Corporate Social Responsibility (CSR) and Benefit Sharing Mechanisms - - PowerPoint PPT Presentation

Shivcharn S. Dhillion, Ph.D. ENVIRO-DEV, Norway

Corporate Social Responsibility (CSR) and Benefit Sharing Mechanisms Hydropower Sector

1 HydroVision India 2012 (Dhillion)

Benefit Sharing and CSR Defining through elaborating on:

• How it is framed?
• How it is practiced?
• What are the lessons learnt?
• Based on Case Studies, World Bank Funded and own

consultations and literature reviews

Sweco Norway and ENVIRO-DEV Consultants

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Benefit Sharing

• Best studied, discourses and analyses –

Convention on Biodiversity, CBD (policy, financing and maintenance)

• In hydropower: Less Clarity of Benefit

Sharing under the umbrella of Corporate Social Responsibility – Especially in line with impact mitigation needs (EIA/SIA/ESIA)

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Why Benefit Sharing Right Now ? Introduction

Evolution in social and environmental Evolution in social and environmental concerns in hydropower development concerns in hydropower development

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A Shifting Paradigm A Shifting Paradigm

• 1990s: concern, agitation, risk

aversion

• Two decades of understanding

these risks and management responses

• S

Sustainable hydropower ustainable hydropower demands a integrated, demands a integrated, comprehensive approach comprehensive approach

– Early consideration of externalities – Investment in environmental and social assets – Innovation in management responses

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Introduction: Four Drivers of Value Four Drivers of Value

Greater focus on energy security in an increasingly complex sector More mature understanding of the cost of hydrologic variability and the concept

• f water security

Development programs and natural resource management based on regional coordination Shaped by the imperative of mitigating and adapting to climate change

• The strategic and

The strategic and development value of development value of hydropower is expanding hydropower is expanding

Energy Security Water Security Regional Coordination

Climate change

On the concept of benefit sharing in hydropower

Two relevant efforts aiming to improve the social performance

• f hydropower investments introduced the concept of benefit

sharing in the hydropower sector:

• International Energy Agency (IEA, 2000)
• World Commission on Dams (WCD, 2000).

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International Energy Agency (2000), Hydropower and the Environment:

• For IEA:
• “an important issue associated with hydropower projects is

that of ensuring social justice through the fair distribution of project costs and benefits among local communities, society at large, project proponents and governments”.

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International Energy Agency (2000), Hydropower and the Environment:

• (Recommendation # 5) suggests:
• “sharing benefits with local communities” because local

communities should benefit from a project, both in the short term and in the long term.

• Community benefits do not necessarily mean monetary

benefits at all. Improved access, improved infrastructure, support for health and education programs, legal title to land are all important benefits that may be derived from a hydropower project (IEA, 2000).

• International Energy Agency (2000), Hydropower and the

Environment: Present Context and Guidelines for Future Action, IEA Technical Report, Annex III-Volume I: Summary and Recommendations, Paris, France.

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World Commission on Dams

• Report of the World Commission on Dams, as part of their

seven strategic priorities (Strategic Priority # 5) suggests:

• “Recognizing entitlements and sharing benefits”.
• … “appropriate mechanisms should be introduced to ensure

equitable distribution of development opportunities generated by the dam” (WCD, 2000).

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Social risk issues in hydropower

(not exhaustive)

• Livelihoods
• Indigenous populations
• Resettlement
• Cultural Heritage & Traditions

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Means of Living and Well Being

Livelihoods

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Indigenous populations

Indigenous Groups Issues ILO 169

Resettlement

Gumu Bazaar

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Cultural Heritage

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Campanar Sant Romà church, Catalunya, Espana

Social Risks and their Management

Stakeholder Responses Disagreements Time Constrains Image

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Social license to operate

• … addressing the demands and expectations that emerge from

neighborhoods, environmental groups and community members, and other elements of the surrounding civil society.

• Failure to properly understand these expectations can generate

a diversity of risks (reputational damage, project delays or abandonment, security problems, etc.).

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Social License to Operate (social viability)

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Controlling these risks requires the need to obtain a Social License to Operate (SLO)

Stakeholder's perspectives: communities

• Communities
• The Issuance of a SLO primarily requires

that community concerns have been taken into account at some extent

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CSR – Corporate Social Responsibility

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Why do firms engage in (”expensive”) CSR? What are the consequences of CSR?

