Introduction to Community Development Agreements

(CDAs)27 January 2015

Emma IrwinConsultant, World Bank

Introduction to CDAs: Historical Context and Background

CSR – growth over past 10-15 years especially in extractive industries, internationally and in Asia

Moving from awkward ‘add –on’ to core, integral business component

Why?

Why?

“It takes 20 years to build a reputation,

and five minutes to ruin it”

Warren Buffett, Chairman, Berkshire Hathaway; Investor, Philanthropist and World’s 2nd Wealthiest Man

Community / Company Expectations

Introduction to CDAs: Historical Context and Background

Many examples of incidents, tensions, and conflicts between local communities and companies – globally and in Myanmar

Companies not ‘getting it right’, failing to recognise importance of good relations and trust with host community

Ability to shut down a company’s operations and cause millions £$£$£$ losses if left unaddressed

Social license to operate‘Social license to operate’ is crucial for project development

(in addition to government/legal license to operate)

CSR and company-community relations now widely recognised as vehicle for socio-economic development as well as business growth and profitability

CDAs as tool for building trust, community relations and socio-economic development

Social license to operateCan’t be paid for, can only be earned/built

Trust

Respect

Dialogue

Ongoing, regular transparent communication

Demonstrable commitment

Role of CDAs

What is a CDA?

Voluntary Agreement

Shared Responsibility Agreement

Impact Benefit Agreement (IBA)

Community Contract

Community Joint Venture

Investment Agreement

Social Responsibility Agreement

Community Development Initiative

Social Trust Fund

Benefit Sharing Agreement

Participation Agreement

Partnership Agreement

What is a CDA?Voluntary or mandatory agreement between extractive company and

community

Increasingly recognised as means of improving relationships (companies, communities, government, civil society etc.)

Promotion of long-term, local socio-economic development

Promotion of benefits / development back to community (in exchange for extraction of non-renewable local natural resources)

Content of each is unique to specific local context: ‘one size does NOT fit all’

Certain general shared characteristics – process and general content - focus of today

International Approaches to CDAsAfghanistan, Chile, Colombia, Ethiopia, Fiji, Ghana, Guinea, India,

Indonesia, Kenya, Kyrgyzstan, Mali, Mongolia, Mozambique, Sierra Leone, South Africa, South Sudan, Peru… all have CDAs (or other name) incorporated into national regulatory framework somehow

Other countries, e.g. Canada/Australia - CDAs are expected as best (and common) practice, although not formally required

Most other countries, no CDA requirement at all

Overall, there is little consistency in approach.

Typical CDA ContentScope, mandate and vision of CDA

Description of parties, including representatives of qualified community/ies – clearly defined roles and responsibilities

Grievance/feedback mechanism

CDA Clauses:strategic aims, scope and parameters of community investment

activities fund managementmanagement/governance body for investment activities and overall

CDA process - structure and terms of reference local content (procurement / employment)

Regular review, evaluation and capacity development

Signed by all parties

CDA Development Process4 Key Phases:

- 1 -Stakeholder Engagement- 2 -Capacity Development- 3 -Stakeholder Representation, Roles and Responsibilities - 4 -Implementation, Monitoring and Feedback Mechanisms

CDA Development: Phase 1 – Stakeholder Engagement

Identification of qualified communities - who qualifies, and why?

Are marginalised/vulnerable groups adequately represented?

Are local power struggles, tensions, other dynamics taken into account?

Mapping and analysis of qualified communities

Democratic election process for community members to directly select people to represent them in the CDA process?

Stakeholder engagement plan

CDA Development: Phase 2 – Capacity DevelopmentHow can the capacity of the different parties be assessed?

Whose capacity? When? To do what? And why?

Community capacity to:negotiate and make agreementsparticipate in governance and monitoring of CDAdeliver and manage specific local community investment projects and

programmes

What strategies can be used to strengthen capacity, both in the agreement making and implementation stages?

Capacity needs assessment and development plan

Key role for CSOs?

CDA Development: Phase 3 – Stakeholder Representation, Roles and Responsibilities

How far should company responsibilities extend in the CDA?Risk of companies taking on government responsibilities for

provision of social goods/services

Should government (national/sub-national) be party to agreements? Roles and capacity of local governments?

Importance of linking to local development planning

Roles/responsibilities of communities and their representatives?

CDA multi-stakeholder governance committees as best potential way forwards

Clear governance structure, mandate and vision of multi-stakeholder committees

CDA Development: Phase 4 – Implementation, Monitoring and Feedback Mechanisms

Importance of multi-stakeholder approach

Community fund management – structure, governance and criteria

Grievance/ feedback / dispute resolution mechanism e.g. grievance procedure

Community/social investment aims, criteria, themes and procedures :Non-specific as dependent on unique local contextTypically include projects for socio-economic benefit and community well-

being (education, livelihoods improvement, health)Investment to groups, not individualsInvestment should not support marginalisationInvestment should benefit all stakeholders

Core principles for CDA development

Summary: Best Practice CDA DevelopmentAgreement is achieved through inclusive, equitable, fair negotiation

between parties

Commitment among all parties to make CDA work

Clearly defined and understood mutual obligations, needs and commitments between the parties

