisms. A well-functioning mechanism should have the following components:
The mechanism should also comply with the UNGP criteria for non-state dispute resolution processes:
[i] USAID, Operational Guidelines for Responsible Land-Based Investment 50 (2015).
[ii] See FAO, Voluntary Guidelines on the Governance of Tenure, Fisheries, and Forests in the Context of Food Security 4 (2012); New Alliance for Food Security and Nutrition, Analytical Framework for Responsible Land-Based Agricultural Investment (2015), available at https://docs.google.com/viewerng/viewer?url=https://new-alliance.org/sites/default/files/resources/Analytical-framework-for-land-based-investments-in-African-agriculture_0.pdf; UN Office of the High Commissioner for Human Rights (OHCHR), Guiding Principles on Business and Human Rights 31-32 (UN Human Rights Council 2011).
[iii] USAID, Operational Guidelines for Responsible Land-Based Investment 50 (2015).
[iv] See Landesa, Case Study: Kilombero Sugar Company Ltd. in Tanzania 4 (2017), available at https://www.landesa.org/wp-content/uploads/KSCL-Tanzania-Case-Study-FINAL.pdf.
[vi] Id. at 20.
[vii] FAO, Voluntary Guidelines on the Governance of Tenure, Fisheries, and Forests in the Context of Food Security 4 (2012) (“Business enterprises should act with due diligence to avoid infringing on the human rights and legitimate tenure rights of others.”). See also UN OHCHR, Guiding Principles on Business and Human Rights 5 (UN Human Rights Council 2011) [hereinafter “UNGP”] (“In order to identify, prevent, mitigate and account for how they address their adverse human rights impacts, business enterprises should carry out human rights due diligence. The process should include assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed.”).
[viii] USAID, supra note i, at 53.
[vix] See IFC Office of the Compliance Advisor/Ombudsman (CAO), A Guide to Designing and Implementing Grievance Mechanisms for Development Projects (2008), available at http://www.cao-ombudsman.org/howwework/advisor/documents/implemgrieveng.pdf.
[x] See id.
[xi] UNGP, supra note v, at 33.
[xii] See CAO, supra note vii, at 51-54.
Monitoring and evaluation (M&E) is essential to successful implementation of a responsible investment. In addition to helping the business earn and maintain a social license to operate, M&E can alert the enterprise to the loss of its social license, can provide the information needed to reestablish it, and can also provide ways of managing core business risks. There are threeprimary reasons for a company to dedicate time and resources to M&E:
Thus, for the life of the project, and potentially for a period of time after, the business must conduct M&E for the investment and its impacts upon the communities and individual smallholders that have changed their relationship to the land for the benefit of the enterprise. This will involve designing and implementing a thorough and robust M&E plan (see M&E Primer).
By conducting regular M&E activities, the business will be able to identify implementation challenges and unanticipated impacts earlier than it otherwise might.[i] This is particularly important for longer-term projects, as there is a higher likelihood that activities will deviate from the initial plan as implementation proceeds and unanticipated challenges arise. Additionally, if displacement occurred and a LRP or RAP was implemented, M&E ensures that the lives of the affected people are adapting and adjusting to their new land, and M&E can also identify any needs for the company to further invest in compensation. Below are principles for M&E that the business should be adhering to when designing and implementing its M&E plan:
While each investment will have its unique needs for M&E based on contextual factors (e.g., the agricultural products involved, the region in which the investment occurs, the nature of any outgrower schemes or relocation programs), there are some broad standards that will be applicable to virtually any project. Supplemental Resource: Monitoring and Evaluation Indicators provides a list of possible M&E indicators. These indicators are not exhaustive, but are intended to provide a starting point for a rigorous and diligent M&E protocol.
Throughout the lifecycle of the investment, the business should commission and publish reports that assess the impact of investment activities on the community, particularly with respect to vulnerable populations such as women, indigenous peoples, and ethnic or religious minorities.
In accordance with its M&E plan, the investor should assess social and environmental impact to monitor the effects of the project on the surrounding community. To ensure accountability and transparency, these assessments should be conducted by reputable third parties and based on international standards for human rights and responsible investments. More frequent assessments create more opportunities for adaptation and mitigation, but this benefit should be balanced against the feasibility of thorough assessment on a compressed timeline.
While each investment’s particular assessment needs will depend on the investor, the community and the investment environment, it is generally best to plan assessments for each level of the value chain. Sample questions for assessment of household farm owners, large farm owners, farmworkers, and manufacturing plant and mill owners are provided in Supplemental Resource: Land Rights Assessment Tool Kit. These questions provide a starting point for designing assessments and should be combined with suggestions and questionnaires designed by neutral third parties that are conducting periodic impact assessments.
[i] USAID, Operational Guidelines for Responsible Land-Based Investment 50 (2015).
[ii] FAO, Voluntary Guidelines on the Governance of Tenure, Fisheries, and Forests in the Context of Food Security 39 (2012) [hereinafter "VGGT"].
[iii] African Union, Guiding Principles on Large Scale Land Based Investments in Africa 25 -26. See also UNESCO, A Guide for Monitoring and Evaluating Community-Based Projects (2009), available at http://unesdoc.unesco.org/images/0018/001862/186231e.pdf.
[iv] VGGT, supra note ii, at 24, 27.
[v] UN Office of the High Commissioner for Human Rights, Guiding Principles on Business and Human Rights 19 (2011).
All of the phases have resources and tools to help you translate best practices to the specific needs, risks, and opportunities of your agricultural investment project.
The LandAssess Tool was created as part of Landesa’s C2P Land Project in partnership with Illovo Sugar Africa, and funded by DFID’s LEGEND Challenge Fund. The LandAssess Tool is a series of checklists that allow companies to manage efforts to comply with international standards and best practices. This includes measuring progress made against each international standard and best practice, assigning risk according to progress, detailing work plans and timelines the company will follow to reach compliance, and designating responsibilities to both internal and external actors by task.
This resource provides examples of business enterprise policies that tend to promote socially responsible investing and work toward ensuring the equitable sharing of investment benefits by women and men in affected communities.
The purpose of this slide deck is to enable business leaders who have recently implemented a new corporate commitment on land rights to communicate the new policy, its rationale, and subsequent implementation steps.
This resource can be used to map the various stakeholders that will be involved in or affected by a land-based investment.
Use this questionnaire alongside the guidebook to support due diligence on potential investment sites.
Use this checklist alongside the guidebook to support productive, meaningful and participatory consultations with community leaders and communities.
This resource provides a template for gathering information on individual and collective weaknesses and strengths across community groups: a community capacity assessment targeting characteristics and skills that are considered necessary for effective community involvement throughout the investment process.
This tool kit provides guidance on supplementing an environmental and social impact assessment with a deeper assessment of impacts to land rights, uses and livelihoods.
Use this resource to analyze and mitigate potential risks created by a prospective investment.
The external resources summarized here provide guidance and discuss best practices for establishing outgrower arrangements as a method of compensation or alternative to outright land purchase or lease.
This is a template for creating a letter of intent or memorandum of understanding between the business and the community.
This resource provides guidance on the terms and elements that should be contained within the Letter of Intent or Memorandum of Understanding and final contract between the company and community, as well as within any lease agreement between the business enterprise and the government.
This checklist should be used when preparing the final contract.
This resource provides a template for designing a strategy for ongoing community engagement and two checklists for evaluating the community engagement plan based on established standards for stakeholder communication.