CCVRI Help Desk

Request & Response

Conflict Sensitive Approaches and the IFC Performance Standards on

Environmental and Social Sustainability

DFID Private Sector Department

Principal Authors: Michelle Spearing, Paul-Andre Wilton

and Dost Bardouille-Crema

Date: August 2013

2

Help Desk Request & Responses for the CCVRI Improving Measurement in DFID Crime, Conflict & Violence Programming This document is a Response to a request by the DFID Private Sector Department submitted to the Help Desk developed under the Conflict, Crime, and Violence Results Initiative (CCVRI). The full set of Help Desk Responses are intended to support DFID country offices and their partners to develop better measures of programme results in difficult conflict and fragile environments. DFID recognises the need to focus on the results of its work in developing countries. To this end, DFID strives to account better for our efforts on behalf of UK taxpayers, offering clarity regarding the value and impact of our work. The Results Initiative operates under the assumption that we will achieve our development objectives with our national partners more effectively if we generate—collectively—a clear picture of the progress being made. Within DFID, the Conflict Humanitarian and Security Department has established a partnership with a consortium of leading organisations in the fields of conflict, security and justice to develop more effective approaches to the use of data in the design, implementation and evaluation of programmes that contribute to reducing conflict, crime and violence. In addition to producing these Help Desk Responses, the consortium will issue a series of Practice Products that address a variety of substantive areas to improve measurement of results in local contexts. The Help Desk can be accessed by contacting helpdesk@smallarmssurvey.org. The views expressed in this Help Desk Response are the sole opinions of the authors and do not necessarily reflect the opinions of all consortia partners. This Help Desk Response does not reflect an official DFID position. Members of the consortium

3

Help Desk Request

The DFID Private Sector Department works with various development finance institutions (DFIs). The Department has central programmes worth £1 billion over four years in addition to regional and country office programmes, many of which work with the International Finance Corporation (IFC).

While engagement between DFID and DFIs does already focus on fragile states, DIFD aims to increase the extent to which investment takes place in the most complex of fragile and conflict-affected states (FCAS). DFID Private Sector Department is keen for DFIs to work increasingly in FCAS, recognising that increasing numbers of poor people globally reside in FCAS and that this engagement is key to reducing poverty. In order both to encourage further investment in FCAS and to maximise its positive impact, DFID is keen to help DFIs ensure that their operations are conflict sensitive.

Many DFIs use the IFC Sustainability Framework: Policy and Performance Standards on Environmental and Social Sustainability as a means to conduct environmental and social ‘due diligence’ on proposed investment and advisory products with the aim to reduce the likelihood of inadvertently doing harm. However, conflict is not explicitly incorporated into this framework, and there appears to be insufficient processes to ensure conflict sensitive practice by users of the framework.

The helpdesk request is for a critique of the IFC Sustainability Framework: Performance Standards on Environmental and Social Sustainability against common conflict sensitive approaches (CSAs) to development. The aim is to identify what more could be done in addition to applying the IFC’s Performance Standards in order to ensure that DFIs/IFIs are promoting conflict sensitive investments in fragile states.

The response will inform an internal DFID audience as well as stakeholders in the Commonwealth Development Corporation and the World Bank Group.

A broad view of conflict sensitivity will be used, considering both approaches at individual project/programme level and institutional factors. The analysis will take each Performance Standard in turn and look at congruencies and gaps between each standard and the core features of CSAs. The process will include a review of various conflict sensitive approaches (CSA) to consider how best to integrate into the IFC PS aspects of development focused CSAs (Do No Harm, Making Sense of Turbulent Contexts, and Conflict Sensitivity Consortium materials) and corporate-tailored conflict sensitive analysis tools (Conflict Sensitive Business Practice, CDA/Corporate Engagement Program framework for conflict sensitive business). The report presents complementary CSAs needed to ensure sufficient Due Diligence of DFI investments, and to help investor entities feel more confident in expanding their investment in higher risk countries.

4

Help Desk Response

Conflict Sensitive Approaches and the IFC Performance Standards on Environmental

and Social Sustainability .......................................................................................... 5

DFID Private Sector Department ............................................................................... 1

Executive Summary ................................................................................................. 5

IFC Sustainability Framework ................................................................................... 7 Contents of the IFC Sustainability Framework .............................................................................................................................. 7 Purpose ........................................................................................................................................................................................................... 7 Implementation of the IFC Sustainability Framework ............................................................................................................... 7 IFC Due Diligence........................................................................................................................................................................................ 8 Supervision of IFCPS (evaluating implementation of the IFCPS) ........................................................................................... 8 IFCPS Review & Update Process .......................................................................................................................................................... 8

Conflict Sensitive Approaches (CSA) ......................................................................... 9 Overview of Conflict Sensitivity ........................................................................................................................................................... 9 Key components of CSA ........................................................................................................................................................................... 9

1 Analysis of conflict ....................................................................................................................................................................................... 9 2 Analysis of the project, intervention or organisation’s operations and how they interact with conflict ............ 9 3 Generating Options for adaptation ................................................................................................................................................... 10 4 Monitoring impacts on conflict, on-going review and adaptation if necessary – cyclical process ...................... 10

CSA in Business ........................................................................................................................................................................................ 10 Specific conflict sensitivity issues related to businesses ........................................................................................................ 11 Example frameworks and resources supporting CSA for business .................................................................................... 11

International Alert’s Conflict Sensitive Business Practice (CSBP) .......................................................................................... 11 CDA’s Corporate Engagement Program (CEP) ................................................................................................................................ 11 The Preventing Conflict in Exploration Tool, jointly developed by CDA, World Vision Canada, and the Prospectors and Developers Association of Canada, ..................................................................................................................... 12 The OECD’s Weak Governance Zones - Risk Awareness Tool for Multinational Enterprises ..................................... 12

Assessment of the Sustainability Framework for conflict sensitivity .......................... 13 Merits of the Performance Standards with respect to CSA .................................................................................................... 13

Conflict Sensitivity elements already incorporated into IFCPS ................................................................................................ 13 Processes for applying Performance Standards which support conflict sensitivity ....................................................... 13

Weaknesses of the Performance Standards with respect to CSA ........................................................................................ 14

Overall Recommendations for enhancing conflict sensitivity of the IFC-PS ................ 16

Annex 1: Assessment of individual Performance Standards .................................. 17 PS1: Assessment and Management of Environmental and Social Risks and Impacts ................................................ 17 PS2: Labour and Working Conditions ............................................................................................................................................. 18 PS3: Resource Efficiency ...................................................................................................................................................................... 19 PS4: Community Health, Safety and Security............................................................................................................................... 20 PS5: Land Acquisition and Involuntary Resettlement ............................................................................................................. 21 PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources .................................. 22 PS7: Indigenous Peoples ....................................................................................................................................................................... 23 PS8: Cultural Heritage ........................................................................................................................................................................... 24

