investigation findings and recommendations · 2016. 11. 8. · relation to projects approved after...

UnitedNationsDevelopmentProgramme–OAI,SocialandEnvironmentalComplianceUnit

INVESTIGATIONFINDINGSANDRECOMMENDATIONS

Inresponsetoallegationsofnon-compliancewithUNDP’ssocialandenvironmentalstandardsandotherrelevantpoliciesinthecontextof

UNDP'sBusinessCalltoActionProjectAlliancePhaseII2014-2016

CaseNo.SECU0002DraftDate:8November2016

DRAFT

SocialandEnvironmentalComplianceUnit

CaseNo.SECU0002 Page2of32

BasicData

CaseNo. SECU0002

CategoryofNon-Compliance: PrimarilySocial

Location: VariousLocations,Uganda

DateComplaintreceived: 12February2016

SourceofComplaint: BugalaFarmersAssociation

Eligibilityassessmentconductedby: RichardBissell,LeadComplianceOfficer

ComplianceOfficerassigned: AnnePerrault,ComplianceOfficer

Otherinvestigatorsassigned: PaulGoodwin,ResearchAnalyst

RelatedCase(s): N/A

Signatures:

Preparedby: Date:

RichardBissell,LeadComplianceOfficer,SECU,OAI

Approvedby: Date:

HelgeS.Osttveiten,Director,OAI



BOP BaseoftheEconomicPyramidBFA BugalaFarmersAssociationBPPS BureauforPolicyandProgrammeSupportBCtA BusinessCalltoActionCSR CorporateSocialResponsibilityDIM DirectImplementationModalityDSC DonorSteeringCommitteeESSP EnvironmentalandSocialScreeningProcedureESG Environmental,SocialandGoodGovernanceFPIC Free,PriorandInformedConsentIDS InstituteofDevelopmentStudiesIFAD InternationalFundforAgriculturalDevelopmentKOPGA KalangalaOilPalmGrowersAssociationMDGs MillenniumDevelopmentGoalsOAI OfficeofAuditandInvestigationsOPUL OilPalmUgandaLimitedPSD PrivateSectorDevelopmentPAC ProjectAppraisalCommitteeProdoc ProjectDocumentPPP PublicPrivatePartnershipRAT RiskAssessmentToolSECU SocialandEnvironmentalComplianceUnitSESP SocialandEnvironmentalScreeningProcedureSES SocialandEnvironmentalStandardsSIDA SwedishInternationalDevelopmentCooperationAgencyUGX UgandanSchillingDFID UKDepartmentforInternationalDevelopmentPOPP UNDPProgrammeandOperationsPoliciesandProceduresUN UnitedNationsUNDP UnitedNationsDevelopmentProgrammeUSAID USAgencyforInternationalDevelopment

ListofAcronyms



1. TheBusinessCalltoActionAlliance(BCtA)projectisaUnitedNationsDevelopmentProgramme(UNDP)DirectImplementationModality(DIM)project,withastartdateofJune2014andanenddateofJune2017.ThebudgetisUS$9,175,404,withfundsprovidedbytheDutchMinistryofForeignAffairs,SwedishInternationalDevelopmentCooperationAgency(SIDA),UKDepartmentforInternationalDevelopment(DFID),USAgencyforInternationalDevelopment(USAID),andtheMinistryofForeignAffairsoftheGovernmentofFinland.2. Theproject’sprimarygoalistocreate‘aglobaladvocacyplatformprovidingpublicrecognitionfortheprivatesector’scontributiontodevelopment.’Itsmissionisto‘challengecompaniestoadvancecorebusinessactivitiesthatareinclusiveofpoorpopulationsandthuscontributetotheachievementofsustainabledevelopmentgoals.’Theprojectispremisedontheideathattheplatformwillfacilitateandsupportengagementsbetweenprivatebusinessesandlow-incomepeople‘asconsumers,producers,suppliers,anddistributors’andotherwiseincreaseemploymentopportunities.UNDPhoststheSecretariatandservesontheDonorSteeringCommittee(DSC)withtheaforementioneddonorinstitutions.CollaboratinginstitutionsincludetheUnitedNationsGlobalCompactandtheInter-AmericanDevelopmentBank'sOpportunitiesfortheMajorityInitiative.3. On18February2016,theSECUwithintheUNDPOfficeofAuditandInvestigations(OAI)registeredacomplaintfromtheBugalaFarmersAssociation(BFA)ofUgandarelatingtotheBCtAproject.ThecomplaintassertedthatBCtA’sadmissionofBidcoAfrica(Bidco),aKenya-basedmultinationalconsumer-goodscompany,ontotheBCtAplatformviolatedUNDP’sSocialandEnvironmentalStandards(SES).ThegrievancesexpressedagainstBidcolargelyrelatetoBidco’sinvolvementinapalmoilfarminKalangala,Uganda.4. InMayandJuneof2016,SECUconductedfieldworkinUganda,thelocationofthecomplainants,andTurkey,wheretheBCtASecretariatandrelevantUNDPstaffarelocated.InUganda,SECUinterviewedthecomplainants,Bidcostaff,localgovernmentofficials,andotherrelevantstakeholders,toinvestigatecomplaintallegations.InTurkey,SECUinterviewedseniormanagementattheUNDPInternationalCenterforPrivateSectorDevelopment,whichhousestheBCtASecretariat,togainadeeperunderstandingofBCtA–particularlyitsadmission,duediligence,andscreeningprocessesconductedonprospectivemembercompanies.5. Theinvestigation,includingfieldwork,wasfocusedontheadequacyofUNDP’sduediligenceandrelatedtransparencyinthecontextoftheBCtAproject–notonwhetherBidcohas,orhasnot,violatedhumanrightsoriscomplicitinhumanrightsviolations.Thelatterdeterminationisbeyondthescopeofthisreport.

