Uruguay Pulp Mills – Managing Corporate, Client, and Community Public Engagement
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Case Background
From November 2005 to March 2006, CBI staff and dispute resolution partners in Argentina and Uruguay were retained by the International Finance Corporation (IFC) to assess stakeholder concerns and facilitate stakeholder involvement in a review of environmental and social impacts surrounding two controversial paper pulp mills – co-located 8 kilometers apart on the Rio Uruguay.
The conflict has been marked by severe protests, bridges blockages, and international lawsuits. Argentine communities fear the mills will bring water pollution and foul air to the popular tourism region. Uruguayans largely resent Argentine obstruction of their “economic development”. IFC asked CBI to assist in stakeholder consultation and engagement prior to making an investment decision.
CBI Approach
CBI’s intervention included both a stakeholder assessment and a facilitated dialogue process regarding the IFC cumulative impact study of the planned mills.
Overall, the assessment revealed a sharp divide between stakeholders who were optimistic about jobs and economic development stemming from the mills, and stakeholders who saw the projects as a fundamental threat to the environment, tourism, agriculture, fishing, and their overall quality of life. CBI also asked stakeholders about their perceptions of a possible joint review of the mills’ impacts. Many indicated a joint review of the draft Cumulative Impact Study would offer a useful opportunity to address their questions and concerns. Others required assurances that joint review of the mills’ impacts would be meaningful and transparent; include broad stakeholder representation; provide opportunity for the review of all credible information; respect sovereignty; and ensure a safe space for civil discussion.
Outcomes
CBI believed that a broad stakeholder engagement to review the draft Cumulative Impact Study was possible, but that IFC and other stakeholders would first need to clarify terms of engagement for all involved. The CBI team carried out a series of facilitated dialogues with stakeholders in both Argentina and Uruguay, but ultimately could not resolve outstanding stakeholders concerns once the situation escalated to a full blown international court case in early 2006.
Despite these challenges, CBI was able to assist IFC in building capacity along the key steps of the public engagement process. Some lesson this process include:
Setting an appropriate convening and public engagement framework. In complex multi-party disputes, it is essential to have a broadly accepted convener . Generally, the extent to which key stakeholders perceive a convener of public engagement as legitimate should be recognized as a critical factor for the success any engagement process – particularly in sensitive investment projects.
Effectively mapping stakeholder relationships and interest groups. Stakeholder assessment is a critical means to identify and acknowledge public concerns from the outset of any potential foreign investment, as well as to chart a course for public engagement. This process is most effective when done early and consistently in a conflict. Not addressing these concerns early and consistently can fuel community perception that their voices are being ignored.
Correlating investment deadlines and engagement timelines. A difficult tension can emerge between multilaterals, companies, and communities in terms of balancing the need to meet deadlines for investment decisions and construction timetables, taking the time needed to effectively engage stakeholders, and attend to outstanding public concerns. Generally, the lower the level of trust in the convener and process, the more critical it is for the convener and the facilitation team to consult informally on a plan for public engagement before formalizing and committing to it.
Setting clear institutional expectations, intentions and responsibilities. CBI encourages lending institutions, in conjunction with their clients, to set clear goals and expectations for stakeholder engagement in tri-sector investment disputes. The word engagement can mean many things, and multilaterals, clients, communities, as well as neutral dispute resolution organizations like CBI may have different definitions and expectations at the outset. At the beginning, it is important for impartial dispute resolution teams and multi-laterals to jointly determine the feasibility of conflict management and whether or not the multilateral institution is positioned to take a leading role in resolving the dispute.
For more information on this case, and lessons learned, contact CBI-Washington DC Regional Office Director, Merrick Hoben.
