Three reasons why company v community conflicts take place across continents

Shortcomings in regulatory norms and failure to engage with local communities have disrupted commercial projects in many countries

By Jemima Rohekar
Last Updated: Tuesday 22 September 2015

In a rare victory for indigenous communities, the Dongria Kondh tribe, that worships Niyamgiri hills in Odisha, succeeded in securing the government’s refusal to Vedanta’s bauxite mining project through public participation and the Supreme Court’s intervention (Photo: Sayantan Bera)

A report identifying the main patterns of conflict between companies and communities across continents was released on October 30, 2014. Several development-related projects in sectors such as mining, agriculture and energy are held up by conflict with the local community, causing massive economic losses within three to five years from the start of operations.

Titled “Communities as Counterparties: Preliminary Review of Concessions and Conflict in Emerging and Frontier Market Concessions”, the report has been prepared for the Rights and Resources Initiative (RRI). RRI is a US-based global coalition of multiple organisations engaged in forest and land policy reform in Africa, Asia, and Latin America.

Property rights of concession areas (where there is a legal claim on natural resources) are a matter of contention as in many cases, governments grant land to companies without taking into account the concerns of the people who live or depend on it, according to the report.

Key facts:
  • Almost 100 per cent of land allotted to companies was already inhabited in countries like Brazil, Indonesia, Peru and the Philippines.
  • Over 40 per cent of land in Peru has been allotted for commercial use such as forest, mining, and oil and gas concessions. Thirty per cent of Indonesia is under some concession or the other.
  • Company-community conflict cost one project $100 million per year in stoppages in a country, according to another report quoted in this research.
  • Of 60 cases of mining and timber concessions, only four cases showed clear evidence of irregularities in the licensing process. This means that, in most cases, the reality was not fully represented on paper.

The report identifies the following patterns of conflict observed across countries, sectors and contexts:

Sixty per cent of conflicts arise at the inception stage of the project

Failure to comply with existing agreements or a breakdown of negotiations with local communities regarding aspects such as compensation leads to a loss of trust between the two sides. Companies do not have established relationships with the local community and are, hence, met by protests during initial activities like clearing of agricultural land or obtaining consent for environmental impact assessments.

Local communities are comprised of groups with diverse needs and a common agreement does not suit all. This and the inability to access people living in remote areas leads to disintegration in the process of reaching an agreement.

The report observes that in countries like India, companies initiated discussions with the community when decisions about the operation had already been made. In the case of a coal mine in Colombia, it was the expansion of the three-decade-old project that caused unrest.

Most countries have ‘rubber-stamp” regulatory schemes

In most cases, action against companies was initiated by the activism of local communities and NGOs, and not regulatory authorities. The report notes that it was only after a forceful demand for explanations and the involvement of the media that the government agencies in charge of issuing environmental licenses took some kind of action.

The report also doubts the efficacy of legal action, if any. While some cases resulted in fines, others only faced a temporary suspension of operations. Court rulings were unable to enforce a complete shutdown of operations.

Slow legal action was also found to benefit companies in certain cases. As the process of judicial redress is slow in most countries, the companies were able to negotiate matters outside court.

Companies do not view local communities as genuine counterparties

According to anecdotal evidence collected by the research, many companies think that informing local communities of projects constitutes sufficient engagement. Compensation is considered a hand-out where local communities are expected to be grateful for whatever they are offered by companies.

The report says that when the responsibility of relocating people is shared with the government, delays often occur due to inefficiency, lack of manpower, or willful misconduct.

Why this report is important in the Indian context

The report highlights three important cases of company-community conflicts in India: the Tata Motors-Singur case in West Bengal, the Coca Cola expansion case in Mehdiganj, Uttar Pradesh, and the POSCO steel project case in Odisha.

In an editorial published in Down To Earth, Centre for Science and Environment Director General Sunita Narain points out that the recently-elected NDA government is clearing projects swiftly. Till July end, forest clearance was granted to over 92 projects, which will divert some 1,600 hectares of forest. It was also reported that the National Board for Wildlife has processed many projects located near or in sanctuaries and national parks.

Environment concerns in these areas are closely connected with the livelihood rights of local communities. The Ministry of Environment and Forests (MOEF) is pushing decision-making to the states in the name of streamlining the process.

After an acrimonious relationship with Tata Motors over the Tata Nano-Singur project, recent media reports show how West Bengal has assured other Tata group companies of all support if they want to expand their business in the state.

Letter to M/s Posco India Private Limited from Ministry of Environment & Forests regarding revalidation of environmental clearance dated 7th January, 2014

Legal query to the Attorney General of India regarding the disposal of Vedanta's application for forest clearance by the MOEF

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