Draft NAP-BHR: Can It Be An Important Next Step In Reducing Land Conflicts, Investment Risks?

Ranjan Kumar Ghosh Pranab R Choudhury Apr 09, 2020

Land conflicts, especially between corporates and communities, historically and more so in the last few decades, are fast transforming into terrains of resistance. In the post-liberalized growth era in India, associated investment-risks have been escalating in an extremely rapid manner. The financial risks posed have been multiple, ranging from slippage in construction times and unexpected cash flow loss due to suspensions to expropriation of assets following the loss of insurance coverage.

Land has immense cultural and community values attached, apart from being the dominant stratum for India’s rural livelihoods, which means contestations inherently and obviously intertwine with human rights implications. It is this spin that makes land the most complicated factor of economic production. It is, therefore, high time that land rights get embedded into the core corporate governance paradigm. In this context, the Draft National Action Plan (NAP) on Business and Human Rights by Indian Institute of Corporate Affairs can be an opportune platform for the sarkar and bazaar to integrate this very important samaj concerns. Draft NAP already demonstrates the commitment and intent of the Government of India to integrate a rights-based approach (covering multidimensionality of business responsibility) along with the transactional approach already stipulated under CSR.

This NAP reflects India’s commitment to the UNHRC call given in 2014 to member states to ensure effective implementation of UNGPs (United Nations Guiding Principles on Business and Human Rights). More importantly, it demonstrates a logical continuation of the Government’s intent to make India Inc. more responsible and inclusive. In a way it aims to unfold an action plan for the existing frameworks on BHR in India viz. the 2011 NVGs and the 2018 NGRBC apart from the Companies Act 2013. The former two are more considered as soft laws or nudges to make businesses show commitments to sustainability responsibly, more voluntarily, though being increasingly encouraged and stipulated. The Securities and Exchange Board of India, made the Annual Business Responsibility Reporting (ABRR) mandatory for top-listed 1000 companies recently in Nov 2019, to improve corporate governance practices and add transparency in terms of reporting of environmental, social and governance (ESG) perspectives. The ABRR net has expanded swiftly starting with the top 100 in 2012 and 500 in 2015. It mandates reporting of the inclusivity transparently base on nine principles with their core-elements delineated in 2011 NVG. The 2018 NGRBC recommends a refined BRR framework, which includes principle-wise performance indicators for businesses.

The forest rights of the communities as per FRA 2005 falls under purview of the principles 4, 5, 7 and 8 of 2018 NGRBC, while land acquisition, resettlement and rehabilitation as per LARR, 2013 are relevant to principles 1, 2, 4, 5, 6, 7 and 8. To address principles 4 (stakeholder engagements), 5 (respect the human rights) and 8 (inclusive growth and development), actions towards ensuring and protecting land and forest rights of communities would be imperative for the businesses.

While the BRR shows certain improvements over last years with more companies reporting more principles and indicators, the reporting around social and governance considerations, has not improved except for community development through CSR, as reported in Indian Responsible Business Index (IRBI), an index created by a coalition of Indian CSOs out the BRR data, reported by the Companies. Analysis of the BRR reports by IRBI conspicuously highlight inadequate attention to land and forest rights. With large tracts of land being acquired for infrastructure and other industrial projects, companies are performing badly in terms of including communities as stakeholders in their projects (principle 4, 5 7 8), be it around following principles of prior informed consent (FPIC), resettling and rehabilitating project-affected people or providing local employment and judiciously using natural resources as shows the IRBI data during 2016-18.

Ironically, this is happening at a time when investments around mining and power sectors, infrastructures, real estates, and agri-business, based around and requiring land, are increasingly facing conflicts, delays and often getting stalled. One of the major reasons behind this increasing stalling of investments, which has reached an all-time high of INR 13 trillion in June, 2019 as per CMIE, has been delay in land acquisitions (INR 1 trillion). It was reported in 2016 by RRI-TISS that land-related conflicts in India affect about 3.2 million people and impact investments worth over INR 12 trillion ($179 billion). In a recent release, the data journalism website Land Conflict Watch reported a total of INR 1370 billion worth of investments, or 7.2 per cent of the country’s 2018-2019 GDP, found to be involved in 335 land conflicts over the past three years. The financial sector, esp. banks owe a significant burden of their NPAs to land-based investments.

The three pillars that Draft NAP tries to address are: protect (by state), respect (by business) and remedy (by victims).

While the protection pillar draws strength from existing international, national and state legal frameworks around human rights, it is imperative for NAP to delineate an appropriate responsibility framework for businesses for effective implementation of these laws along with a robust monitoring framework. This is important to make businesses invest in curbing the increasing incidences around avoidance and/or violations of laws around community consultation and consent, impact assessments, development of affected areas viz, through DMF, protection of human rights defenders, fair compensation and R&R, as evidenced in IRBI and also reported in media.

For the second pillar to work, commitments by businesses to act on improving the essential and leadership indicators prescribed in the 2018 NGRBC would remain critical. Along with transparent action and more complete reporting with demonstrated involvement and accountability of corporate leader/board/partners and other value chain actors in land and forest dealings, what is more important is to provision scope of stakeholder/shareholder audit and consultation of such reports at a periodic interval to enhance transparency and trust-building.

In the context of third pillar of NAP, redressal provisions are encouraged through existing judicial (courts, etc.) and non-judicial (LSA, Lok Adalat) and other mechanisms (viz, NHRC, NCW, etc.) for ensuring remedy to the victim. It is equally important for NAP to also consider, extending this space to other legitimate local self-governance institutions viz. GP, Gram Sabhas, Village Authorities, etc. empowered adequately by relevant land and forest acts. This move towards localization and decentralized democratization, can be strengthened by corporate investments in building local institutional mechanisms to enhance information access and awareness to facilitate more informed decisions, consents, and collaborations.

As NAP connects to and builds on 2018 NGRBC, it should clearly spell out actions for businesses to improve corporate governance, especially around embedding responsibility and human rights concerns. It is critical that NAP triggers business investment around capacity building to create a cadre of responsible and equipped executives to better address the NGRBC principles and their core elements, while also improving recommended reporting of essential and leadership indicator. NAP can be a strategic opportunity for corporates to take the next leap beyond the positive climb up of CSR ladder, to trigger investments and actions, around land and forest rights inclusivity and community livelihoods, more importantly in land-based investment projects, to improve human rights and business sustainability.