WASHINGTON, May 14 /PRNewswire-USNewswire/ -- Multinational
corporations and financial institutions that seek local community consent
for their operations will have a competitive advantage over those that fail
to do so, concludes a report released today by the World Resources
Institute and endorsed by a $110 billion coalition of faith-based
Development Without Conflict: The Business Case for Community Consent
is the first report to document the precise financial and operational
opportunities and risks a company faces when engaging with communities
affected by environmentally sensitive development projects. It provides a
roadmap for implementing community consent procedures into project and
investment strategies. The report's four case studies of industrial
projects in the Philippines, Argentina, Thailand and Peru demonstrate the
financial opportunities of achieving community consent including project
cost savings, increased access to international capital and positive
reputational benefits. Companies that fail to achieve consent face a range
of financial implications including project cost-overrun risks, litigation,
increased scrutiny and concern from Wall Street stock analysts, and
significant reputational harm.
The report has received the endorsement of the Interfaith Center on
Corporate Responsibility (ICCR), a 35-year-old international coalition of
275 faith-based institutional investors, which include denominations,
religious communities, pension funds, healthcare corporations, foundations
and dioceses with combined portfolios worth an estimated $110 billion.
"Companies that look to the principles laid down in the WRI report and
learn from the valuable case studies will be better equipped to work with
the communities in which they operate," said Rev. David M. Schilling,
program director of ICCR.
The central tenet of free, prior, informed consent (FPIC) is that local
indigenous communities have the right to determine how projects that might
affect their land or way of life are developed. The principle has been
expanded by some companies and financial institutions to all communities
impacted by their projects and investments.
"WRI supports companies and financial institutions that mainstream
community consent-based policies into their projects and investments.
Respecting local community rights makes plain sense from a business
perspective and we expect trends towards this practice to increase," said
Jon Sohn, WRI senior associate and a co-author of the report.
The report comes as recent news events and trends demonstrate the need
for increased attention to community consent issues:
* In April 2007, religious institutional investors, led by Christian
Brothers Investment Services, filed a shareholder resolution that
required Newmont Mining Corporation (NEM) to produce a report
addressing community-based opposition to its operations around the
world. In an unprecedented move for a U.S. mining company, Newmont's
board of directors supported the proposal. Newmont's shareholders
overwhelmingly approved the resolution, with 91% of shares voting in
* Tomorrow, May 15, the World Bank's International Finance Corporation
is hosting a meeting of Equator Principle Banks, export credit
agencies and other development banks to explore best risk management
practices to achieve "broad community support" in projects they
One case study from the Philippines examines the benefits of project
development that is mindful of community consent. The project, undertaken
by Shell Philippines Exploration (SPEX), and the Philippine National Oil
Company (PNOC) to extract natural gas in the Philippines, was completed
with extensive consultation and modifications that resulted from community
input and ultimately documented consent under Philippine law.
Consequentially, the project was rerouted to avoid culturally and
environmentally sensitive areas. The result was a finished, profitable
project that led to local economic development as well.
Three other case studies examine circumstances where the lack of
community consent led to extremely expensive consequences and lost business
opportunities. The projects involved in these case studies are a gold mine
in Argentina owned by Meridian Gold, a mid-tier gold producer based in
Reno, Nevada; a wastewater treatment facility in Thailand conceived by the
Thai government's Pollution Control Department and backed by the Asian
Development Bank; and a gold mine in Peru that is a joint venture led by
Newmont Mining Corporation.
Operationalizing FPIC is an evolving concept in development circles,
yet several institutions have recently adopted strengthened consultation
procedures and are considering ways to achieve "consent" based development
outcomes. This report provides best practice principles to achieve that
goal. Authors of the report are Steven Herz, Jon Sohn and Anthony LaVina.
The World Resources Institute (http://www.wri.org ) is an independent,
non-partisan and nonprofit organization with a staff of more than 100
scientists, economists, policy experts, business analysts, statistical
analysts, mapmakers, and communicators developing and promoting policies
that will help protect the Earth and improve people's lives.
SOURCE World Resources Institute