5

Executive Summary The Policy on Environmental and Social Sustainability commits the IFC to make an effort “to carry out investment and advisory activities with the intent to ‘do no harm’ to people and the environment…” with the aim of achieving “positive social contribution to local communities through outreach efforts”. The Performance Standards provide a framework to increase the sustainability of the business operations of IFC clients and present opportunities for business growth and market advantage. The underlying ethos of the Policy and Performance Standards thus supports conflict sensitive approaches (CSA) in its aim to avoid or minimise negative social and environmental impacts as well as promoting positive contributions. The entirety of the IFC Framework also contains elements compatible with CSA. However, to ensure that any actor meets the Performance Standards and achieves them in a conflict sensitive way, additional CSA would need to be implemented in parallel. CSA would provide the appropriate steps on how to achieve IFC standards (the what) when operating in those environments. For example, although the revised 2012 Performance Standards require social and human rights due diligence throughout, in contexts fraught with conflict, meeting those standards with respect for human rights is extremely difficult without more rigorous approach to conflict sensitivity. The key steps of CSA entail 1) ensuring deeper understanding of conflicts within a particular context as part of the social and environmental assessment process; 2) identifying the range of ways in which the operation might have positive or negative effects on existing conflicts as well as those arising from the operation itself; 3) adapting to minimise negative impacts and maximise positive impacts; and 4) monitoring this over time so that further adaptations in line with contextual changes can be made as the project progresses. In order to realise the aims of the standards in a conflict context, deliberate inclusion of rigorous conflict analysis is necessary. The individual standards touch on some specific conflict drivers, including displacement of people, use of armed security, labour relations, land issues, impact on ecosystem services, and cultural heritage (see assessment of individual performance standards in Annex 1). However, despite business processes as recommended in the Standards, such as establishing a mitigation hierarchy and adopting inclusive stakeholder consultation practices, it is difficult to achieve the standards in conflict affected contexts without a foundational understanding of the underlying causes of tensions and the complexity of interest patterns in the area. Deeper consideration of the interaction between the project and the broader social context (beyond directly affected communities) is needed. This should go beyond understanding direct and evident impacts of the operation on the surrounding community, such as displacement, and extend how the operation affects relations between different local groups and how it may either exacerbate or mitigate pre-existing divisions within the host country/society as a whole. Failure to consult across existing social divisions and differential negative or positive impacts across them, may result trigger increased conflict that extends beyond the footprint of the project, for example, situations in which one group benefits much more from employment opportunity or service provision due to the location or policies of an operation. The process for engaging affected communities needs to be further qualified across all Standards. In a conflict context, specifically, this should extend to communities beyond the immediate geographic area of the operation. Stakeholder engagement should also differentiate between different perspectives within an ‘affected community’ where, in most cases, a community is not homogenous. An initial conflict analysis should indicate where these potential conflict factors need to be taken into account. An effective, trusted and widely accessible grievance mechanism should also provide indication of the effectiveness of an engagement strategy in conflict settings. As it currently exists, the IFC’s framework is insufficient to provide suitable guidance to build expertise to apply the PS in a conflict sensitive way. Achieving elements of the Standards with a CSA, particularly the environmental and social assessment process, would require experts with knowledge of conflict sensitivity and conflict analyses. The IFC Framework includes Guidance Notes which illuminate the requirements contained in the Performance Standards, including reference materials and good sustainability practices to improve project performance. While the Guidance Notes detail explicit steps required to address conflict situations, they neither address conflict issues at a macro-level that can result from or impact the client’s project nor address conflict mitigation and resolution consistently throughout the Performance Standards. For non-IFC clients who are committed to the Performance Standards, achieving the spirit of the standards may be difficult without expert support from IFC.

6

In summary, while the performance standards do not contradict a conflict sensitive approach and do address some relevant issues, they do not propose the steps that would be necessary to achieve conflict sensitivity in the business activities of client projects. Furthermore, in order to meet the IFC Performance Standards, financial institutions, donors and clients would need to apply additional conflict sensitive approaches to their projects in conflict-afflicted environments. In order to be conflict sensitive, the IFCPS would need to place a greater emphasis on conflict, per se, to articulate a higher standard of due diligence, and to mandate more robust management processes as minimum standards for projects in conflict-affected areas. This would ensure that a cohesive approach would build off of PS 1 and that conflict sensitivity would be incorporated consistently throughout the Standards. This would also ensure that operations in areas that are usually thought of as “conflict-free” will not create or exacerbate tensions that could lead ultimately to conflict.

7

IFC Sustainability Framework

Contents of the IFC Sustainability Framework The IFC’s Sustainability Framework1 includes the following elements: Policy on Environmental and Social Sustainability; Performance Standards on Environmental and Social Sustainability; and Access to Information Policy. While the policy on Environmental and Social Sustainability defines IFC's responsibility in supporting project performance towards positive development outcomes, the Performance Standards define the client’s responsibilities. The Framework is complemented by Guidance Notes that serve as companion documents to the Performance Standards, providing guidance to clients (and IFC staff) in meeting the Performance Standards. This report focuses on the 8 Performance Standards, as follows:

1. Assessment and Management of Environmental and Social Risks and Impacts

2. Labour and Working Conditions

3. Resource Efficiency

4. Community Health, Safety and Security

5. Land Acquisition and Involuntary Resettlement

6. Biodiversity Conservation and Sustainable Management of Living Natural Resources

7. Indigenous Peoples

8. Cultural Heritage

Purpose The Performance Standards are a global benchmark for environmental and social risk management in the private sector. Their aims are sound environmental and social practices, transparency and accountability, and positive development impacts.

Implementation of the IFC Sustainability Framework2 IFC uses these standards as a risk management framework for determining, assessing and managing environmental and social risk in projects. The Sustainability Framework focuses on environmental and social/community standards and responsibilities. The Performance Standards define clients' responsibilities for managing their environmental and social risks and provide a benchmark for the IFC to use in meeting its responsibility to support sustainable financing objectives and project performance in partnership with clients. IFC has also developed a significant program of indirect investments that is implemented through financial institutions (FIs). Through this program, IFC helps strengthen domestic capital and financial markets that support economic development at a smaller scale of activity than would be possible through direct IFC investments.

The desired sustainability outcomes are described in the objectives of each Performance Standard, followed by specific requirements to help clients achieve these outcomes through means that are appropriate to the nature and scale of the activity and commensurate with the level of environmental and social risks and/or impacts. Central to these requirements is the application of a mitigation hierarchy to anticipate and avoid adverse impacts on workers, communities, and the environment, or where avoidance is not possible, to minimize adverse impacts, and where residual impacts remain, compensate/offset for the risks and impacts, as appropriate.

The IFC also liaises with relevant international financial institutions (IFIs) and/or national agencies on strategic, regional, and/or sectoral environmental assessment for private sector business activities with significant environmental or social issues. In addition, the Performance Standards have been adopted by IFIs signed on to the Equator Principles. Equator Principles Financial Institutions (EPFIs) commit to implementing the EP in their internal environmental and social policies, procedures and standards for financing projects and will not provide Project Finance or Project-Related Corporate Loans to projects where the client will not, or is unable to, comply with the EP. The DFID Private Sector Department works with various development finance institutions (DFIs) that provide credit in the form of higher risk loans, equity positions and risk guarantee instruments to private sector investments in developing countries. Many of these DFIs use the IFC Sustainability Framework: Policy and

1 IFC Sustainability Framework:

http://www.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_Site/IFC+Sustainability/Sustainability+Framework 2 International Finance Corporation’s Policy on Environmental and Social Sustainability, January 2012

8

Performance Standards on Environmental and Social Sustainability (IFCPS) as a means to conduct environmental and social ‘due diligence’ on proposed investment and advisory products with the aim to reduce the likelihood of inadvertently doing harm.

IFC Due Diligence IFC only finances investment activities that are expected to meet the requirements of the Performance Standards within a reasonable period of time. Environmental and social due diligence typically includes the following key components: (i) reviewing all available information, records, and documentation related to the environmental and social risks and impacts of the business activity; (ii) conducting site inspections and interviews of client personnel and relevant stakeholders, where appropriate; (iii) analyzing the business activity’s environmental and social performance in relation to the requirements of the Performance Standards and provisions of the World Bank Group Environmental, Health and Safety Guidelines or other internationally recognized sources, as appropriate; and (iv) identifying any gaps therewith, and corresponding additional measures and actions beyond those identified by the client’s in-place management practices. To ensure the business activity meets the Performance Standards, IFC makes these supplemental actions (Environmental and Social Action Plan) necessary conditions of IFC’s investment.

Supervision of IFCPS (evaluating implementation of the IFCPS) IFC’s agreements pertaining to the financing of clients’ activities include specific provisions with which clients undertake to comply. The IFC carries out a range of actions to monitor its investments and advisory activities as part of its portfolio supervision program. The IFC reviews implementation performance, as reported in the client’s Annual Monitoring Report and updates on the Environmental and Social Action Plan against the environmental and social conditions for investment and the client’s commitments. If the client fails to comply with its environmental and social commitments, as expressed in the environmental and social conditions for investment, IFC will work with the client to bring it back into compliance to the extent feasible, and if the client fails to re-establish compliance, IFC will exercise remedies as appropriate.

IFCPS Review & Update Process The IFC initiated a review and update of their Sustainability Framework, and the Performance Standards were updated and re-launched in January 2012. The 2012 release of the standards require social and human rights due diligence, “Free Prior Informed Consent” in specific circumstances, and reference to work within the “Guiding Principles on Business and Human Rights, implementing the UN Protect, Respect and Remedy Framework”3.

3 On 16 June 2011, the UN Human Rights Council endorsed the "Guiding Principles on Business and Human Rights: Implementing the United Nations 'Protect, Respect and Remedy' Framework" proposed by UN Special Representative John Ruggie.