Some evidence on strategic behavior by firms – increased CSR improved financial performance

• (Peter & Mullen, 2009)

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Stakeholders perspectives: Promoter

• Promoter / Developer

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Profit sharing Why? Short term vs Long term profits Inter-temporal optimization

Firms are ”also” interested in producing social goods + reputation

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A Synthesis of International Best Practice Benefit Sharing

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Approaches and Methodology

Benefit Sharing and Hydropower Development (current study) Benefit Sharing and Hydropower Development (current study) 1. Theoretical Assessment - Discussion notes (mechanisms and Approaches). Based on literature and concept notes from IFIs (i) Note 1 – A working definition of enhancing and sharing development benefits. (ii) Benefit Sharing mechanisms (iii) Governance options (iv) Economic Assessment of Enhancing Benefits (v) Social and Development Benefits 2. Elaboration of methodology for selecting best case studies. Ranking of potential case studies (6 focal case studies + 4 extended desk studies + specific project reports). 3. In depth studies of focal case studies, including field visits 4. Best Practice and Lessons Learned. Overall synthesis, comparison as well as redefining the concept and the mechanisms.

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Methodology for selecting best case studies.

Approaches and Methodology

Cases Tripartite partnerships Community involvement Geographic scale Range of mechanisms (synergies across mechanisms) Likelihood of transferability

• f mechanisms

and lessons Ease of logistics for field work and obtaining information for this study Case 1 Case 2 ........

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Methodology for selecting best case studies.

Approaches and Methodology

Original typology of Benefit Sharing mechanisms adapted from a World Bank Concept Note

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Methodology for selecting best case studies – Partnerships

Approaches and Methodology

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Selected Case Studies

Approaches and Methodology

Focal Case Studies (field + stakeholder workshops)

• Lesotho Highlands Water Project – Transboundary, basinwide and

multipurpose, multiple dams and large scale (Lesotho/RSA)

• Khimti 1 HPP – Hydropower, medium scale (Nepal)
• Angostura HPP – Hydropower, large scale (Costa Rica)
• San Carlos HPP – Hydropower, large scale (Colombia)
• Glomma & Laagen Basin – Whole basin study with many dams (Norway)
• Nam Theun 2 HPP – Mainly hydropower, large scale (Lao PDR)

Extended Case Studies (desk)

• Bujagali HPP – Mainly hydropower, large scale (Uganda)
• High Aswan Dam – Mulipurpose, very large scale (Egypt)
• A’Vuong HPP – Mainly hydropower, large scale (Vietnam)
• Columbia Basin – Transboundary, basin scale, multiple dams (USA/Can)

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Main Findings From Case Studies

Khimti 1 HPP - Details

Khimti I Hydropower Project (Khimti I HEP) is a 60 MW run-of-river hydropower plant on the Khimti Khola (tributary), Central Nepal. With a gross head of 684 meters (a drop from 1,270 to 586 meters above sea level) it has an annual production of 350 GWh. It is located in the Dolakha district, about 100 km east of Kathmandu, in the middle hills of

• Nepal. Khimti Khola is a tributary of Tamakoshi (Tama River).

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Main Findings From Case Studies

Case Study Typology (mechanism) Aspect of Typology Beneficiary Group and social/environment component Process followed and

• utcomes

Khimti 1 Institutions, Policies and Capacity Building (non- monetary) Establishing local institutions. Establishing public private partnerships. Creation of user groups (e.g. the KREC cooperative). Partnership with UNDP. Helped expanding rural electrification for the local farming communities. Allowing neutral organizations (NGOs) to facilitate and manage (partly) implementation programme (with KREC). Community initiated needs led to community level institutions (user groups) which facilitated benefit sharing interventions. Significant number of household having electricity through a stage-wise process

• ver time. The degree of

acceptance is very high.