6. Afterthefieldworkandadditionalresearch,SECUconcludedthattheprocessesemployedbyUNDPforadmissionofBidcowerenotconsistentwithUNDPpolicies.Tohelp

I. ExecutiveSummary



ensureUNDP’scompliancewithitspolicies,SECUmakesseveralrecommendations,themostsignificantofwhichincludethefollowingpoints:

TheUNDPProject/ProgrammeManagerintheBCtASecretariatshould:

I. ScreentheBCtAprojectusingtheSocialandEnvironmentalScreeningProcedure(SESP),

II. RequireuseofthefullPolicyonDueDiligenceandPartnershipswiththePrivateSectoraswellasthecompleteRiskAssessmentTool(RAT)or-ifthefullRATisnotapplied–requiredetailedwrittenjustificationandadescriptionofhowkeyconcerns,e.g.humanrights,environment,andlabor,etc.willotherwisebeaddressed.

III. RevisetheProdoctospecifyhowindividuals/communitiespotentiallysupportedthroughBCtA-relatedactivitiescanknowabout,andbeinvolvedin,initiatives,and

IV. RevisetheProdoctoensureitreflectspertinentinformation(detailedbelow)UNDPSeniorManagementshouldensurethefollowing:

V. BCtAmembershipcriteriaarerevisedtoensureattentiontosocialandenvironmentalconcerns,

VI. Theprocessforassessingeligibilityisclearandrobust,VII. Separationexistsbetweenstaffinvolvedindevelopingrelationshipswithprivate

sectorcompaniesandstaffmakingrecommendationsanddecisionsrelatingtomembershipinBCtA,and

VIII. Membershipbenefitsandtenurearetiedexplicitlyandcloselytotheinitiative

UNDPSeniorManagementshouldensurethefollowing:

IX. Aformalgrievancemechanismexistsforreceivingandrespondingtocomplaintsallegingthatagiveninitiativemayharmcommunities.

II. Overview

7. On18February2016,theSocialandEnvironmentalComplianceUnit(SECU)oftheUNDPregisteredacomplaintfromtheBFAconcerningtheUNDP-supportedBCtAProjectAlliancePhaseII2014-2016,(https://info.undp.org/sites/registry/secu/SECUPages/CaseFile.aspx?ItemID=7).

8. On1March2016,SECUdeterminedthecomplaintmetthecriterianecessaryforSECUtoinvestigateUNDP'scompliancewithitssocialandenvironmentalcommitments,andtheDirectorofOAI(UNDP/OAI)approvedtheeligibilitydetermination(https://info.undp.org/sites/registry/secu/SECUPages/CaseFile.aspx?ItemID=7)



9. SECUismandatedtoperformacompliancereviewforeligiblecomplaintsreceivedinrelationtoprojectsapprovedafter31December2014.TheBCtAPhaseIlProjectDocument(Prodoc)doesnotclearlyindicatewhentheprojectreceivedfinalapproval.TheBCtASecretariatindicatedina29August2016emailthattheProdocwasapproved‘afterthePAC[ProjectAppraisalCommittee]inJuly2014andbytheDSCinSeptember2014.’However,documentsandinterviewsimplythatthePACprocesswasnotcompletedinJuly2014;atthattimethePACrequestedarevisedProdocandanopportunitytocommentonthisreviseddocument.ItisnotclearwhenorifthePACsecuredareviseddocument,butUNDPprojectstaffprovidedSECUwithaProdocthathasa1March2015revisiondate,butnosignaturedate.