9

Conflict Sensitive Approaches (CSA)

Overview of Conflict Sensitivity Conflict Sensitivity is an approach to working in a context of conflict in which an organisation deliberately takes measures to: 1) understand the context it operates in 2) understand the interaction between its intervention and that context and 3) act upon this understanding in order to minimise negative impacts and maximise positive impacts on conflict4. “Negative impacts” here are understood to be impacts that intensify conflict and tensions, and “positive impacts” are understood to be impacts that diminish them. A key underlying premise of conflict sensitivity is that any intervention in a conflict context becomes part of the context and will therefore interact with conflict dynamics. Such interventions therefore always have impacts on the conflict itself.

As the Conflict Sensitivity Consortium notes: “Conflict sensitivity is not a one off activity. It is an approach to your work and presence” It entails constantly asking how a decision or action might inadvertently do harm and what opportunities exist to act in ways that benefit the context while still achieving an intervention’s original aim. A range of activities can be undertaken, from conflict sensitive due diligence to ensure that harm is avoided to a proactive approach of supporting conflict resolution and peacebuilding efforts. No matter the objective of a particular approach, there are four key components of conflict sensitivity.

Key components of CSA

1 Analysis of conflict

Conflict Analysis is a structured process for better understanding a conflict (its background/history, the groups involved, each group’s perspective, identifying causes of conflict, etc.). It may be framed at macro level or at a local level where an organisation is operating. There are many approaches to conflict analysis, but it may incorporate root causes, proximate causes and triggers; mapping of conflict actors and relations between them and their positions, interests and influences; conflict timelines and phases; or types of violence (physical, structural or cultural). Conflict analysis may also include the identification of factors which support peace or opportunities for peacebuilding.

Examples of conflict analyses toolkits that are commonly used include:

Do No Harm: Once the main conflict is identified, the context in which the conflict occurs is analysed

according to factors that unite individuals, groups and communities (connectors), and factors that

separate people (dividers). These factors include actions, attitudes, interests, historical experience,

symbols and systems. The analysis process tends to be quite brief but intended to be applied on an on-

going, cyclical basis, and is most frequently used by agencies to assess contexts at the micro level

(compact geographical area, individual interventions).

Making Sense of Turbulent Contexts: A tool designed by World Vision to take a participatory approach to

macro-level analysis, by identifying key actors, their interests, root causes of conflict, triggers and likely

scenarios. One unique element is its focus on political economy analysis, through the identification of

resources of value in the context and noting who controls them and whether this control is contested.

Other approaches: World Bank’s Conflict Analysis Framework, USAID’s Conflict Assessment Framework,

and GTZ’s Conflict Analysis for Project Planning and Implementation, DFID’s Joint Analysis of Conflict

and Stability (JACS) (which replaced the Strategic Conflict Assessment (SCA) methodology).

2 Analysis of the project, intervention or organisation’s operations and how they interact with conflict

It is necessary to understand different elements of a project or organisation operating in the context and bring this together with the context analysis to anticipate changes that the organisation’s presence will trigger in the context. This should include the “what,” “when,” “where,” “why,” and “who” of the organisation’s operations.

Do No Harm offers one approach, by first analysing the details of an intervention, and then seeing

whether any of these are likely either to add pressure to existing dividers or to undermine existing

4 Definition from the Conflict Sensitivity Consortium (CSC) which aims to understand what "conflict sensitivity" means in practice, in terms of organisational systems as well as during the design, implementation, monitoring and evaluation of specific interventions. The CSC website provides access to a range of data and resources on conflict sensitivity and the work of the Consortium. http://www.conflictsensitivity.org/

10

connectors. Do No Harm suggests patterns of how aid assistance could increase tensions, for instance

through theft, benefiting one group more than another, or providing status to illegitimate groups. Focus

is also placed on behaviour of staff, and how this can reinforce values that cause harm, such as impunity

or disrespect.

Within the parameters of aid, the Conflict Sensitivity Consortium usefully focuses on the institutional

presence and its’ impact on conflict. This recognises that areas such as the procurement, hiring and

partnership policies of an agency could equally have an impact on tensions or conflict dynamics. Other

areas examined include the organisation’s systems for adjusting programming, safe spaces for

complaints, codes of conduct and accountability systems, partner due diligence and capacity building,

leadership interest in the area, funding sources and relations with government.

Asian Development Bank’s 2012 ‘Peacebuilding Tool for a Conflict-Sensitive Approach to Development’

has a mix of questions to focus a conflict assessment that would inform the initial design of programmes.

It is best suited to the macro level. It suggests areas in which the potential for social conflict might

develop or exist. The tool has questions related to major “issues”—post-conflict environment, decision

making and implementation structures, informal peacebuilding structures, social issues, socio-economic

issues, geographic issues and security issues.

DFID Conflict Audit/Review methodology aims to support review of conflict sensitivity at the strategic

level of a whole country programme

3 Generating Options for adaptation

Based on the analysis from the first two steps, a conflict sensitive approach requires organisations to adapt or redesign their intervention as required. This will allow necessary changes to be made in order to reduce the negative impacts and reinforce the positive impacts of the intervention.

The Do No Harm project published the book Options for Aid in Conflict 5 which focuses on common

flashpoints in five key areas (what to deliver; beneficiary selection; identity of staff, partner selection; and

partnering with government) and describes different choices aid organisations have made in relation to

each.

The ADB tool also has questions to help generate recommendations for adjusting the project.

4 Monitoring impacts on conflict, on-going review and adaptation if necessary – cyclical process

In conflict contexts it is assumed that the environment is highly volatile and that changes will occur all the time. In addition, implementing options generated in step 3 will inevitably have impacts on the context that need to be understood. Therefore, monitoring the context and the interaction between the intervention and the context is vital, and adequate systems for this need to be in place. Guidance at the strategic level for the monitoring of conflict sensitivity is available in the CCVRI DFID paper Monitoring and Evaluating Conflict Sensitivity, Methodological Challenges and Practical Solutions (2013)6. Core processes that assist in monitoring include a commitment to participatory decision making and design, continuous and open communication between implementing agencies and other stakeholders, a commitment to transparency and gathering and responding to feedback/complaints mechanisms.

CSA in Business

Any business operating in a conflict context has potential to have unintentional negative impacts on conflict as well as opportunities for positive impacts. Conversely, a conflict context will have impacts on the business that may affect security of staff, operations, and local community members, as well as profit and reputation, among other things.

Applying CSA in business can help a company understand the two-way interactions

5 Anderson, Mary B Options for Aid in Conflict; Lessons from Field Experience, (CDA inc MA USA) 2000.

6 Chigas, Diana and Rachel Goldwyn, Monitoring and Evaluating Conflict Sensitivity, Methodological Challenges and Practical Solutions,

(CDA and CARE for CCVRI Helpdesk) March 2013

11

between a company’s operations and a conflict context. Generally, private sector operations are accepted by the public at large because of the role they play in society in providing employment, driving economic development, developing much needed resources, and improving general wellbeing. But in conflict-afflicted contexts characterized by highly complex patterns of relationships between actors with clashing interests, a company’s operations can unwittingly play into socio-political issues, thereby exacerbating local grievances and exposing companies to significant risk. If a company subsequently fails to recognize and respond to grievances, tensions can continue to escalate to a point at which the company loses the approval and acceptance of the community and its social license to operate. Incorporating CSA into the due diligence process can help companies avoid unintentional negative impacts on conflict and manage or mitigate conflict-related costs and risks to their business as well as local stakeholders. Towards this end, companies may use CSA to help identify ways in which their activities can have positive impacts in supporting peace. This may help a company to maintain its social licence to operate on the local, national and international level.

Specific conflict sensitivity issues related to businesses Most business-centric CSAs take a risk management approach founded on and intended to be easily integrated into the existing management system of the company or affiliate. There are certain sectors which have focused on CSA due to their potential both to have unintended negative consequences and to contribute to peace, notably the extractives, large infrastructure, and agri-business sectors.

Managers that think about CSA, and particularly the impact of conflict on their business, do so to reduce risk exposure to the company and work towards a more constructive operating environment. CSA in business is generally considered in terms of specific “flashpoints” that commonly present a challenge to operations or trigger conflict, including corruption and revenue management by host state authorities, land tenure and compensation, illegal armed groups, water and natural resources, employment, and security provision.

