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The construction site of an illegal sawmill is seen from a police helicopter during a sting operation against sawmills and loggers who trade in illegally-extracted wood from the Alto Guama River indigenous reserve in Nova Esperanca do Piria, Para state in this September 29, 2013 file photo REUTERS/Ricardo Moraes/Files

EXECUTIVE PERSPECTIVE: Shedding a light and engaging on land rights

By José Lopez, Executive Vice President, Operations, Nestlé S.A. | 23 February 2015

GENEVA—Progress on eliminating deforestation has gained momentum in the last twelve months. At the same time, the social impacts of deforestation are now more than ever on the agenda of companies like Nestlé. Striking the balance between sourcing raw materials and conserving natural resources, while respecting the rights of citizens, however, is not easy.

Take land as a case in point. One thousand one hundred million people have insecure title to the land that they live on and farm. It makes good business sense to help farmers and communities strengthen their land tenure, because farmers, and particularly women farmers, are more likely to invest in their farms and forests when they own the land.

But there is another angle to land that is important—the perception that there is empty land that can be used for agricultural expansion. Pick up any map of a developing country and the green areas look inviting. With demand increasing for many commodities, the opportunities to use these areas to serve local and global markets while bringing sorely needed jobs to impoverished regions is attractive for companies and governments alike. Indeed several governments have allocated over 30 percent of their national territories for large-scale agriculture, timber and mining operations.

And yet these green spaces on the map are frequently not empty. A recent study by the Rights and Resources Initiative (RRI) of almost 73,000 natural resource concessions in eight tropical forested countries found that more than 93 percent of these developments involved land inhabited by Indigenous Peoples and local communities. An earlier analysis by RRI found that at least one out of every three hectares of land licensed for commercial development in 12 emerging market countries overlapped with lands inhabited by Indigenous Peoples or local communities.

This situation has become one of the leading causes of local conflict around the world, for when people find out that their land has been allocated or sold without their consent, they inevitably push back. This conflict creates operating delays, higher costs of capital and even leads to projects being abandoned.

This is not just an issue of expansion into forested landscapes; companies are increasingly turning their sights onto degraded lands for future expansion. For example, the grasslands resulting from cleared forests could be converted into oil palm plantations. And yet these lands—despite being degraded—are often also inhabited.

A growing number of companies are recognizing that a different approach is needed. Respecting and strengthening the land rights of local peoples is important not only because it helps strengthen the climate for investment at the country level, but because our operations cannot survive in an atmosphere of uncertainty and conflict.

So how do we change our approach?

First, companies need to deliver transparency: transparency around the situation on the ground, and transparency around our intentions. At Nestlé, we understand the value of responsible sourcing and have developed specific publicly available guidelines to help our operations in this field. Our leadership in this area has been recognised by, amongst others, Oxfam’s Behind the Brands scorecard.

Second, we need to continually improve our performance. There are tools and declarations such as Free Prior and Informed Consent and the FAO’s Voluntary Guidelines on Governance of Land Tenure to guide us. But we need smarter operational guidelines that can help companies, communities and governments to work better together and to use these tools. Together with a wide spectrum of organisations convened by the Rights & Resources Initiative and the International Finance Corporation, we are participating in the development of such operational guidelines that all can use.

Finally we need to continue to engage with all stakeholders, including communities, governments and civil society. We can’t do this alone. It is only through these ongoing dialogues that we at Nestlé—and the other leaders who, like us, recognize the importance of creating shared value—have made progress.

2015 may just be the year when we can start to make this happen. A new independent institution, the International Land and Forest Tenure Facility, will start pilot initiatives in a select set of countries. With US$14Mn in funding from the government of Sweden, this new institution will provide financial and technical support for projects proposed by Indigenous Peoples, local communities, governments and civil society to reform land tenure in developing countries.

Secure land rights will create value for all actors along the supply chain. Indigenous Peoples, communities and small-holder farmers will have the confidence to invest in their land for the future, which is the basis for improving productivity and creating prosperity. With less uncertainty regarding land tenure, investments will become less risky and more attractive to financiers. Suppliers will avoid conflicts stemming from land disputes and accelerate the establishment of their investments. Less waste, lower costs and higher productivity will bring real value for consumers. Host governments will benefit with jobs, food security and investment.

Companies, communities, and governments can work together and create shared value for society.

Topics

Corporate Governance

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