10. Giventheuncleardateofapproval,butfacedwithasignedProdocwitharevisiondateof1March2015,SECUisinvestigatingintheinterestofafairprocesstocomplainants.SECU’sInvestigationGuidelinesnote,inthisregard,‘Inordertofosterconsistency,compliancereviewinvestigationsareconductedinaccordancewiththeseGuidelinestotheextentpossible;however,thecircumstancesofaparticularinvestigationmayaffecttheapplicationoftheGuidelinesintheinterestofafairprocesstothecomplainants’(pg.3).SECUwillfocusprimarilyonthestandardsthatappliedwhentheprojectwasreviewedbythePACinJuly2014.

11. Thisreportdescribestheinvestigation,includingthefollowing:(I)Anexecutivesummary(above);(II)overview;(III)backgroundandconcernsthatledtothecomplaint;(IV)socialandenvironmentalcommitmentsthatappliedinthecontextofthisproject;(V)findingsrelatedtoapplicationofthecommitments;and(VI)recommendations.

III. BackgroundandConcernsthatLedtoComplaint12. TheBCtAinitiativebeganin2008,whenover60companiesagreedtoadvance‘inclusivebusiness.’TheeffortwasdesignedtorespondtothecallforanewglobalpartnershiptohelpdelivertheMillenniumDevelopmentGoals(MDGs).A2011reviewofinclusivebusinesspracticesdescribedtheirsignificantpotentialbenefitsnoting,forexample,‘Inclusivebusinessmodelsengagepeoplelivingatthebaseoftheeconomicpyramid(BOP)incorporatevaluechainsasconsumers,producers,andentrepreneurs.Suchmodelsoffergreatpromise:toenablebusinessgrowthinmarketsthatcovertwothirdsoftheworld’spopulation,whilecreatingeconomicopportunityandbetterstandardsoflivingforthepoorintheprocess.’1

13. In2013,afterareviewofbenefitsprovidedbyPhaseIoftheBCtA,includinggreater

1Gradl,ChristinaandBethJenkins(2011).“TacklingBarrierstoScale:FromInclusiveBusinessModelstoInclusiveBusinessEcosystems.”Cambridge,MA:theCSRInitiativeattheHarvardKennedySchool.



attentionto,visibilityof,andsupportforinclusivebusiness,BCtASteeringCommitteemembersagreedtopursuePhaseIIofBCtA.TheydeterminedthatPhaseIIwouldaddressoutstandingchallenges,includingprovidingconsistentvalueandservicestodonorsandprivatesectormembers,andincreasingmeasurementandevaluationofresults(prodoc,pgs.4-5).

14. TheBCtAAlliancePhaseII(hereinafter‘BCtA’)ProdocwasreviewedbyUNDP'sPACinJuly2014andrevisedinMarch2015.ItindicatesastartdateofJune2014andanenddateof30June2017.ItisDIMproject.TheprojectbudgetisUS$9,175,404,withfundsprovidedbytheDutchMinistryofForeignAffairs,SwedishInternationalDevelopmentCooperationAgency(Sida),UKDepartmentforInternationalDevelopment(DFID),USAgencyforInternationalDevelopment(USAID),andtheMinistryofForeignAffairsoftheGovernmentofFinland.TheUNDPhoststhesecretariatandservesontheDonorSteeringCommittee(DSC)withtheaforementioneddonorinstitutions.CollaboratinginstitutionsincludetheUNGlobalCompactandtheInter-AmericanDevelopmentBank'sOpportunitiesfortheMajorityInitiative.

15. TheBCtAAlliancePhaseIIprodocdescribesBCtAas‘aglobaladvocacyplatformprovidingpublicrecognitionfortheprivatesector’scontributiontodevelopment.BCtA’smissionistochallengecompaniestoadvancecorebusinessactivitiesthatareinclusiveofpoorpopulationsandthuscontributetotheachievementofsustainabledevelopmentgoals’(prodoc,pg.2).BCtAdoesnotfunddevelopmentactivitiesbetweenmembercompaniesandtargetedlow-incomepopulations.Theprojectispremisedontheideathattheplatformwill,invariousotherways,facilitateandsupportengagementsbetweenprivatebusinessesandlow-incomepeople‘asconsumers,producers,suppliers,anddistributors’andotherwiseincreaseemploymentopportunities.