Some business activities have become inherently linked to conflict, notably ‘conflict minerals’ due to the high incidence of corruption and exploitation of these resources during conflicts. Specific voluntary initiatives exist to deal with this (e.g. the Kimberley Process) as well as legislation such as Section 1502 of the Dodd-Frank Act which requires companies using conflict minerals in their products to disclose the source of such minerals.

While development organizations and private sector companies may adopt approaches to conflict sensitivity analysis that are identical in their structure and basic elements, the outcomes of their respective analytical processes can be very different. Development and private sector actors have fundamentally different mandates, priorities and objectives, and their operations entail different activities. They establish and maintain different kinds of relationship with different groups of external actors, and they often engage those actors in fundamentally different ways. These differences often lead to analyses that support divergent mitigation actions. This discussion underscores the importance of the second step of a CSA, in which the objectives, capacities, vulnerabilities, and role of the intervening actor are analysed. It also suggests that it may not be reasonable to expect similar outcomes from companies that implement projects and from development actors or funders, or to evaluate the impacts of companies in the same way that one evaluates the impacts of a development actor, even if both adhere to the IFCPS.

Example frameworks and resources supporting CSA for business

International Alert’s Conflict Sensitive Business Practice (CSBP)

CSBP helps companies better understand social, security, political, economic and human rights dynamics taking place in their areas of operation as well as their role in such contexts. It consists of guidance on doing business in societies at risk of conflict for field managers working across a range of business activities, as well as headquarters staff in political risk, security, external relations and social performance departments. It provides information about understanding conflict risk through a series of assessment and practical guidance notes.

CDA’s Corporate Engagement Program (CEP)

The CEP Framework helps company managers look at the links between specific company policies and practices and the positive or negative impacts these are having on a community, as well as on company – community relations. The CEP framework presents practical, field-driven options for understanding and addressing political issues in the community that affect company operations, community perceptions of the company, and negative impacts associated with the company’s operation, in order to capitalize on the positive role that the company can play in the community.

12

The Preventing Conflict in Exploration Tool, jointly developed by CDA, World Vision Canada, and the Prospectors and Developers Association of Canada, is designed to help exploration companies establish constructive relationships with stakeholders at the community level and reduce the risk of conflict at their operations sites. It sets out five key steps to guide any company, and more specifically explorers and developers, in scanning the social, political and economic environment in order to effectively identify key stakeholders, conflict risks and opportunities for intervention for the purpose of building conflict-sensitive engagement strategies.

The OECD’s Weak Governance Zones - Risk Awareness Tool for Multinational Enterprises poses a range of questions addressing risks and ethical dilemmas that companies are likely to face in countries where governments are unwilling or unable to assume their responsibilities.

OECD Supply Chain Initiative.

Available at: www.oecd.org/daf/investment/mining

Minerals and conflict: A toolkit for intervention (USAID 2005) Available at: www.usaid.gov/our_work/cross-cutting_programs/conflict/publications/docs/CMM_Minerals_and_Conflict_Toolkit_April_2005.pdf

Value chains analysis and conflict. Available at http://www.microlinks.org/ev02.php?ID=23786_201&ID2=DO_TOPIC

13

Assessment of the Sustainability Framework for conflict sensitivity

Merits of the Performance Standards with respect to CSA

Conflict Sensitivity elements already incorporated into IFCPS

IFC endeavours to collaborate with clients who identify risks but also “who pursue environmental and social opportunities and outcomes in their business activities”. This sets out the expectation that a strong “culture of corporate integrity” improves sustainability and recognizes that institutional leaders and systems are critical factors for responsible business. However, to ensure proper risk management and due diligence, particularly in conflict-settings, the IFCPS could elaborate further on human resource needs, skills, aptitudes, and policies and standards that need to be in place. Central to [IFC] requirements is ‘the application of a mitigation hierarchy to anticipate and avoid adverse impacts on workers, communities, and the environment, or where avoidance is not possible, to minimize, and where residual impacts remain, compensate/offset for the risks and impacts, as appropriate’. This is consistent with CSA. There is strong focus in the IFCPS on specific issues common to conflict settings, including security, land tenure and resettlement, community health, indigenous rights, biodiversity and environmental impact, and safety as well as cross-cutting issues such as community consultation and complaint/grievance mechanisms. The standards recognise the responsibility of business to respect human rights and include an expectation of human rights due diligence in each performance standard. This includes the expectation that IFC clients will avoid infringing upon rights, address adverse human rights impacts, and provide access to and mechanisms for remedy. IFC expects clients to engage in a process of Informed Consultation and Participation (ICP) with all affected communities and obtain Free, Prior, and Informed Consent from Indigenous Peoples, to ensure broad community support of the project. However, while this type of engagement is necessary in all operating contexts, it might not account for the need to also engage non-indigenous marginalized groups and communities that are only indirectly affected by a project. In conflict-affected areas a broader consultation is needed. The due diligence process requires the creation of a non-judicial complaint or grievance mechanism to identify and remedy “project-related grievances”. The grievance mechanism, alongside rigorous community consultation, provides for at least two key elements of a stakeholder engagement plan.

Processes for applying Performance Standards which support conflict sensitivity

The IFCPS provide guidance on how to identify risks and impacts, and are designed to help avoid, mitigate, and manage risks and impacts as a way of doing business in a sustainable way. This is compatible with CSA. There are clear expectations for an Environmental and Social Management System (ESMS). Existing recommendations for management systems and continuous improvement mechanisms allow for management of and response to conflict issues. They also support a strong link between context analysis and the project design. The standards address operational issues from the early developmental stages through the life cycle of a project with physical assets (design, construction, commissioning, operation, decommissioning, closure or, where applicable, post-closure). There are clear expectations regarding on-going monitoring of corrective and preventative action plans, so as to evaluate and make changes for mitigation measures. The standards focus on social impact of investments and require context analysis. As noted above, they require investments to pay particular attention to certain flashpoints that are the most common proximate causes of conflict between investments and “local” stakeholders. However, there is still a need to require a fuller conflict analysis in certain operational settings deemed high risk for conflict. The IFC ”believes that the clients’ regular engagement with stakeholders about matters that directly affect them plays an important role in avoiding or minimising risks and impacts to people and the environment” (p4). The emphasis on consultation supports CSA and suggests the need for gender inclusivity and inclusion across different

14

social groups. This also allows for “Informed Consultation and Participation (ICP), leading to ‘Broad Community Support” (p7). However, this acknowledges that there may be “Broad Community Support even if some individuals or groups object”. CSA would explore this kind of divergence in perceptions in much more depth to determine whether support/lack of support aligned with other divisions within a community (ethnic identity, land ownership, political alignment etc.). The standards require on-going monitoring of ‘compliance’ throughout the life of the project, which provides for room to monitor changes and adapt in order to be responsive to context. Expectations of project monitoring also indicate an expectation for transparency and disclosure of information. Instituting grievance mechanisms for project related problems, and thus demonstrating accountability, is necessary and may be sufficient to capture conflict issues if the conflict is directly related only to the project. If the conflict has other causes, companies need to know what these are both to mitigate risks to their operations and to conduct their activities in a conflict sensitive manner. The IFC recognizes the importance of accountability and that the concerns and complaints of Affected Communities should be addressed in a manner that is, and is perceived to be, fair, objective, and constructive. The IFC makes use of the Compliance Advisor/Ombudsman (CAO) to enable individuals and communities affected by IFC-supported business activities to raise concerns to an independent oversight authority. The CAO works to resolve complaints using a flexible problem solving approach through the CAO’s dispute resolution arm. The extent to which local stakeholders are aware and able to access the CAO would need to be determined by projects operating in conflict settings. Environmental and social due diligence of a business activity is a key step in the approval process and managing environmental and social risks is the “responsibility of the client”. While IFC seeks to ensure that business activities it finances are implemented according to the IFCPS – through ‘due diligence, monitoring and supervision efforts’ – it remains unclear how much scope IFC has on affecting change at the operational level.

