WRI Establishes First Business Case for Community Consent

Clear Financial Benefit to Investors, Project Developers, Government and


May 14, 2007, 01:00 ET from World Resources Institute

    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
 institutional investors.
     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