By setting out the respective roles and responsibilities of companies and communities, agreements are a central part of FPIC implementation. Agreements can set out a mutually agreed basis for realistic expectations, and processes for communication and project modifications.
Because large projects change over time, and are complex in scope, several agreements may be appropriate over time. For example, in the pre-feasibility phase of a project, impacts and profitability will be unknown, so a short-term land access and communication protocol would make sense. Detailed plans for closure may not be concluded until a project is mature. When a project affects several communities, multiple agreements may be required. And parties may prefer to have “layered agreements” so that some elements (e.g., communications processes) can be adjusted easily without renegotiating other parts of the agreement. Every project and every community is unique; at the same time, good agreements should cover the following considerations:
- Communications and Decision Making Processes. Companies and communities will be able to interact more effectively when both identify and understand their respective decision-making processes, authorities, and governance structures. It is important for all parties to have details such as the process, frequency, or triggers for ongoing information sharing; decision making protocols, roles, and timelines – including any election or review of representation; the process for flagging, discussing, and addressing conflicts; the potential milestones or issues for which FPIC will be sought; and the process and frequency for re-evaluating and/or revising any of these protocols. Separating the agreement on relationship management from discussions about impacts and benefits provides a stable framework for addressing unforeseen circumstances, project modifications, shifts within company, shifts in the community, or context.
- Impacts & Compensation. Communities and companies should reach a shared understanding of the environmental, social, and cultural impacts of a project and how impacts will be managed. This part of the agreement should be informed by baseline environmental, cultural, and social assessments, as well as the formal ESHIA. It should account for changes in community access to lands and other natural resources over the course of the project. It should also describe how impacts will monitored and re-assessed over time to account for cumulative impacts and evolving social and cultural realities, values, and capacities. This is also where company commitments to the community can be recorded in terms of how the company will avoid, mitigate, monitor, manage, and compensate for those impacts. The process for assigning value and distributing compensation for impacts should be discussed (e.g., the value of grassland to a company is different than to a pastoralist; and value is not always monetary for communities). From the standpoint of accountability and flexibility, it is important that agreements specify what happens if companies do not meet these commitments.
- Shared Benefits. Community benefits are different from impact compensation, and it can be useful to distinguish between company compensation for negative impacts, and agreed benefits the company will deliver to the community. When the level of benefits may be contingent on commercial factors like commodity price, this can be included in the agreement. These discussions offer an opportunity for the company and community to develop a common vision and realistic expectations for impacts, future development, and benefits. Agreements may also look at the role of “trust funds” and how they can be governed to reflect diverse needs within the community and to avoid political manipulation.
Agreements between companies and communities should set out implementation and management plans, timelines, contingencies/accountability mechanisms for addressing unmet obligations, and protocols for managing conflicts and grievances. Allocation of adequate company resources is important for implementation success. In addition to operational and capital budgets that correspond to mitigation, compensation, and community benefits, it can also be important to allocate resources for legal counsel, independent monitors or advisors, or funding/capacity for community members to play identified roles.
The process for developing agreements is just as important as finalizing them. Ensuring that communities have sufficient time and resources (including possible external counsel) to fully consider and deliberate about conditions within a prospective agreement is essential to securing free, prior, and informed consent. Please see the Inclusivity and Gender in FPIC resource for additional guidance on the importance of thoughtful, inclusive engagement leading toward agreements. The Agreements and Community Outcomes resource also outlines several considerations for ensuring that agreements lead to positive outcomes for the community.
Gender and Inclusivity
Agreements and Community Outcomes
Why Agreements Matter, 2016. Ali, S., Brereton, D., Cornish, G., Harvey, B., Kemp, D., Everingham, J. and Parmenter, J. This document contains a “How to guide” outlining key elements of agreements, good practices for inclusive engagement in agreement-making, and practical guidance for planning for successful implementation and monitoring.