16. Beforecompaniesapplytobemembers,theBCtASecretariatoutreachteam‘conductsaduediligence/riskscreeningreviewofallpotentialapplicants’usingtheUNDP/PSD[PrivateSectorDevelopment]duediligenceform(Prodoc,Annex2,pg.70).AccordingtotheProdoc,thisreview‘consistsofascanofanymajorcontroversiesthatmayinfluencethePartners’willingnesstoacceptthecompanyasamember,aswellascheckingthecompanyagainsttheBCtA’sexclusionarycriteria’(Prodoc,Annex2,p.70).

17. Whenacompanyappliestobeamember,itsubmitsanapplicationform,andUNDP-astheBCtASecretariat–createsan‘ApplicantSummary’form.ThisformcontainsasummaryofinformationderivedfromtheBCtAmembershipapplicationformfilledthatisfilledinbythecompany,asummaryof‘RiskAssessment‘findingsexcerptedfromtheUNDP/PSDform(describedherein,inpara.16),andabriefassessmentofwhetherandhowthecompanymeetsBCtAeligibilitycriteria(describedherein,inpara.20).

18. UNDPsendstheApplicantSummaryformtoDonorSteeringCommittee(DSC)



membersandleadsaprocesstodetermineifDSCmembersagreethatmembershipshouldbegranted‘basedonthequalityof’acompany’sproposedinitiative’(Prodoc,Annex3,pg.74).ThefullapplicationandUNDP’sduediligenceinformationareprovidedifDSCmembersrequestthemandsignanon-disclosureagreement.

19. Accordingtoan11March2016emailfromMr.SabhaSobhani,UNDP’sGlobalProgrammeAdvisor-PrivateSectorwithintheBureauforPolicyandProgrammeSupport(BPPS),toRichardBissell,LeadComplianceOfficerforUNDPSECU,underBCtAprocedures,‘Ifnoobjectionsareraisedtotheapplicationwithintwoweeks,thenwemoveforwardwiththeacceptanceoftheapplication.’

20. OfthethreeprimarycriteriaBCtAusestoassessacompany’seligibilitytobecomeamemberofBCtA,thecriterionfocusedonhowthecompany’sinitiativepotentiallyimprovesthelivesofcommunitiesisCriterion2,‘Demonstratespotentialtocreateeconomic/socialreturnsforlow-incomecommunitiesindevelopingcountries’(Prodoc,Annex3,pg.74).Thiscriterionincludestwoquestions,‘Doestheinitiativeintegrateunderservedpopulationsintocompanyvaluechainsassuppliers,producers,distributorsand/oremployees?’and‘Istheinitiativelocatedinoneormoredevelopingcountries?’Othercriteriainclude‘1.Demonstratepotentialtocreatefinancialreturnsforthecompany’and‘3.Abletogeneratemeasurableresults.’

21. BidcoAfricaappliedtobeamemberofBCtAin2015.Accordingtothesummaryoftheapplication,theinitiativeuponwhichtheapplicationwasbasedwas‘Bidco’sFullValueChainInitiative’withacommitmentto‘integrateover30,000Kenyansmallholderfarmersintoagriculturalvaluechains’and‘createover60,000directandindirectjobsthroughopeningitsvaluechainsforsmallscaleentrepreneurs’(ApplicantSummary,7September2015).

22. UNDPconcludedfromtheapplicationthatthisinitiativewouldhelppoorpopulationsprimarilybyemployingthemassuppliersthroughtheagriculturalsupplychain.

23. On11September2015,UNDPcirculatedasummaryofBidco’sapplication–a‘BCtAApplicantSummary’-totheDSCmembersfortheirconsideration.

24. BidcoAfricawasinformedofitsacceptanceintotheallianceon18September2015throughaletterfromMr.SobhanitoMr.VimalShah,whichstated,‘BidcoAfrica’sinitiative,approvedbypartnerson16September2015,istobuildlivelihoodsofsmallholderfarmersandentrepreneursinthevaluechain.’Whentheletterwassent,threeDSCmembersrelayedsupportforBidco’sapplication.TheSIDArepresentativetotheDSCraisedaquestionon16SeptemberrelatedtoBidcoandpalmoil,andaresponsewasprovided17September.TheremainingDSCmembersraisednoobjection,andthiswasinterpretedbytheSecretariatasacquiescencetotheapplication.Theciteddateofapproval–16



September-was5daysaftercirculationofinformationtoDSCmembers,andtheemailtoMr.ShahofBidcowas7daysaftercirculationofinformationtoDSCmembers.