Weaknesses of the Performance Standards with respect to CSA The standards focus on the direct impact of operations (e.g. people displaced by the project). The extent to which the standards consider impacts of company interventions on broader drivers of conflict is limited. Focus on the project area means that analyses may not take into account regional and national-level drivers of conflict. While the performance standards approach does not negate/contradict a CS approach, it also does not propose or focus on the steps necessary to achieve CSA. To operate to the standards in conflict settings, entities would need to apply additional conflict tools. The standards require context analysis as part of the due diligence process, but do not include specific requirements with respect to conflict analysis. The IFC notes that there is no universal approach to context analysis and that the process is dependent on the individuals commissioned to undertake studies, the frameworks they use and the specific thematic interest and expertise they hold7. It is difficult to find specialist assessors who hold a broad enough knowledge to ensure that all mainstreamed issues are sufficiently taken into account. It is important to differentiate between a context analysis that examines a broad array of social, economic, political and cultural issues and a conflict analysis that specifically seeks to understand conflict. In particular, the performance standards are limited in that they do not provide for the analysis of economic agendas in war and the social dynamics (e.g. relating to class, gender, identity, history, belief systems) leading to violence. Within the performance standards, it is unclear how much conflict analysis would be considered ‘good enough’ and what is expected by the creditor or donor. There is limited discussion of the existence of conflict actors, issues and dynamics, and what that might mean for projects in conflict-afflicted areas. For example, PS1 does not address the 3 vital elements for conflict analysis, namely analysing structural causes/root causes; analysing actors and dividers/connectors; analysing conflict dynamics.

7 Consultation by phone with IFC Environment, Social and Governance Department 30/07/13

15

The performance standards do not provide adequate guidance for sufficient stakeholder analysis and planning in complex settings. They call for analysis commensurate with project risks and adverse impacts, but miss the opportunity to provide guidance on stakeholder analysis that includes positions, interests, and networks/influences (which is a common challenge for companies). The performance standards do not adequately take into account perspectives of “non-affected communities”. Project impacts are largely assessed once an activity is already identified and therefore do not take into account the impact on broader drivers of conflict. In the case of conflict, the investment may have a positive impact on the affected-community but may serve to increase inter-ethnic or inter-community divisions if other communities feel they receive negative impacts from operations or simply receive none of the benefits. Communities can benefit through employment, compensation, and provision of services, among other things. The performance standards do not provide guidance on understanding how local stakeholders define concepts of “fair” or “equitable” with respect to distribution of benefits from the operations, engaging stakeholders, undertaking negotiations, or protecting the rights of Indigenous Peoples (PS7). There is limited guidance for dealing with governments in conflict-afflicted regions that lack either the will or capacity to fulfil their social, technical and human rights responsibilities and are, at times, a conflict actor. The standards also provide limited guidance on achieving disclosure and transparency in conflict contexts. Furthermore, issues and processes related to conflict sensitivity are dispersed across all of the standards. A lot of cross referencing would be required to use the standard to develop a CSA. For conflict sensitivity, a cohesive approach that brings together all relevant factors is required.

16

Overall Recommendations for enhancing conflict sensitivity of the IFC-PS In order to realise the aims of the IFC Performance Standards in a conflict context, deliberate inclusion of conflict analysis and consideration of the broader social context (beyond directly affected communities) are required. This should be incorporated into the environmental and social assessment process both by use of appropriate frameworks for analysis and inclusion of experts with knowledge of conflict sensitivity in the environmental and social assessment process. Current frameworks are insufficient and expertise in applying these within projects is inconsistent. In particular, institutions that are not directly partnered with or a client to the IFC may find it difficult to achieve the standards as laid out in the Framework without the express assistance and support of the IFC advisory services. Deeper consideration of the interaction of the intervention with conflict is also needed. This should go beyond understanding of direct and easily evident impacts of the operation on the surrounding community, such as displacement, to understand how the operation affects relations between different local groups and how it may either exacerbate or mitigate pre-existing divisions within the country/society as a whole. The process for engaging affected communities needs to be further qualified across all of the standards. In a conflict context, specifically, this should extend to communities beyond the immediate geographic area of the operation. It should also differentiate between different groups within an ‘affected community’ where a community is not homogenous. An initial conflict analysis should indicate where this needs to be considered. Financial institutions, donors and clients would need to apply additional conflict sensitive approaches to their projects in conflict-afflicted environments in order to meet the IFC Performance Standards. CSA would give appropriate steps on how to achieve IFC standards when operating in conflict settings, namely: 1) ensuring deeper understanding of conflicts within a particular context as part of the social and environmental assessment process; 2) identifying the range of ways in which the operation might have positive or negative effects on existing conflicts as well as those arising from the operation itself; 3) adapting to minimise negative impacts and maximise positive impacts; 4) monitoring this over time so that further adaptations can be made as the project progresses in line with contextual changes. In addition to these overarching recommendations, specific actions to enhance conflict sensitivity within each performance standards are detailed in Annex 1.

17

Annex 1: Assessment of individual Performance Standards

PS1: Assessment and Management of Environmental and Social Risks and Impacts

Factors supporting CSA The objective of the standard is to “anticipate, avoid, minimise and offset risks and impacts”. It establishes processes and structures designed to capture change in the context and make changes where necessary to reduce negative unintended outcomes. This intersects with conflict sensitivity principles and processes. The standard outlines how risks will be identified by describing a due diligence process and possible assessments linked to the remaining performance standards. The focus on ‘impact’ requires the client to consider how the intervention will play out in the context and may lead to negative consequences at all stages of the project cycle. The standard also requires particular attention and response given to people identified as disadvantaged or vulnerable. The guidance notes outlines the importance of this step stating “The risks and impacts identification process is an important early step in managing and improving environmental and social performance, as it helps the client to screen and assess possible impacts and risks associated with the project to be financed (whether addressed through the performance standards or not8)”9This process is effectively a context assessment that, with support, could include a conflict analysis. Where projects are not yet defined and so impacts are harder to predict, the standard recommends the use of social audits to capture these as they become more apparent in the future. The guidance notes include “public/community safety” as one area that could be monitored. Stakeholder engagement is given particular attention and a detailed process that goes beyond most conflict sensitivity guidance is annexed in the guidance notes10. For ‘high risk’ projects, the guidance notes acknowledge that a wider group of stakeholders beyond those directly affected should be consulted - including NGOs, CSOs, religious groups and the media - to pick up any missed risks.11 The standard describes key structures that need to be in place in order to monitor the context for unintended consequences and make changes as necessary. Chiefly, the standard demands the establishment of an Environmental and Social Management System12, including a grievance mechanism or complaints procedure that is responsive and sufficiently resourced. All processes and structures should be grouped under an overarching policy that should “guide the project to achieve sound environmental and social performance.”13This policy and related structures align well with the conflict sensitivity consortium’s map of institutionalised conflict sensitivity. Both call for clear roles in monitoring conflict sensitivity, and ensuring compliance with agreed standards. Both also emphasize the importance of strong leadership to make the policy credible and actions decisive. The emphasis on clear communication and dialogue with affected communities supports CSA. The standard gives advice on ‘effective consultation’ including its recommendation to begin early, have two way dialogue, involve meaningful participation, and document the process. CDA’s Do No Harm and Corporate Engagement Program call for the principles of Respect, Accountability, Fairness and Transparency (RAFT) to run through aid organisations’ and companies’ communications, policies and staff conduct for both ethical and practical purposes. The standard also recommends relevant disclosure of information to help affected populations be fully informed of the risks, impacts and opportunities of a project14. Further, where impacts are significant a higher standard of information and discussion is required called ‘Informed Consultation and Participation.’