Khimti 1 HPP – Main Benefit Sharing findings

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Main Findings From Case Studies

Khimti 1 HPP – Main Benefit Sharing findings

Case Study Typology (mechanism) Aspect of Typology Beneficiary Group and social/environment component Process followed and

• utcomes

Khimti 1 Ancillary Investments Non-monetary and monetary inputs to enhancing health and education services in addition to water supply systems (irrigation and drinking water). Enhancing user group roles. Local communities and affected people. Community initiated needs led to community level institutions (user groups) which facilitated benefit sharing interventions. Significant improvement of general public health, education and water supply situation e.g. in the community.

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Working Definition and Mechanisms – Benefit Sharing Working Definition: “A framework for governments and project proponents to maximize and distribute benefits across stakeholders, through relevant spatial and temporal scales by use

• f

various mechanisms, and consistent with the principles of sustainability”

Who are the stakeholders that should benefit? Most commonly;

• Local Communities
• Displaced people
• Local/Regional Government
• Project Owners
• National Government

And where relevant;

• Transnational and River Basin

Organizations

• Special Interest Groups
• Private Sector

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Lessons Learned and Best Practise

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Lessons Learned and Best Practise

• Stepwise development and phased implementation allows for lessons learned to

be incorporated in benefit sharing programs,

• Results from the various case studies indicate that sound legal frameworks and

institutional arrangements become more important when implementing benefit sharing mechanisms across larger scales and more complex geopolitical settings. The Khimti 1 HPP case (NEPAL) shows that local level mechanisms can work without a legal framework and institutional arrangements in place, given that the project owner has the interest and sees it as a necessity (securing community good will) for sustainable and successful development and operation of the project.

Some innovative and viable approaches

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Lessons Learned and Best Practise

• In Costa Rica the actions from the COMCURE’s watershed protection

programs, with investments financed by contributions from water fees and payments for ecological services have led to a decrease in the erosion and sedimentation problems in the watershed benefiting both the project

• wner and the local communities.
• Benefits derived from integrated operation of reservoirs can be

paramount for the project owners and stakeholders across sectors, in number of basin level case studies.

• Public – Private partnerships (PPP) have shown to be key for success of

implementation of benefit sharing mechanisms in some cases.

• ISAGEN in Columbia has shown to be innovative related to their cost sharing

partnerships, through their co-financing approach used to contribute and enhance benefits among neighboring communities. This approach encourages interested

• mmunities to become partners in their development initiatives instead of passive

receptors.

Some innovative and interesting approaches

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Lessons Learned and Best Practise

• The Cases in Lao PDR and Costa Rica demonstrate innovative approach to

watershed management and ecosystem protection based on the provision of funds (fees, taxes, transfers) from financial allocations by the generation companies.

• The Columbia Basin/CBT case study stands out when looking at a very clear

linkage between projects and regional development plans as HPP development, benefit sharing initiatives (environmental protection, land conservation and education programs) is an integral part of the Colombia Basin Management Plan.

• The LHWP and NT2 Cases have quite a considerable impact on the national

economy of Lesotho/Lao PDR and sparked economic development that enabled and strengthened (new) industries and services.

Some innovative and interesting approaches

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Key Enablers for Benefit Sharing

Process of ESIA

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ESIA (SIA/EIA) Mitigation

corporate measures to enhance mitigation

• ptions

Enhancement Measures

SLO Image BENEFIT SHARING

CSR Planned-strategic Reactive / Proactive

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Compensation versus Benefit Sharing

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Sharing Benefits: An evolution in thinking Sharing Benefits: An evolution in thinking… …. .

Eminent Domaine Eminent Domaine Mitigation & Mitigation & Compensation Compensation Sustainable Sustainable Development Development Land acquisition Land acquisition Trickle Trickle-

• down Benefits

down Benefits Negative impacts minimized at Negative impacts minimized at individual and community levels individual and community levels Benefit Benefit-

• sharing

sharing integrated project design integrated project design

Evolution in Dams Benefit-Sharing

Financing-gap model Employment and infrastructure leads to GDP growth Compensation for loss of land and livelihoods Mitigation of social and environmental costs Portfolio approach to sharing benefits Sustainable welfare improvements

APPROACH IMPACT ON LOCAL COMMUNITIES

42 Irrigated Agriculture Flood might. Afforestation and Watershed Might Local Community Infrastructure Hydromel System

Hydropower

Energy for growth

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Thank You