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Land Transparency – what makes for a good initiative? A case for a responsible investment index

Michael Jarvis's picture

Rice paddiesWith preparations for the G8 Summit in June in full swing, British Prime Minister David Cameron has made clear that transparency will be a key theme and within that a focus on transparency not just in the extractives sector but around land more broadly. This is in large part a response to concerns around the proliferation of large scale land acquisitions – the “land grab” phenomenon. Certainly that topic dominated discussion at the World Bank’s annual Land and Poverty conference this month. However, as someone who has looked more at oil, gas and mining transparency than in the land sector, recent conversations have crystallized the complexity of having an effective land transparency “initiative”.

 

As Anna Locke and Andrew Norton of ODI note in their blog from the conference, there is even confusion as to what is meant by transparency, so a neat package for an initiative may be too much to ask at this stage. That said potential components include i) ensuring greater clarity on land deals, ii) the need to lend coherency across existing efforts, and iii) providing greater reassurances as to investor practices.
 

Large scale land investments are here to stay, whatever their merits (see Terra Lawson-Rehmer’s challenging recent study on Property Insecurity and related Economist article touching on their linkages to development). While only one slice of broader land governance issues, they are a lightning rod for attention from all stakeholders and it only makes sense to find ways to increase transparency, not just of how these deals are awarded, but the players involved, and the key terms of the deals. Of course, much then needs to be done to build capacity to use that data. Technology is an aid on both the supply and demand sides – not least in helping highlight issues around license awards for land use. The impact of Indonesia’s regularly updated digital map of concessions underlying implementation of a moratorium on new licenses and protecting is a great example, enabling the public to review and make suggestions re areas for protection. Open contracting is no panacea but can at least provide a stronger basis to ensure good process and minimize opportunities for shady deals.

 

The land sector encompasses a variety of land uses. Therefore, while perhaps synonymous with agriculture in the minds of many, the need to ensure coherence of policy across not just agriculture, but forestry, mining, petroleum, even large scale infrastructure is a significant challenge. This is not just the risk of separate agencies awarding the same parcel of land for different uses, but even on the transparency side the risk of a jumble of competing efforts that might undermine collective effectiveness. The tide of transparency is spreading. The Extractive Industries Transparency Initiative, US Dodd-Frank legislation, the new EU Accounting Directive covering extractives and forestry payments, newly in force EU Timber Regulations - the list goes on. New requirements on land transactions will need to be complementary to these, and even if limited to commercial agriculture, can learn from the successes and pitfalls of these parallel initiatives. As documented in the latest edition of Tenure Trends, a product of the Rights and Resources Initiative, well intentioned efforts – in this case looking at forest governance - can still have unforeseen negative impacts.
 

There are encouraging signs of engagement of the private sector in these debates. A draft is now available of the Principles for Responsible Agriculture Investment (RAIs) in the context of food security and nutrition. Business engagement around such principles will be crucial and there are growing incentives for firms to be transparent as to their operations – not just for managing reputational risks but also wanting to see positive development that will create further business growth. As Tom Langan of Unilever noted during the Land and Poverty conference, over half their consumers are now in developing consumers. The concerns of those consumers need to be addressed by the firm. Old assumptions that multinationals are happy to wreak havoc in far off sources of production as long as it keeps costs down in consumer markets are increasingly untenable when those boundaries increasingly overlap.

 

That said, how do governments and communities know that investors will follow international good practice? At present there is no easy way to assess their commitments and track records. One solution could be an index of responsible agriculture investors. Much work would need to be done to develop reasonable, measurable criteria covering key social, environmental and governance aspects. Such an index should draw on existing frameworks such as the RAIs, and learn from similar indices in other sectors, such as for Access to Medicine. Bottom line, such an index could be invaluable for countries in assessing investor bona fides, beyond the financial aspects, and in incentivizing and rewarding responsible corporate actions. Food for thought as discussions pick up ahead of June pronouncements.
 

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