Factors against CSA The standard, as written, is not sufficiently comprehensive for effective assessment of impacts of projects in fragile and conflict affected contexts. The fundamental weakness with this standard is not with the structures it outlines but with the scope of the unintended consequences anticipated. Without a conflict lens the primary impact assessment will be weak, the complaints and grievance processes will be unfocused and likely not

8 PS1 GN17 notes what kind of impacts might be outside of the scope of PS2-8, including artisanal mining.

9 PS1 GN16 Authors’ emphasis.

10 PS1 GN Annex B

11 PS1 GN99

12 PS 1 Paragraph 17

13 PS 1 Paragraph 6

14 PS 1 Paragraph 29

18

capturing key changes, and decision makers will not be fully aware of the importance of the information they do receive as pertaining to violence and tension. For example, on stakeholder engagement, the standard requires clients to “identify the range of stakeholders that may be interested in their actions and consider how external communications might facilitate a dialogue with all stakeholders.” 15 Despite the guidance to consult more widely where risks are perceived as high,16 without a conflict lens the identification of interested parties could solely focus on a more limited group directly materially affected by an intervention as is suggested in low risk projects. A conflict sensitive approach would also consider those whose position is, or is perceived to have been, changed relative to the group in question. Put crudely, where one group is seen as a ‘winner’, another group with a history of antagonism with the better off community may feel relatively worse off, fuelling grievances and raising tensions. This could be classed as an “unintentional but predictable impact” and therefore part of the client’s area of influence as determined by the standard. However these impacts will only be predictable and a project classed as ‘risky’ if the initial assessment is appropriately comprehensive. The standard requires the management and monitoring system to be resourced and “scaled to the risks and adverse impacts of the project.”17 Again, without an assessment that fully considers what these risks are, the likelihood is that the monitoring system put in place will be underfunded and not fit for purpose.

Recommended additional actions/processes to ensure CSA Using the existing structures as a starting point the primary recommendation is to add a focus on conflict and violence alongside other already identified possible impacts.

During the due diligence process and the impact assessments which align with steps one and two of a

conflict sensitive approach, a full conflict analysis should be conducted with potential conflict risks and

opportunities for contributions to peace identified. Whereas the guidance notes state the standard draws

on established business management processes of “Plan, Do, Check and Act”18, we would recommend

adding “Analyse” as the starting point.

Key personnel, including project leaders as well as Environmental and Social Management System staff

need to be fully aware of the conflict context and training in conflict sensitivity to understand and make

appropriate changes to the project in light of problems and opportunities identified.19

Along with leadership and key staff, other institutional areas should be screened for conflict sensitivity,

notably communications, procurement, engagement with the host government, and internal grievance

mechanisms or ‘whistleblowing’.

Monitoring processes need to proactively engage with the broadest group of possible affected

communities, including through information campaigns and complaints mechanisms.

PS2: Labour and Working Conditions

Factors supporting CSA Project staffing and management of local labour is one of the ‘flash point’ areas identified in the conflict sensitivity literature because of the level of authority, status and material benefit that an employee is likely to receive from the client. This equally applies to the hire of national staff, as to international staff. The performance standard anticipates some of these issues with its objectives to “promote fair treatment, non-discrimination, and equal opportunity of all workers” as well as active avoidance of doing harm through using forced labour or providing unsafe and unhealthy working conditions.20 Other requirements may help a project be conflict sensitive in very specific contexts, such as equality for migrant and non-migrant workers which might

15

PS 1; Paragraph 26 16

PS1 GN97, however the GN23 on social assessments states that stakeholder identification should focus on those “directly affected”, which seems contradictory or at least confusing. 17

PS 1; Paragraph 23, and again in GN63 18

PS1 Guidance notes page 2 19

PS1 GN77 identifies what kind of training might be appropriate for ESMS staff. Conflict sensitivity would complement this. 20

PS 2; Paragraph 2

19

otherwise trigger tension. 21 Another is the recognition that “assistance to remedy past discrimination” or positive discrimination is allowable, and therefore could be used to address historical grievances by one group or another. The principle allows workers to develop ways of expressing their grievances and needs to management where workers organisations are illegal, and offers the possibility of contributing to peace by working with and strengthening institutions that connect those who might otherwise be divided. In conflict sensitivity parlance, this is a ‘local capacity for peace’, or ‘connector’ which if ignored could weaken the ability of a specific group to manage tension or resolve conflict non-violently. There is recognition that clients have a duty to ensure that, when outsourcing, contractors equally abide by the standards set out, either as an employer or as a supplier, particularly around the issue of forced/child labour. Institutionalised conflict sensitivity standards require agencies to build the capacity of their partners and conduct due diligence before contracting them to insure they are not themselves actors in the conflict.

Factors against CSA The clearest weakness is that these global rules are not tailored to the history, actors and dynamics of a place and time and so can only address generalities rather than specific triggers of conflict. While migrant workers could be a group systematically denied rights in one place, in another they may control land resources and be engaged in fighting with non-migrant groups. Thus the choice of staff will determine the ‘face’ of the client, and how they are perceived and accepted by communities in the areas where they choose to work. One of the adaptations a project might need to take is to identify, in consultation with local stakeholders, the jobs that should be reserved for people from the local community with resources allocated as required to train the staff to the necessary standard. Forced labour issues also need to be considered not only within the scope of staffing for a project but also within the region where the project is located and may potentially benefit from egregious labour practice.

Recommended additional actions/processes to ensure CSA Staffing decisions should be made in light of the conflict analysis, with due care and attention given to

ensure that divisions in the community are not mirrored or reinforced by the makeup of the workforce.

Criteria for staff selection should be widely disseminated, and efforts made to invest in affected

communities to bring them to the required standards where the influx of non-local would create tension.

Staff groups or organisations should be reinforced where they represent a local capacity for peace.

PS3: Resource Efficiency

Factors supporting CSA One pattern of how aid exacerbates or prolongs conflict in a fragile state is through fuelling of the ‘war economy’, meaning economic activity which is driven by the on-going conflict, or which exploits the absence of effective governance in turbulent contexts to generate profit. Agencies or IFC clients have enormous power to affect market conditions because of the size of the resource transfers that they bring into a context. In this standard one particular area, waste disposal22, could be a proxy for any activity where the pursuit of cost effectiveness or efficiency potentially leads to devastating negative consequences for the local community. Waste disposal is likely cited for its association with criminal networks that generate significant profit by illegal dumping where the regulatory system is weak. In light of this, the standard requires clients to only work with properly licensed, “reputable and legitimate enterprises”23, abiding by government regulations and able to demonstrate chain of custody documentation to the final destination. The same principles could also be applied to other economic activities that exploit the weakness of the state to generate profit. A second area is the competition over scarce resources and in particular water. The standard notes the client could be a potentially significant consumer of water, and that “this should not cause or contribute to unacceptable water stress on third parties (including local communities)”. 24 Acceptable usage should be determined through a

21

PS 2; Paragraph 25 22

PS3; Paragraph 12 23

Ibid. 24 PS3; paragraph 9. GN25;

20

community engagement process. Scare resource competition could be an existing driver of conflict exacerbated by the presence of a large business.

Factors against CSA Within fragile states, the government itself can be an actor in violence and weak governance a structural cause of conflict. In the absence of an effective state, or where the state is compromised and unwilling to enforce regulations, what should the client’s responsibility be? The concern is that simply abiding by regulations, where corruption or criminality result in regulations being lax or harmful, will not ensure conflict sensitivity.

Recommended additional actions/processes to ensure CSA Impact assessments should include a consideration of what the market effects of the project will be and

whether these are linked in any way to the war economy in fragile states.

Where the state is absent, unable to perform its functions, or colludes in criminal activity, the emphasis

should be on the client to manage its resources in a manner that is conflict sensitive, rather than taking

the license of the state as a sufficient evidence of meeting the standards expected.25

Impact assessment should also analyse the impact of government revenues of key business activities

(e.g. extractives) on public governance and whether it has the potential to fuel conflict

PS4: Community Health, Safety and Security

Factors supporting CSA PS4 comes closest to addressing violence and conflict directly, noting “In conflict and post-conflict areas, the level of risk and impacts may be greater. The risks that a project could exacerbate an already sensitive local situation and stress scarce local resources should not be overlooked as it may lead to further conflict.” This is the first time that conflict dynamics are explicitly recognised, along with the understanding that the actions of the client may influence these for better or worse26. The language of health and safety makes clear the responsibility of the client to evaluate and take action to protect communities. Specifically “The client will evaluate the risks and impacts to the health and safety of the Affected Communities during the project life-cycle and will establish preventive and control measures consistent with good international industry practice (defined as the actions expected of skilled professionals).” A sentence later the standard states that the mitigation measures taken by the client will “favour the avoidance of risks and impacts over minimization.” With respect to security provision, ensuring that the “safeguarding of personnel and property is carried out in accordance with relevant human rights principles” is the foremost objective.27 It is acknowledged that command and control issues around weapons are critical. In a conflict context, distributing weapons can increase tension and violence. The standard states that the “client will make reasonable inquiries to ensure that those providing security are not implicated in past abuses, and will train them adequately in the use of force and firearms.” What constitutes reasonable inquiry is not stated but this shows concern for the rule of law in environments where this may be weak. Similarly, efforts to prevent armed personnel acting with impunity are outlined in the requirement for grievance mechanisms to be constituted and investigations launched into all allegations against personnel. Further, the risk arising from use of government security personnel is acknowledged. Where the government is an actor in the conflict, communities might be put at greater risk from government forces than others if they are brought into an area through a project and supported or paid by the client28. Further, regarding circulation of weapons, the Guidance Note recognizes “the potential for increased communal tensions due to the presence of security personnel or the risk of theft and circulation of firearms used by security personnel”29.