25. Bidco’smembershipintothealliancewaspubliclyannouncedinJanuary2016throughapressreleaseonBCtA’swebsite.

26. On28January2016,theBFAdeliveredtotheUNDPofficeinKampalaa‘petition’addressedtoUNDPAdministratorHelenClarkandotherUNDPandUNemployeesraisingconcernsaboutBCtA’sinclusionofBidco.

27. Shortlythereafter,on12February2016,theBFAfiledacomplainttotheSECU.Thecomplaintreferencesthe28January2016petitionallegationsthatapprovalofBidcoAfricaLtd.asamemberoftheBCtAallianceisa'tragedyforsmallholderfarmers'inUganda.Thecomplaintclaimsthat100suchfarmershaveaccusedaBidcoAfricaLtdventureinUganda,OilPalmUgandaLimited(OPUL)of'violatinghumanrights,destroyingtheenvironmentandgrabbinglandfromsmallholderfarmers'.Atthetime,thesefarmerswereattemptingtosecurearesponsetotheseconcernsinthecontextofthisUgandaproject,andwereawaitingacourtdecisionintheirlawsuitagainstOPUL.

28. Thepetitionstates,'Inshort,BidcoAfrica,whichclaimstoadheretotheU.N.GlobalCompact,isinfactinviolationofallU.N.GlobalCompactprincipals,fromhumanrightstoprotectionoftheenvironment.Againstthebackdropofsuchrepeatedviolations,theUNDP/BCtA'spartnershipwithBidcoAfricaisaviolationofUNDP'scoremissionandprincipals....Toeventhecasualobserver,UNDPandBCtAarewilfullynegligentfortheirdecisiontoignorewelldocumentedviolationsofBidcoAfrica,tofailtoconductproperduediligenceintoBidcoAfrica,orboth.TheBFAcallsonUNDPanditsseniorleadershiptoexaminethemorallyquestionableassociationofsuchadistinguishedU.N.organisationwithsuchablatantviolatorofhumanrightsthatisBidcoAfrica.'

29. SeveralpossibleharmsaresuggestedbyBFA’scomplaint.ThefirstisthatUNDP’ssupportforBidco’smembershipprovidesanendorsementofBidcothatimpairsBFA’sefforts–throughtheUgandancourtsystemandelsewhere–tosecureredressforharmsallegedlysufferedinthecontextoftheUPOLproject.

30. ThesecondisthatendorsementcouldservetofacilitatefutureharmfulactivitiesbyBidcoinUgandaand/orimpactUgandancommunities.

31. Additionally,BCtA’sendorsementofBidcocouldservetofacilitateBidcoprojectsthatadverselyharmcommunitiesinKenyaandothercountries.



IV. UNDP’sSocialandEnvironmentalCommitmentsintheContextoftheBCtAAlliance,PhaseIIProject

32. SocialandenvironmentalcommitmentsthatapplytoUNDPprojectsarereflectedinUNDP'sProgrammeandOperationsPoliciesandProcedures(POPP)andineachProdoc.WhenUNDP’sPACreviewedtheprojectinJuly2014,relevantcommitmentsincludedtheEnvironmentalandSocialScreeningProcedure(ESSP)andenvironmentalandsocialcommitmentslistedinthePOPPatthattime(seeAnnex1tothisreport).Socialandenvironmentalcommitmentsthatwereeffectiveafter31December2014,whentheProdocwasrevised(andtheapplicationforBidcoAfricaLtd.wasapproved),includedanupdatedversionofthescreeningprocedure–theSESP,andrecentlyenactedSocialandEnvironmentalStandards(SES).

