December 3, 2014

Coralie David Project Head – Investment in Agriculture OECD

Agricultural investment can create employment and bring expertise, technology and financing capacities for increasing agricultural production sustainably, which can enhance food security. At the same time, in a context of rising land and water scarcity and as a growing number of investors target frontier markets with weak governance frameworks, the risks of failing to observe internationally agreed standards of responsible business conduct (RBC) may be exacerbated.

For instance, large scale land-based investments may infringe on existing land tenure rights in weak governance countries. Such risk is exacerbated when the legislation fails to protect existing land tenure rights or does not provide clear and transparent rules for consultations between enterprises and affected stakeholders. Enterprises may then exclude from consultations certain land tenure right holders that are adversely affected by their activities, which can cause tensions and possibly conflicts with local communities. Investors may be negatively impacted in their reputation and operations.

Responsible business practices are an efficient way to manage risks and reputation, and to obtain and retain the social licence to operate, necessary for long-term value creation. Adhering to high RBC standards provide both commercial and non-commercial benefits by helping to retain employees, increase productivity, meet customer demands, distinguish from competitors, and gain access to new markets. RBC standards can help ensure that investments do not lead to adverse impacts and contribute to economic development, poverty reduction and food security.

To help agricultural investors observe existing RBC standards, the United Nations Food and Agriculture Organization (FAO) and the Organisation for Economic Co-operation and Development (OECD) are developing practical guidance, focusing particularly on human rights, land tenure rights, labour rights, health, food security, animal welfare, sustainable use of natural resources, governance, and technology and innovation. The guidance will be finalised in May 2015.

Coralie David is a member of the speaking faculty for Global AgInvesting Europe 2014 at the Landmark London, 1-3 December. 

The opinions expressed in this editorial are the author's own and do not reflect the view of Global AgInvesting.