25

This is covered to some extent by PS1. The guidance notes (GN2) specify the importance of due diligence on third parties taking into account local context and measures to mitigate negative outcomes. Nevertheless it also states that in the case of the government the client “may have little ability to control or influence the outcome and hence possible impacts.” The risk is that this will be read as an abdication of responsibility to assess the harm the government may be allowing or facilitating. 26

This is made more explicit in guidance note 25. 27

PS4; Objectives, page 33 28

PS4 Paragraph 12-14 29

PS4 GN25

21

Factors against CSA Once again the language of the standard establishes the principle for bringing in a conflict sensitive approach but the weakness is in the guidance on how to take this forward. It notes that implementation of the actions necessary to meet the standard “is managed through the client’s Environmental and Social Management System”30 from standard one, which raises all the questions and concerns outlined there. Recommendations regarding security personnel and armed guards could do harm in a conflict context. PS4 states: “The client will not sanction any use of force except when used for preventive and defensive purposes in proportion to the nature and extent of the threat”31. As noted in the critique of PS1 above, accountability is crucial and is expected to run through an organisation’s policies, codes of conduct and publicity. The use of arms can send a message that authority and power are derived from the possession and use of lethal weapons. In contexts where guns are widespread the actions of the client might reinforce this belief rather than demonstrating that power is derived from legitimacy and respect. Although PS4 calls for proportionality and cites the UN codes of conduct as a guide, a stronger warning against the dangers inherent in the display and use of weapons is necessary. A second concern is that by creating groups of armed personnel there is increased risk of existing power holders trying to use that group to its own advantage. An unintended consequence of client security operations could therefore be to legitimise and strengthen a group which has a vested or partisan interest at odds with others in the community.

Recommended additional actions/processes to ensure CSA Emphasis on health and safety of communities should translate into conflict analysis and assessments.

In light of the risks inherent in introducing arms into a fragile or conflict affected state greater emphasis

should be put on client’s exploring alternative security measures before they choose to arm guards.

The risks of arming guards in terms of impunity, legitimisation of rights abusers, and reinforcing the

ethnic that arms and power are synonymous should be further elucidated, and additional assessments

put in place to judge the relationship between the state security sector and the community.

PS5: Land Acquisition and Involuntary Resettlement

Factors supporting CSA Conflicts arising from disputes over land are complex and common in fragile states. Land is a primary resource underpinning livelihoods as well as individual and collective identity and nationalism. PS5 focuses on mitigating the impact of land resettlement on livelihoods. Consistent with other standards, it emphasizes community engagement in decision making, and robust complaints mechanisms to help monitor unintended consequences. Other plus points include the emphasis on avoiding or, if not possible, minimizing displacement by exploring alternative project designs32; the recognition that poorly managed involuntary resettlement can lead to “hardship and impoverishment” (which could themselves become the source of grievance and further conflict); and that forced evictions “will not be carried out except in accordance with law and the requirements of this performance standard”33. Throughout, the responsibility is on the client to ensure that displaced communities recover their previous standard of living or better. For instance relocated persons should receive land tenure even if previously they did not have land assets34. Where the government leads on relocation, it remains the responsibility of the client to ensure these standards are met, if necessary by improving the government settlement35. Particular guidance on land conflict is given in the guidance notes, which notes that acquiring land in areas of conflict or post-conflict, where displacement has occurred, “will add considerable complexity to the usual challenges in land acquisition and involuntary resettlement, and may potentially exacerbate existing land conflict.”36 The standard advises adherence to UN Guiding Principles on Internal Displacement.

30

PS4; Paragraph 2 31

PS4 Paragraph 12-14 32

PS5; Objectives 33

PS5; Paragraph 24 34

PS5; Footnote 8. 35

PS5; Paragraph 31 36

PS4 GN7

22

Factors against CSA The focus on economic impacts ignores the fact that for many communities their land is a valuable cultural asset. More of this is discussed in performance standards 7 and 8 however the assumption is that the only cost of relocation is loss of an economic asset. The potential for violence within a community, between communities and between the client and the community is very real in the case of forced relocation and there should be specific guidance for addressing this. An example of this conflict blind spot is how the standard suggests that more generalised impacts on communities or groups of people, for instance disruption in access to mineral deposits by artisanal miners is covered by PS1. Artisanal mining is one of the classic activities within a war economy because it operates at the margins of regulation. In a fragile state interfering in this activity could be a conflict flashpoint. This could be picked up by a conflict analysis that includes a political economy focus such as MSTC. While the government is cited as the arbiter in cases of disputes or where compensation is rejected, in some contexts the state may well have its own interest in the land meaning it will not act as a neutral judge. As stated above land is both a prized economic asset but also fundamental in the project of state formation itself. If land ownership or sovereignty is disputed the state might be a party to the conflict.

Recommended additional actions/processes to ensure CSA This standard is primarily lacking a political economy analysis that would help the client understand the importance of land as a cultural, economic, social and political asset in the context. This would allow better appreciation of risks around land relocation, including the threat of violent resistance, as well as gauge whether the standards involving the government would be appropriate or conflict insensitive. The standard assumes that financial reparations are the sole and appropriate means of settling land disputes. Rather in many contexts this standard would need to be closely linked to the requirements set out in standards 6 and 7, which gives a more holistic picture of how land should be evaluated.

PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources

Factors supporting CSA Destruction of biodiversity can be one underlying cause of conflict when linked to resource shortages and impacts on livelihoods or food security. Thus the objective ‘to protect and conserve biodiversity’ and maintain ecosystem services is consistent with CSA. However, it does not take into account the range of ways in which natural resources and conflict interact. Allowing for ‘adaptive management’ recognises changes over time and the need for fluidity in analysis and response37. This aligns well with conflict sensitive process which must allow for adaptation following either increased knowledge of impacts or a changing context. The standard considers both biodiversity value and ecosystem services (‘the benefits that people, including businesses, obtain from ecosystems’38) and emphasises that clients should avoid or minimize impacts on these. The balance of emphasis in PS6 is on inherent biodiversity values rather than values held by resource-dependent communities and benefits that they get from ecosystem services which are more likely to underpin increased tensions if affected. However, the guidance note provides sufficient detail for assessing and responding to the range of values derived from biodiversity39. It therefore provides a good basis for assessing how impacts on resources which communities benefit from might underpin conflict. If combined with conflict analysis this would support conflict sensitivity.

Factors against CSA The potential for conflict where the economic, social or cultural value of biodiversity is affected is not explicitly stated. For example, impact on natural resources could affect local livelihoods which in turn can fuel conflict. Thus there is no encouragement to incorporate this understanding with conflict analysis.

37

PS6 GN20 38

PS6, para 2 39

PS6 GN12

23

PS6 does not mention transboundary impacts, e.g. waters affected by agribusiness or water projects upstream. This could also include greater consideration of impacts that may be felt in communities that are not adjacent to the site such as downstream water users within the country, communities whose lives/livelihoods are affected by wildlife that may have been displaced from elsewhere by a project. PS6 focuses on damage limitation, i.e. minimising impact on biodiversity or on ecosystem services. It could go beyond this to support positive impacts where environment overlaps with social and economic aspects. This could include greater emphasis on promoting payment for ecosystem services (PES) that may benefit communities economically whilst achieving environmental targets. PS6 considers management of living resources40, for example, forestry or agribusiness. However, this is only viewed from the aspect of impact on biodiversity value. It does not explicitly consider land tenure and ownership or issues of access to land or impact of food security (if export crops are introduced) or even impact of employment opportunities on different groups. These are issues with high potential to fuel conflicts. PS6 recognizes that there are many guides to developing a Biodiversity Action Plan (BAP) but that these are generally not relevant to the private sector. It is not clear that any of these specifically take conflict into account.

