25.06.2018  |  Samfund

What the Right to Own Property Means for a Land-Based Sustainable Business

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This is the second in a series of blog posts where we and a BSR member company review how business respects individual articles in the Universal Declaration of Human Rights (UDHR), 70 years after its adoption in 1948. This series has the support of the Office of the High Commissioner on Human Rights (OHCHR), but any views expressed here should not be attributed to OHCHR. This particular post, co-authored with Enel, explores what the right to own property and land rights mean for business.

As reported by USAID, in 2016, an estimated 70 percent of land in developing countries was unregistered or perceived to be insecure. Tenure rights in particular are regulated by customary laws or informal systems that often remain undocumented, even when they are recognized as legitimate by local populations.

Land-based commercial investments, which are the basis for many businesses—such as agriculture, forestry, extractives, infrastructure, real estate, and travel and leisure—often fall within these unclear land regimes, which can leave companies facing challenges to understand who has legitimate land and resource rights. Notably, the development of extractives and infrastructure projects, including renewable energy projects (such as greenfield electricity generation assets) and the transmission and distribution infrastructures that go with them, can have a significant land impact.

Yet, respect for land rights is essential for many communities around the world, as land represents a key living factor for food production and sustainable livelihoods. Land means access to resources, an adequate standard of living, equality, inclusiveness, and social development. Ultimately, the human right to own property also protects the human rights to adequate food, freedom from hunger, and better living. However, of the threats facing local communities, in particular indigenous communities, one of the most significant, as described by UNESCO, is the risk of being driven away from land and natural resources.  

As outlined by the FAO Voluntary Guidelines, the corporate responsibility to respect human rights also includes legitimate tenure rights. Due diligence over and recognition of customary law and tenure rights should be baseline practice for companies acquiring or looking at acquiring long-term use or ownership rights for land and forests. In the development of a greenfield project, first and foremost the choice of the potential site should be driven by the minimization of all potential impacts, including land rights.

The Interlaken Group suggests that due diligence should be “focused on identifying—and where possible helping to legally secure—the tenure rights of local communities and households.” If due diligence is not performed correctly and comprehensively, the impacts of business operations on the human rights of local communities, in particular the most vulnerable, might be overlooked. For companies, this could mean facing increased costs, unforeseen delays, and potentially reputational and legal challenges related to alleged land grabs and land rights abuse.

Throughout the lifecycle of an infrastructure project, compensation for the loss of land and property is often a pivotal issue. For instance, in the case of resettlement, most countries have land acquisition laws that require prompt and adequate monetary compensation; however, monetary compensation may not be considered sufficient, adequate, or culturally appropriate. According to Cultural Survival, “Cash compensation disproportionately benefits some interest groups (for example landlords) and not so much poor and small-scale farmers, the landless, and women.” Depending on the local laws and culture, companies could apply other models, such as adopting a land-for-land strategy that provides new land that is ideally better or at least equivalent to the lost site in terms of productivity, availability of water, and location.

An effective consultation process backed by appropriate assessments can also help businesses define and set up initiatives that effectively respond to the local development needs and enhance the social and economic benefits for local communities. Free, prior, and informed consent (FPIC) should be a cornerstone of engagement and consultation with local communities, in particular for investments involving land acquisition. Duly engaging through FPIC can help a company identify and address women’s rights to land and forests.

While the recognition of land rights is primarily a state responsibility, clear land rights and their respect are not only beneficial for landowners and local communities’ livelihoods, but also essential to an inclusive land-based sustainable business. Respecting human rights of local communities, including land rights, can help a company effectively engage with stakeholders, establish trustworthy relationships, reduce the risk of social conflicts, and ultimately secure the social license to operate infrastructure projects.

Enel recognizes the importance of engagement with local communities and, for this reason, has included in its sustainability plan a specific pillar dedicated to this issue; you can also read more about Enel’s approach to project development through creating shared value in its 2017 Sustainability Report. Enel’s approach is notable for its structured methodology of local stakeholder engagement and consultation, which is applied widely with particular attention to identifying and protecting ancestral communities and engaging in dialogue and consultation throughout the phases of project planning and development of new assets.

This article first appeared on BSR and is written by:

  • ROBERTA PINAMONTI, Manager, BSR
  • GIULIA GENUARDI, Head of Sustainability Planning and Performance Management, Enel
  • FERDINANDO FALCONE, Sustainability Planning and Performance Management, Enel

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