Do companies care about sustainable land governance? An empirical assessment of company land policies

ABSTRACT

Land investments and global commodity supply chains contribute to food insecurity, deforestation, climate change, and conflict. As a result, donor governments, NGOs, international organizations, and other stakeholders have pushed companies to voluntarily adopt responsible land policies to promote sustainable land use and development. Yet, no study has empirically assessed companies’ normative commitments on land governance. This paper uses logistic and ordinary least squares regression models to analyze a newly created dataset of 1059 companies to determine under what conditions companies are more likely to have land policies, expansively defined as a binding or aspirational commitment to land governance, whether a stand-alone land policy or a normative statement embedded within another policy-oriented document. We find that 91.5% of the 1059 companies reviewed have no land policy but that, surprisingly, given media attention focused on retailers, producers are more likely to adopt land policies. Moreover, publicly traded companies are the most likely to adopt land policies. We posit these results are due to the higher tenure security risks faced by producers, and the greater public scrutiny placed on publicly traded companies. These results suggest that resources allocated to convincing publicly traded producers to adopt land policies to mitigate risks will initially be the most fruitful. Private companies could then be called upon to follow their lead.

KEYWORDS:

• Sustainability
• tenure risk
• land governance
• land tenure
• land policies
• corporate social responsibility
• corporate sustainability
• Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security

Acknowledgments

Special thanks to Peter Veit for his early support of this research and valuable comments on an earlier draft.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Klabbers(1998), for example, has misgivings about this development as it may lead to accountability deficits.

2. International standards are characterized as ‘private global governance’ (von Geibler 2013), transnational legal processes (Koh 1996, 2001) or global administrative law (Krisch and Kingsbury 2006; Meidinger 2006).

3. We use the terms ‘company’ and ‘business’ interchangeably to denote any legal form that engages in lawful activities for profit. Other than the selection criteria mentioned, the review is not limited to businesses or companies with a particular legal form, as the nature of these legal forms vary across countries and jurisdictions.

4. We do not consider policy implementation. To our knowledge studies on this topic are lacking.

5. A separate, but related, institutional effort to engage the private sector on the Voluntary Guidelines is the Interlaken Group, which issued a guide to assist companies in implementing the Voluntary Guidelines (Interlaken Group 2015).

6. In this way, the Guidelines track IFC Performance Standard 5, with its objective to improve tenure security (IFC 2012; Palmer et al. 2012a; Windfuhr 2017).

7. The term ‘legitimate’ in reference to tenure rights is also debated.

8. There is a technical guide for investors limited to agricultural land, which identifies the types of land tenure risks investors may encounter and how to address them (Vhugen 2016).

9. The New York Declaration on Forests is a non-binding, political declaration adopted at the 2014 Climate Summit by a number of companies, NGOs, and governments. Included among its many commitments is: ‘Strengthening forest governance, transparency and the rule of law, while also empowering communities and recognizing the rights of indigenous peoples, especially those pertaining to their lands and resources’ (Climate Advisors 2014).

10. ANOVAs essentially conduct multiple t-tests at once to compare whether means are statistically significantly different from each other.

11. For example, the RSPO Criteria 4.4–4.8 discusses documenting negotiations and fair compensation. Criteria 4.4 states: ‘Use of the land for oil palm does not diminish the legal, customary or user rights of other users without their FPIC [Free, Prior, and Informed Consent]’ (RSPO 2018, p. 37).

Additional information

Funding

This work was supported by the World Resources Institute and USAID under the Evaluation, Research, and Communication (ERC) and Communication, Evidence, and Learning (CEL) Task Orders.