Recommended additional actions/processes to ensure CSA Greater assessment of the value given to/drawn from natural resources should be done under a broader

framework encompassing social, cultural and economic values that resource dependent communities

place on natural resources. This knowledge should be incorporated explicitly with conflict analysis.

The long list of different types of specialist required41 to inform ecosystem services assessments could

include conflict analysts to ensure that likely conflict impacts are considered

The following resources could be useful:

- Natural Resources, Conflict and Conflict Resolution: USIP 2007

- Integrating Environment in Post-Conflict Needs Assessments, UNEP Guidance Notes 2009

- From Conflict to Peacebuilding: The role of natural resources and the environment, UNEP 2009

PS7: Indigenous Peoples

Factors supporting CSA The recognition of specific needs of indigenous communities supports CSA as indigenous communities can be an actor in conflict, particularly over land and resources. The recognition of group identity and its’ relation to land, natural resources and heritage supports CSA42. Also the consideration of impacts where indigenous knowledge and intangible heritage are exploited for commercial purposes supports CSA as these can become conflict flashpoints. The standard recognises that efforts to establish land use could have unintended consequences for indigenous groups land claims and it cautions against prejudicing such claims. However, there is no guidance on how to deal with what may be a politicised situation. It is recognized that indigenous group may not be homogenous and that perspectives of different groups within these must be taken in to account43. This principle should be applicable to all affected groups.

Factors against CSA The definition of indigenous groups limits application of this standard. In many contexts there are distinct groups identified by livelihood (ie pastoralists), ethnicity and language, traditions and customary law. However, these are often not indigenous groups according to the definitions here and less distinct from the wider society. Further, in

40

PS6 para 26 41

PS6 GN21 and GN132 42

See PS8 43

PS7 GN18

24

many contexts there will be multiple indigenous, traditional or tribal communities with some of the characteristics described here and their interests may compete. PS7 does not address this diversity. PS7 does not consider specifically the relation between an indigenous community and other groups. It only considers direct impact on an indigenous group in terms of their rights and usage of land and resources for livelihoods or cultural reasons. The right-based approach is a useful mechanism to address some problems that arise relating to indigenous communities but does not necessarily address conflict dynamics. If compensation is agreed through consultation the client should aim to understand who within the indigenous community benefits from these arrangements. For example, does the benefit go disproportionately to power-holders, business people or others with status at the expense of the wider community? Discussion of compensation mechanisms should take into account that this is a resource transfer and could thus be exploited if there are internal divisions within the group. PS7 discusses situations in which the government is responsible for managing indigenous peoples’ issues. However, it does not recognise potential negative impacts of working through government. The client should aim to understand the relation between government and the indigenous group(s) before determining the level of engagement with government. There is recognition, through the mitigation hierarchy, that some grievances may not be addressed. A conflict sensitive approach would develop a sense of an acceptable threshold in terms of risk, harm and likelihood of fuelling conflict in the long term. There is recognition that indigenous peoples may be displaced but no consideration of the impact this would have on communities they join, in particular in relation to inter-group relations and use of resources. This is addressed to some extent under PS5 but not fully in terms of the different dynamics of intergroup relations where groups may have different cultural identity as well as different economic and social practices. PS7 assume that indigenous groups are geographically distinct, organised and visible. Indigenous people may live alongside non-indigenous groups. Clients should ascertain different constituents within what may appear a single Affected Group in order to understand where indigenous or other minority voices and needs are suppressed.

Recommended additional actions/processes to ensure CSA Much of PS7 could also be applied to minorities and disenfranchised groups who would not qualify as

‘indigenous’ but are culturally distinct.

Recognition of vulnerability of specific groups supports CSA but should be triangulated with conflict

analysis. Community consultation needs to be correlated with conflict analysis and understanding of

impact on different groups who are identified as well as understanding divisions within a group.

This could be further expanded in relation to competing identities and to the impacts of damage to these

things on group identity, grievances and how this may interplay with broader conflict issues.

PS8: Cultural Heritage

Factors supporting CSA The objective of equitable benefit sharing supports conflict sensitivity. However, the mode through which this is realised should be further defined. Understanding different groups within society and how these correlate with conflict dynamics should inform what is defined as ‘equitable’. Further, the objective of protecting cultural heritage in itself supports conflict sensitivity in situations where the cultural heritage of certain groups may be deliberately targeted as a conflict strategy designed to destroy social cohesion or group identity44.

Factors against CSA Manipulating or destroying cultural heritage is one way in which goals of conflict actors may be pursued. This is not acknowledged so sufficient analysis and appropriate safeguards are unlikely. This can include deliberate

44

As detailed in Bevan, R. 2006. The Destruction of Memory. Architecture at War, Reaktion Books, London

25

targeting of heritage places and practices but also inequalities within social, economic and political structures that allow certain groups heritage to dominate, including policies and financing which control use of language, educational curricula, staging of cultural events or building of cultural infrastructure such as libraries and museums. These aspects can become politicised in culturally divided societies and heritage can be abused both during armed conflict and in societies viewed as peaceful but where cultures are actively suppressed. PS8 does not address all forms of heritage. This largely refers to tangible heritage and does not consider intangible heritage except in relation to commercial exploitation of it (i.e. indigenous knowledge). To be conflict sensitive this should also cover broader impacts on intangible heritage. PS8 does not consider whether the project to be financed has any impact on competing heritage of different groups, for example, tourist infrastructure may support the heritage of one group over another, infrastructure for education may promote a dominant culture (e.g. location of schools may ensure that minority groups have to be integrated in schools reflecting the majority culture). PS8 does not discuss roles of cultural heritage in social cohesion and identity. Any engagement with cultural heritage has the potential to either damage or strengthen its role in social cohesion. Investments could seek ways in which the role of heritage in social cohesion could be supported, rather than strengthening its potential to bolster divisions. PS8 neglects the Hague Convention which addresses heritage in armed conflict, including sub-national conflict45. The Declaration concerning the Intentional Destruction of Cultural Heritage46 is relevant where conflicts are outside of legal definitions of armed conflict. Broader legislation around cultural heritage and cultural rights47 offers additional protection in non-violent conflict and abuses against intangible heritage, offering frameworks for evaluating heritage in terms of social justice and wellbeing and supporting positive social roles of heritage. PS8 does not mention potential positive roles of heritage in post-conflict reconstruction and peacebuilding and possibilities to support these48. The Convention for the Safeguarding of the Intangible Cultural Heritage (UNESCO 2003) and the Convention on the Protection and Promotion of the Diversity of Cultural Expressions (UNESCO 2005) reflect increasing recognition that cultural heritage contributes to social wellbeing of communities as well as having universal significance. These can underpin good practice aimed at supporting positive roles of heritage.

The requirement to consult affected communities needs to be qualified. Communities outside of the immediate area may place value on the affected heritage but be outside of obvious consultation area. The affected community may be culturally diverse and place competing heritage values on the site.

Recommended additional actions/processes to ensure CSA The process of consultation around heritage and community agreement should be correlated with

conflict analysis in order to understand underlying divisions and different groups to be consulted.

A heritage values assessment should be conducted, taking into account economic, social and cultural

values of different groups (as identified through conflict analysis). No single methodology exists but

different approaches can be used together49.

In addition to international conventions on heritage, national legislation should be taken into account. In

some post-conflict contexts heritage is specifically addressed in legislation which ensures that cultural

rights are recognised for diverse groups.

45

www.unesco.org/new/en/culture/themes/movable-heritage-and-museums/armed-conflict-and-heritage/the-hague-convention/#c167451 46

UNESCO 2003 47

Cultural rights aim to guarantee that people and communities have access to and can participate in the culture of their election, including cultural and artistic production, continuation of language, protection of heritage, security of intellectual property and form of livelihood (protecting minority forms of livelihood such as pastoralism or indigenous knowledge which underpins economic activity).. 48

Detailed in Barakat, S. 2005. After the Conflict: reconstruction and development in the aftermath of war, IB Tauris, London and in Cultural Heritage in Postwar Recovery: Papers from the ICCROM Forum held on October 4-6 2005, edited by Nicolas Stanley Price. ICCROM Conservation Studies 6, ICCROM 2007 49

Assessing the Values of Cultural Heritage, Marta de la Tour (ed), The Getty Conservation Institute 2002.