33. WhenBCtAwasprepared,theESSPrequiredscreeningofprojects‘submittedtoaPACwithabudgetofUS$500,000ormore’(ESSPGuidanceNote,March2012,pg.5).Thisscreeningensuredthatpossiblesocialandenvironmentalrisks,particularlyriskstolocalcommunities,wereidentifiedandthepotentialsignificanceofrisksdetermined.Projectswerecategorizedaccordingtothepotentialsignificanceofrisks.Ifrisksweremoderateorsignificant,additionalassessmentlikelywasnecessary,andmeasurestoavoidandmitigatetheseriskshadtobeidentifiedandapplied.2

34. Relevantproject-relateddocuments,includingtheenvironmentalandsocialassessmentandenvironmentalandsocialmanagementplan,weretobedisclosedpublicly.Transparencyinthiscontextwastoenablepotentially-impactedlocalcommunitiesandotherstakeholderstobothknowofpotentialadverseandpositiveimpactsrelatedtoaUNDP-supportedproject,andtoengageindiscussionsrelatedtosuchimpacts(ESSP,pg.17).

35. TheESSPhelpedensureconsistencywithenvironmentalandsocialcommitmentsofthePOPP,whichincludedattentiontoconsultationandparticipationoflocalcommunitiesinprojectdesignandimplementation,consistencywithinternationallawandrespectforhumanrights,biodiversityprotection,resettlement,culturalheritage,indigenouspeoples,etc.(SeeAnnex1tothisreport).

36. Issuesraisedinthecomplaintappeartorelatetoseveraloverlappingareasreflectedinthesecommitments,includingprimarilythefollowing:screeningandimpactassessment,duediligence,humanrights,andtransparency.

V. FindingsRelatedtoApplicationofUNDP’sSocialandEnvironmentalCommitmentsin

theContextoftheBCtA,PhaseIIProject2ThecurrentSES,whichhadbeenapprovedwhenBidco’sapplicationwasapproved,coverthesamesubstantiveareasasthosereflectedinthePOPPwhenBCtAwasconsidered,(andafewmore),andprovidemoreextensiveguidance.



ScreeningandAssessmentofBCtAProject37. Asdescribedabove,whentheBCtAProdocwasbeingprepared,thePOPPrequiredUNDPtoscreenprojectsforimpacts/riskstolocalcommunitiesandtheenvironmentusingtheESSP.

38. TheESSPprovidedaseriesofquestionstheanswerstowhichallowedUNDPstafftoidentifyandassessthesignificanceoftheserisks,determinethe‘category’oftheprojectbasedonthisassessment,and,inturn,choosetheappropriatemeasuresforaddressingrisks.

39. UNDPdidnotapplytheESSPtotheBCtAproject,anddidnotundertakeanalternativeformalevaluation(explicitlyasleast)ofthesocialandenvironmentalrisksrelatedtoUNDP’ssupportfortheBCtAplatformforengagementofprivatesectorcompanieswithpoorcommunities.

40. Asdescribedbelow,thefailuretorobustlyassesssocialandenvironmentalrisksthatmightoccurthroughsuchaplatformappearstohaveleftmeasurestoavoidandmitigatetheserisksoffUNDP’sradarandoutoftheProdoc.

41. Forexample,althoughtheProdocdescribes‘RisksandAssumptions’associatedwiththeBCtAproject,risksidentifiedweremostlyunrelatedtosocialandenvironmentalriskstocommunities(Prodoc,pg.19).Risksidentifiedwerefocusedon‘strategicrisks’e.g.,negativepress,donorsandcompaniesshiftingawayfrominclusivebusiness,companiesnotfollowingthroughoncommitments;‘reputationalrisks’–memberscontactedtoofrequently,BCtAprovidinglowvalueandperceivedasalobbyinggroup;poorconductbymembercompaniesand/orconsequentnegativepressthatadverselyimpactsBCtAbyassociation;and‘operationalrisks’–companiesnotmeasuringorreportingprogressadequately,donorsinsufficientlyengaging,highBCtAstaffturnoverleadingtoweakmemberrelationships,BCtAoverexpandingorcommittingwithoutadequateresources,andcomplexityofchangeatUNDPdelayingtheSecretariat’sabilitytodeliverplannedactivities.

42. Theidentifiedriskmostrelevanttosocialandenvironmentalrisksis‘poorconductbyBCtAmembercompaniesand/orconsequentnegativepressmayadverselyaffectBCtAbyassociation.’Theidentified‘mitigationapproach’is‘Carefullyscreencompaniesintheapplicationstageforsuchrisks’and‘Instituteclearcriteriaforcompaniestomaintainmembership.’

