Toolkit

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Introduction to Chapter 4

Despite progress made over the last decade in the field of business and human rights, including the development of new international standards and related guidance, developing positive relationships with local communities living in the areas of corporate operations continues to be challenging for many companies. Beyond the corporate responsibility to respect human rights, good relations with local communities makes sound business sense because it can prevent and mitigate risks, reduce costs^[1] and even generate benefits for a company. Effective corporate-community relations allow the company to:

a) Obtain and maintain a ‘social license to operate’^[2];

b) Reduce the risk of local opposition, tensions and conflict that can cause delays, material damage, lost productivity, loss of property and even the shutdown of operations;

c) Reduce security and human rights risks and, consequently, the costs of insurance, legal support and compensation;

d) Attract and retain local expertise, which can provide an understanding of the local context that the company might lack; and

e) Strengthen the company’s reputation, establish a competitive advantage, maintain a favorable corporate risk profile, increase investor confidence, and reduce the cost of project capital.

While effective stakeholder engagement requires considerable investment of time and resources, developing good relationships with local communities is essential to the long-term sustainability and success of a project. However, understanding why companies, at times, face opposition from local communities, crime and violence, and how to change the situation, remains elusive.

As reflected in this chapter, community-related security risks are frequently the result of unaddressed concerns, negative impacts, or misunderstandings about non-security related issues such as employment, land, environment, compensation, resettlement, and negative legacies from previous company projects, to name a few. When concerns and grievances go unaddressed or unmitigated, these issues can escalate into tensions and may eventually result in situations of violence.

This chapter therefore adopts both a prevention and a conflict management approach to addressing some of the most common security and human rights challenges related to corporate-community relations. While many good practices will be specific to a situation or context, some key recommendations recur because they are essential to good stakeholder engagement. These include:

a) Understanding the context and assessing actual and potential risks and impacts thoroughly;

b) Engaging with communities from the moment the first company representative, contractor or security guard sets foot on the ground. Communities should be considered as hosts and the company as a temporary visitor;

c) Mapping, analysing and engaging with all relevant stakeholders, ensuring vulnerable groups are included and feel comfortable to participate;

d) Ongoing and transparent sharing of information, including timely response to enquiries;

e) Showing respect for local culture and treating communities as partners rather than as a threat;

f) Listening carefully to concerns and grievances, and involving communities in the development of solutions to address them; and

g) Investing time in developing strong relationships with local communities and allowing ample time for community consultations and decision-making.

Given the nature of the issues addressed in this chapter, implementation will often fall under the responsibility of company security and community relations departments. However, as highlighted in Section 4.3, stakeholder relations should be a collective responsibility with firm commitment from company leadership and management. All company staff should apply the company’s human rights policies and stakeholder engagement strategy in their activities. This involves aligning all corporate policies, processes, objectives, production targets, performance standards, and staff incentives with both business viability and respect for human rights. Companies should also involve their local staff as much as possible in the development and implementation of their stakeholder engagement strategy and other corporate policies, processes and practices, to ensure they are appropriate to the local context and culture.

Corporate-community relations do not happen in a vacuum. This chapter therefore addresses operational issues that must be analysed within the context of a complex operating environment. Community concerns and grievances targeted at the company will often be the result of weak governance, poor public services, and lack of genuine engagement on the part of the host government. Companies, therefore, must assess how all aspects of their operations, beyond just security measures, interact with the existing context. Critical analysis must be applied to understand whether the company’s actions are reinforcing inequalities, increasing competition for resources, and reducing the extent to which community members have a voice in decision-making, or whether, conversely, company actions are reinforcing good governance, respecting human rights, and safeguarding human security. In this respect, while companies cannot and should not replace the government, efforts can be made to support a stronger government role. Furthermore, where national governance is weak, compliance with national legal requirements may not be enough to fulfill the corporate responsibility to respect human rights. In some situations, domestic laws may even conflict with international human rights law and standards. Companies will therefore need to conduct enhanced human rights due diligence and go beyond national legal requirements to ensure respect for human rights in their operations^[3].