The extractive sector has long faced criticism for failing to involve local communities in planning and starting projects. Though slow, there’s now a movement to amend the situation.
The International Finance Corp., the World Bank private sector arm, for instance, now requires oil, gas and mining firms to comply with the Free Prior and Informed Consent rules, which aim to ensure that local communities have the right to approve or otherwise extractive contracts, before providing them with loans for projects affecting indigenous populations. And just last month, G-7 leaders launched the CONNEX initiative to help governments in developing countries better negotiate extractive contracts, complementing the Extractive Industries Transparency Initiative.
In an interview with Devex correspondent Eva Donelli, Luis Ore, a Peruvian mediator, negotiation trainer and expert in cross-cultural stakeholder engagement, voiced optimism that CONNEX will make a difference “if approached with the right mindset,” noting that “some companies simply exclude the local community and some others adopt the 'I want to be a good neighbor' approach, because they're going to be there for a long time.”
It’s about local communities having their voice heard in the extractives industry, Devex readers argue.
It’s not enough for companies to just negotiate with governments representing local communities, according to Dan Alipo, especially when there are suspicions of leaders receiving bribes to silence people.
“The local communities are a very important component of such in such industries and I feel they do have a right to demand to be involved. It should not be the third leg that misses because that is where the work gets done…[T]he industries have the greatest opportunities to create lasting impact within the local communities where they work and for that reason they should not leave them behind,” Alipo wrote.
The same problems, such as corruption and lack of negotiating skills leading to lopsided contracts, arise from large-scale foreign investment in agriculture, according to Palm Watch.
Indeed, companies that want long-term success of their operations must engage effectively with locals, said Darryl Vhugen. Here, he added, an honest FPIC process and outcomes seems to be key to uphold the rights to land and natural resources.
For David Samuel Smith, companies can use their social responsibility dollars to increase community interaction and establish a vibrant economy that can outlive their presence in the area.
What do you think are the best ways for extractive companies to engage local communities? Let us know by leaving a comment below.
Join the Devex community and access more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health.