Recently, major legal wins have opened up conversation about creating a remedy fund at development finance institutions to address harms that result from investment projects. This would be a huge step forward.
Yet there’s also an urgent need to ensure communities can engage in shaping projects early and often to avoid potential harms. What if there were a global financing mechanism for independent legal support for affected communities?
Access to targeted support can help address asymmetries in power and access to information. It’s part of what’s needed to breathe life into commitments to free, prior, and informed consent. And for businesses it could reinforce a new norm that communities be empowered to act as an equal counterparty.
An independently administered pooled fund for community support could collect financial contributions from the private sector and pay out grants for local communities to obtain support to engage in shaping decisions about investments. It could tap into new sources of funding, ensuring communities across the world are able to access the resources needed to engage with large-scale investment projects. Check out the attached concept note for more on how a pooled fund could work.
Our community is campaigning to increase financing for legal empowerment (#justiceforall) and this could be an opportunity for innovation. But there are also challenges with taking funds from the private sector.
We’d like to hear from you. What would a fund need to get right if it’s going to meet communities’ needs?
Here are a few principles that could help guide the design of a basket fund:
Any effort to create a financing mechanism with contributions from the private sector must be grounded in the principle that communities have the right to say no to investment.
Contributions from the private sector should be tied to the ‘cost of doing business’. This could take multiple forms, e.g. setting aside a % of total operating costs. In contrast to a philanthropic contribution, building funding into corporations’ and investors’ core financial model reflects a commitment that affected communities deserve support to exercise their rights; without it a business deal is irresponsible.
A financing mechanism should support and strengthen national law and environmental, social, and governance standards rather than substituting for them.
Grants should cover support across the entire investment life cycle, ensuring communities can shape decision-making in the early stages and are able to address grievances that arise during operations or closure. In addition, grants can include supporting communities to engage effectively in both a) bilateral negotiations between communities and companies and b) public regulatory processes such as permitting and enforcement.
Grants can cover a range of activities and types of support, including but not limited to rights awareness, advice on contract negotiations, reviewing impact assessments, environmental monitoring, and grievance redress. Communities may pursue support from CSOs, lawyers, scientists, and a range of others.
It will be critical to maintain the independence of support providers and ensure they are directly accountable to communities. Communities can choose who to partner with to meet their needs. In addition, the fund should outline clear processes for protecting communities and support providers from undue influence by contributors.
The fund should be managed by an independent institution. The governing body needs to include frontline civil society organizations. In addition, the fund should outline clear procedures for transparency and oversight.
The grantmaking process (e.g. application, transfer of funds, reporting, etc) should be designed to minimize the burden on communities and support providers.
Do these reflect the important considerations? What would you add or change? Reply here to share your thoughts!