The fourth session of the Mekong Land Forum introduced the ASEAN Guidelines on Promoting Responsible Agricultural Investment and identified some of the challenges ahead in implementation. Two companies shared their experiences working with a strong policy in CSR (Corporate Social Responsibility), so that we could consider how company practices can align with the Guidelines.
The ASEAN Guidelines on Promoting Responsible Investment in Food, Agriculture and Forestry (ASEAN RAI) & Mekong Forest Landscapes
Jana Herold (Associate Professional Officer - Responsible Agricultural Investments, FAO)
The ASEAN Guidelines on Promoting Responsible Agricultural Investment (RAI) bring together a number of initiatives and standards, housed under a single umbrella, with the aim for their application throughout the region. They are intended to support policymakers, investors and civil society who are involved in agricultural investments. The incentive here is that agriculture remains a significant sector in the region (contributing more than 11% to ASEAN’s regional GDP), both as a generator of economic growth and a basis to alleviate food insecurity and poverty. Investments that are not responsible have the potential to impact upon the livelihoods of not only local land users and workers, but also the companies who hoped to profit from them.
The Guidelines were assembled through a multi-stakeholder process and adopted in 2018. They take inspiration from the Committee on World Food Security’s Principles for Responsible investment in Agriculture and Food Systems (CFS-RAI). FAO, Grow Asia, IISD (International Institute for Sustainable Development) and ASEC are partnering to assist member states in the implementation of the Guidelines.
There are 10 thematic areas. Particular attention was drawn to:
Guideline 4 on Tenure of Land, which calls to respect land tenure holders and their wishes, in support of the FAO Voluntary Guidelines on Tenure, the UN Declaration on the Rights of Indigenous Peoples, and Free, Prior and Informed Consent.
Guideline 5 on Natural Resources, minimizing impact and following sustainable forest management practices.
It is these two guidelines which carry the clearest references to tenure and forest areas.
The Guidelines are now included in the International Trade Centre’s Standards Maps, which is an important source for companies to place their practices against measures of sustainability. In this way, the Guidelines can help companies limit commercial and reputational risk in their ventures. Meanwhile, there is a platform for the meaningful engagement and participation of communities.
Towards more Responsible Rubber in Cambodia, Laos and Viet Nam
Diep Xuan Truong and Hoa Tran (Viet Nam Rubber Group)
In the second presentation of the session, Vietnam Rubber Group give details on their business activities around the Mekong region, and the conversion of company policies to responsible rubber. The Group has extensive operations to include 11 industrial parks and over 80,000 workers in Vietnam, Cambodia, and Lao PDR. VRG has put forward a Sustainable Development Program which is running from 2019-2024. The program aims to achieve responsible production and investment over a number of economic, social, and environmental components.
Under this program, in 2019-2020 VRG achieved 150,000 hectares of rubber trees that qualify for the Vietnam Forest Certification System (VFCS). They have been working on activities to end a disassociation from the FSC Certification System. This includes contract farming with smallholders applying sustainable rubber management certificates. The company has also been supporting communities with roads, electricity infrastructure, worker housing, and schools.
Details were provided on how VRG links to government and development organizations. This also ties in with activities taking place abroad in Cambodia and Lao PDR.
Justin Mercer and Niko Strydom (New Forest)
Justin Mercer opened the third presentation of the session. He explained how New Forest was founded in 2005, and by 2020 had over 6 million USD in assets globally. They have a concerted CSR policy that attempts to align with numerous international certification models. Through TAFF (Tropical Asia Forest Fund), there is a focus on investment in certified plantations. These include 24,000 hectares in timber plantations in Lao PDR, 25,000 hectares in acacia plantations in Malaysia, and a 100,000-hectare industrial forest in Ketapang, Indonesia.