43. Theidentifiedmitigationmeasureto‘Carefullyscreencompaniesintheapplicationstage’clearlycanbeausefulmeasureforavoidingormitigatingriskstocommunities,buttheProdocdoesnotclearlydescribewhatthisshouldentailorwhat‘poorconduct’mightinvolve.Asdetailedbelow,theriskassessment/screeningreviewprocessusedbyBCtAforBidcowasnotasrobustasthescreeningprocessrequiredbyUNDPforotherprivatesectorentities.



44. Theidentifiedmitigationmeasureto‘Instituteclearcriteriaforcompaniestomaintainmembership’canbeusefulaswell,butcouldnotbeidentifiedasaprojectrequirement.TheProdocindicates,‘MembersarecompaniesthathavecompletedtheBCtAapplicationprocessandmadeaformalpubliccommitmenttoaninclusivebusinessinitiative.MembersthathavecompletedtheircommitmentswillremainmembersofBCtAaslongastheyexpressaninterestinparticipatinginandcontributingtotheBCtAcommunity’(Prodoc,pg.18).

45. IfUNDPhadappliedtheESSPtotheBCtAProdoc,itcouldhavedeterminedthat,inadditiontopotentialbenefits,risksassociatedwithsupportforprivatesectorcompaniesengagementswithpoorcommunitiesassuppliers,consumers,producers,anddistributorsofgoodsandservices,includerisksrelatedtopowerimbalancesandthepotentialforexploitation.Forexample,afundamentalissuefortheBCtAprojectisthatpopulationstargetedforassistance–‘thepoor’–arefinanciallymarginalizedbydefinition,andoftenalsopoliticallymarginalizedinpractice.Inthiscontext,intheabsenceofexplicitattentiontosocialsafeguards,includingtheprotectionofrightsofmarginalizedpopulationsandtheirabilitytoaccessinformationrelatedtoprojects,participateinkeyprojectdecisions,andhaveaccesstoadequateremedyforharms,etc.,exploitationispossible.Forexample,if,whilepromotingtheintegrationoftheimpoverishedinasupplychainofaBCtAcompany,UNDPfailstoconsiderandpromoteadequateprice/wageandlaborconditions,UNDPcouldsimplybefacilitatinginexpensivelabororsuppliesforthemembercompany.TheseimpactscouldadverselydamageUNDP’sreputationandthecommunitiesitseekstohelp.

46. TheESSPcouldhavehelpedUNDPdeterminehowtoidentifyandrespondtoBCtA-relatedrisks.PlatformssuchastheBCtAposespecialchallengestoUNDPfortheidentificationofrisks.WhileUNDPisprovidingaplatformandother(nonfinancial)supportforcompanyinitiativesthatincludethepoorasproducers,entrepreneursandconsumers,companiesthatbecomemembersdirectlyengagewithcommunities,andsocialandenvironmentalrisksarelargelyassociatedwiththisengagement,thequalityofwhichreflectsbackontheBCtAandUNDP.

47. TheESSPdescribedthat,forsuchprojects(likely‘Category2’projectsundertheESSP),‘therearepossibleenvironmentalandsocialbenefits,impactsand/orrisksassociatedwiththeproject(oraprojectcomponent)butthesearepredominantlyindirectorverylong-termandsoextremelydifficultorimpossibletodirectlyidentifyandassess…Inthesecases,UNDPwilloftenhaveanimportantroletoplayinsupportinganddevelopingcapacitiesfortakinganintegratedapproachtodevelopment’(ESSP,pg.10).

48. Indeed,evenintheabsenceofESSPscreeningresults,documentsandinterviewsdemonstratetheconcernsofnon-projectUNDPstaff.Aspartofprojectreviewandapproval,suchstaffidentifiedpotentialenvironmentalandsocialrisksassociatedwiththeBCtAproject,andexpressedinterestintheProdocreflectingarights-basedapproach,incorporatingUNDP’s



environmentalstandards,anddescribinghowthebeneficiaries’perspectivesareincorporated.49. UndertheESSP,forsuchprojects,UNDPstaffhadtoidentifythekeydecision-makingpointsandprocessesintowhichitcould‘mainstream’considerationofenvironmentalandsocialconcernsandmeasurestoensurethatenvironmentalandsocialrisks/impactswereaddressedinfutureactivitiesthatcouldharmcommunitiesand/ortheenvironment.

50. InthecontextoftheBCtAproject,oneobviousdecision-makingpointandprocessforsuchmainstreamingiswhenandhowcompaniesareevaluatedformembershipinBCtA.Measuresthatcanbemainstreamedduringsuchanevaluation(toensurethatenvironmentalandsocialrisksandimpactsareaddressedinfutureactivities)includepoliciesandtoolsthatassessthecapacityandwillingnessofacompanytoaddresssocialandenvironmentalconcernsandthatidentifymeasurestosupportcompanycapacitybuildingtoimproveitsperformance.