Outcome is formalised in some kind of formal written document (sometimes, but not always, in legal form)

Agreement includes provisions that address broader, sustainable development objectives, rather than narrow focus on financial compensation

Effective governance arrangements to manage relationships, and adequate funds/resources to support these

Monitoring and review mechanism integrated into agreement, to ensure progress is being made and allow for changes/flexibility where necessary

Case Study:Ahafo Social Responsibility Agreement, Ghana

Formal agreement signed in 2008 between Newmont Ghana Gold Company and the Ahafo Mine Local Community (10 community towns in two districts)

Voluntary and multi-stakeholder approach – good example for developing a CDA - but important to remember that each context is different

In 2005 Newmont committed USD 1 per ounce of gold sold and 1% of net annual profits for a Community Development Foundation.

In absence of regulatory framework, Newmont and the Nananom (local chiefs) decided to create a Social Responsibility Forum to develop an agreement on how to manage the Fund

Case Study:Ahafo Social Responsibility Agreement, Ghana (cnt’d)

Social Responsibility Forum created in 2006 to provide a mechanism for collective discussion and decision-making.

As a result of over 20 meetings in 2 years, the Forum developed the Social Responsibility Agreement

Social Responsibility Agreement delegates Forum with authority to: create committees and assign functions to them establish rules, by-laws and regulations to enforce implementation resolve disputes and complaints, assist with conflict-resolution Agreement review and amendment management of Community Development Foundation Engagement with wide range of stakeholders

Forum consists of 55 members as well as an independent monitor and co-monitor

Case Study:Ahafo Social Responsibility Agreement, Ghana

Case Study:Ahafo Social Responsibility Agreement, Ghana

SUMMARY

The Ahafo Social Responsibility Agreement includes provisions for the creation of a: Social Responsibility Forum, which serves as the multi-stakeholder

negotiating and governing body for the general agreement Development Foundation, which serves to fund sustainable

development projects in the community

The Agreement also includes: local employment quotas training and human development opportunities provisions for social amenities and the safeguarding of cultural

heritage.

Thank you!

Case Study 2: Argyle Diamond Mine, Australia

Case Study 2: Argyle Diamond Mine, Australia

Argyle Diamonds: owned and operated by Rio Tinto open-pit diamond mine in the East Kimberley region of NW Australia Mine Lease area located on the traditional country of 4 indigenous communities, composed of 5

estate groups

Participation Agreement agreed with local indigenous communities in 2004.

Participation Agreement registered by the Native Title Tribunal of Australia in 2005 as an Indigenous Land Use Agreement (ILUA)

ILUAs in Australia perceived to often restrict companies and communities and can be very difficult to amend

Participation Agreement includes a Management Plan: a flexible subsidiary agreement that provides guidelines on important community issues not directly addressed in the ILUA

Management Plan addresses: land rights, income generation, employment and contracting opportunities, land management and indigenous site protection.

Case Study 2: Argyle Diamond Mine, Australia (Cnt’d) Company frames relationship with community in terms of “tenancy”, seeing the qualified

community as “landlords” Company recognises that indigenous community holds primary ownership of the land -

working towards handing land back to Traditional Owners is key to Agreement Participation Agreement key component is creation of Relationship Committee, consists

of: 4 company representatives 26 Traditional Owner (TO) representatives from 6 estate groups of the Mine Lease Area.

Establishment of Relationship Committee demonstrates commitment to honour and empower Traditional Owners role in influencing the Management Plans that affect their communities - a direct reflection of overarching principle of community as ‘landlords’

Role of Relationship Committee (which meets quarterly) is: to monitor implementation of Management Plans make recommendations to parties on improving implementation conduct a review of each Management Plan provide reports annually identify employment opportunities set timeframes for negotiations between Argyle and the TOs.

Case Study 2: Argyle Diamond Mine, Australia (cnt’d)Capacity Building: Participation Agreement includes:

training for every representative on the Relationship Committee to ensure capacity to fulfill responsibilities.

Key capabilities include understanding the agreement (both company and Relationship Committee) and ability to comprehend/ assess financial statements and reports.

To enable better understanding of Agreement - summary boxes written in plain English - as well as a video are included to make legal/technical language more accessible.

Agreement establishes a Secretariat, provided for and staffed by company, to: assist the Relationship Committee in facilitating meetings assisting TO representatives to participate in the committee conducting informative meetings with the local indigenous communities ensuring the committee operates properly.

Agreement provides training for the TO representatives on the committee but also for all Tos to assist them in participating in the agreement - includes organisational and managerial support to TOs in their engagement

Case Study 2: Argyle Diamond Mine, Australia (cnt’d)

Key Findings:

Factoring flexibility into Agreement to adjust to trends and circumstances and to ensure sustainability

Argyle developed a Management Plan Agreement with local TOs to accompany the ILUA to address how the company and the community would work together

Participation Agreement demonstrates concerted effort to ensure mutual understanding and communication between the company and the community – key principle of tenant/landlord relationship

Argyle provides training to TO representatives as well as support mechanisms for the wider community

Argyle employees receive cross-cultural training to build capacity on the company side to understand the perspective of the TOs.