Dow Jones NewsWire: Companies to Lead Way on
Responsible Land Investment as Risks Grow, Says Study
05 Feb 2013 10:07 GMT DJ
By Michael Haddon and Neena Rai
Companies will likely take the lead in creating a more responsible culture for investment in land,
as potential losses from projects which have gone astray and the reputational impact of
involvement in "land grabs" are too great to ignore, the land tenure coalition Rights and
Resources said Tuesday.
"I think companies will move faster than the United Nations regarding the development of
common standards as it's the private sector who loses money," Andy White, president of rights
and resources, told Dow Jones Newswires. "Companies are starting to see the risks and will act
much faster," he added.
The UN has launched a two-year consultation process to develop guidelines for responsible
investment in agriculture that "respect rights, livelihoods and resources," as controversy rages
over land grabs in developing countries.
"Typically the agribusiness sector has been subjected to less scrutiny but this could be the time
when things could change," Jeffrey Hatcher, analyst at Rights and Resources, told Dow Jones
Newswires.
A new report commissioned by Rights and Resources said conflicts over land tenure
significantly increase financial risks for companies in infrastructure, mining, agriculture and
forestry, inflating project expenditure and sometimes even endangering the future of the
corporate parent itself.
Many companies have committed time, money and effort into projects without understanding
some considerable risks, it added.
"Investors themselves now need to do a lot more due diligence to understand the issues with land
tenure," said Mr. White.
Property rights in many emerging markets are dysfunctional enough that ownership of land can
be granted to an investor without the knowledge of tens of thousands of people living on, or
dependent on, that land, the report said.
Tied to their land for many generations, they have little interest in, or no reasonable option for,
moving to urban areas and are practically impossible to relocate, it added.
"An increasing amount of investors seem to realize that they can no longer just count on the
word of the government that the investment is indeed sound," said Mr. White. "Now
governments need to recognize that they too face reputational risks," he added.
A second report commissioned by Rights and Resources said the inequalities caused by
extractive political and economic systems are replicating the "resource curse," where nations
become trapped in poverty and are driven by resentment and internal conflict, with growing risks
of turmoil.
If countries choose open and inclusive democratic systems they can avoid this fate, it added, but
they will need to recognize local property rights and develop strong civil societies that keep the
public informed and hold leaders to account.
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