The company is looking to implement a new blended-finance model, which means that there is a significant allocation of funds towards community livelihoods, biodiversity, and carbon sequestration. This is well beyond the business-as-usual model that have been practiced by New Forest. As an investment manager, Mercer sees it as critical that there are clear policies in place, so that assets can be filtered down to the local level of project implementation. Hence the need to align with international standards. The two key issues here are forest certification and meeting IFC performance standards. Company CSR policy also calls for no deforestation, protecting peatlands, respect to land tenure, meeting supply chain requirements (under FSC) and following responsible investment guidelines (such as the Voluntary Guidelines in the Governance of Tenure and the UN Declaration on Human Rights). There are lots of similarities between ASEAN RAI and other guidelines that they are following.
In the second part of the presentation Niko Strydom focused on acacia and eucalyptus plantations as part of a concession in Lao PDR, with TAFF as the majority shareholder.
The previous outgrower scheme involved 500 farmers and yet ended up failing. So when taking over plantation management, it was important for New Forest to understand what had gone wrong, and a full FPIC process was needed. They took two years to develop a new management model, deciding to convert a pulp regime into a higher value veneer and sawlog crop. This included making it clear to the farmers that they retained control of the land, with New Forest providing technical assistance. However, the farmers had to give a clear indication if they intended to harvest and sell the timber. As of December 2020, over 280,000 tons of logs have been harvested.
Under moderation by Robert Cole (Adviser on Responsible Agricultural Investment, MRLG), the panel was asked to give reactions on the presentation.
James Bampton (Regional Forest Lead, Asia Pacific, WWF) noted how good responsible agricultural investments sound, particularly in the face of a climate, biodiversity, and global health breakdown. However, it cannot be ignored that many irresponsible investments still take place. So using the examples presented today, the question is how to stop irresponsibility. There is a big concern that companies are making claims of sustainable practices that is hard for consumers and governments to verify. There is also the continuation of rampant illegality and corruption, particularly in land acquisitions and environmental violations. The first step is to stamp out illegality and corruption, calling out violations. Then it is necessary to level up the playing field by removing policy and other barriers. It is important that ASEAN takes a lead here.
Stefano Savi (Director, Global Platform for Sustainable Natural Rubber) mentioned the problem of responsible purchasing in that the price of commodities do not reflect their true cost.
Investors wanting to act responsibly have to pay extra for entry into sustainable practices and standards. But everyone involved, including consumers are paying more. The question is how we can disincentive people to buy from irresponsible markets. The costs need to be internalized. Certification in a way fulfills this function. But should (lack of) sustainability be taxed for example? With a will there can be a way.
Vicky Bowman (Director, Myanmar Centre for Responsible Business) explained how international standards provide the main guidance to companies in Myanmar, particularly IFC Standards. ASEAN guidelines are relevant as something not from the west. But the challenge is to align them with legal provisions. In Myanmar it was hoped that the new Land Law could be a mechanism to do this, but it is now impossible to predict new developments in the face of political turbulence. The Myanmar Centre for Responsible Business did not place a significant focus during impact assessments upon agricultural investment, partially because other groups are carrying out this activity. There is less investment going into the agricultural sector, and what does is mainly in food processing. In this sense Myanmar is losing out to the benefits from improved practices, and there is little support for farmers. It is a lost opportunity and hard to place Myanmar in terms of ASEAN RAI.
Daniel Hayward (Project Coordinator, Mekong Land Research Forum)
The ASEAN Guidelines on Promoting Responsible Agricultural Investment (RAI) bring together a number of key international standards, housed under a single roof. The challenge is to apply them at the national level, in order to support governments, communities and companies in the quest for inclusive, equitable and sustainable investments.
Both New Forest and Vietnam Rubber Group have strong CSR (Corporate Social Responsibility) frameworks. The work they are doing aligns with the ASEAN Guidelines, and while they do not frame their work in terms of RAI, the guidelines can help set up work at the local level to achieve international standards.
While there are companies interested in following international standards in CSR, many others do not. Rampant illegality and corruption should be called out, while the internalizing of costs could be a carrot to those wanting to improve their practices.
There is a price for political turbulence. Even if companies want to behave responsibility, the risks are too high to invest in countries like Myanmar.
Check further details on the 3rd Mekong Land Forum.