51. OnesetofmeasuresrelevantinthisregardincludesthePolicyonDueDiligenceandPartnershipswiththePrivateSector(thePolicy,SeeAnnex2),complementaryRAT(SeeAnnex3)–designedtosupportimplementationofthePolicy-andGuidelinesforPrivateSectorPartnerRAT(Guidelines)–designedtosupportimplementationoftheRAT.Thesemeasuresincludeattentiontosocial(humanrights)andenvironmentalconcerns,althoughprimarilytoavoidriskstoUNDP’sreputation.

52. Asdescribedingreaterdetailbelow,applicationofthePolicytoUNDPengagementswithprivatesectorentitieshasbeenrequiredsinceDecember2013,andtheRAThasbeena‘mandatoryrequirementforanytypeofpartnershipbetweenUNDPandaprivatesectorentity’since2014.ThePolicyandRATrequirescreeningandassessmentofpotentialUNDPpartners,aswellasapplicationofkeyprinciples‘regardlessofthenatureofUNDP’sengagementorpartnership’(emphasisadded)withotherentities(Policy,pg.12).

53. TheProdocincludesacommitmenttoapplythePolicyandRAT.TheProdoc,forexample,notesthattheduediligence/riskscreeningreviewperformedbytheBCtASecretariat‘complieswithUNDPandPartnerpoliciesforpartnershipswithcorporations(BCtAutilizestheUNDP’sPrivateSectorPartnerRAT),aswellasensuresthatwedonotdamageanyrelationshipsbyengagingcompaniesthatcannotbeacceptedasmembers’and‘BCtAutilizestheUNDP’sPrivateSectorPartnerRAT’(Prodoc,Annex2,pg.70).

54. TheUNDP/PSDDueDiligenceform(UNDP/PSDform)similarlyexplicitlyacknowledgedtheRAT,stating,‘ThisformispartoftheduediligenceprocessthatUNDPundertakesinconsideringcompaniesandotherprivatesectororganizationsforpotentialpartnerships….ThisproceduretemplatecomplementstheRATandprovidesanoverviewofcorporatecontroversiesandother,relevantcorporatesocialresponsibilityinformation.’

55. SeveraladditionalfactorssupporttheideathatUNDPshouldhavetreatedmembersto



BCtAaspartnersand/orassessedusingUNDP’sRAT,andinamannerconsistentwiththePolicy:(1)thedefinitionof‘partner’inthePolicyisbroad,andthereasonsforthePolicysupportitsbroadapplication;and(2)examplesinthePolicyof‘typesofengagements’UNDPhaswithpartnersaresimilartoUNDP’sengagementswithmemberstoBCtA.

56. Regarding(1),above,thePolicydefinespartnershipas‘avoluntaryandcollaborativeagreementorarrangementbetweenUNDPandtheprivatesector,aswellaspotentiallyotherentities,inwhichallparticipantsagreetoworktogethertoachieveacommonpurposeorundertakeaspecifictaskandtosharerisks,responsibilities,resources,andbenefits’(Policy,pg.12).ItnotesthefollowingpurposeofthePolicy:‘Thegrowingroleoftheprivatesectorinthechangingdevelopmentlandscapebringsbothnewopportunitiesandrisks.AsUNDPaimstoscaleupitsengagementwiththeprivatesectoritneedstodosoinawaythatmanagesriskstoitsreputation…ThepurposeofthisPolicyistofacilitateandguidetheselectionofprivatesectorpartnersandtheformulationofpartnershipsinsuchawaythatenableseffectiveandcreativecollaboration,whilemaintainingaprincipledapproachthatmanagesrisksandensurestheintegrityandindependenceofUNDP’(Policy,pg.1).

57. ThroughBCtA,UNDPandDSCmembershavea‘voluntaryandcollaborative’arrangementwithmemberstotheplatformtoworktogethertoachieveacommonpurpose:toincrease‘inclusivebusiness’towardpovertyalleviation.UNDP,DSCmembers,andothers,areprovidingbenefitsandresourcestothemembers–including‘globalvisibilityandvalidation’,‘adirectchanneltoprovideinputs’intopolicy,and‘initiativeadviceandlinkageswithothercompanies,donors,governmentsandotherkeystakeholders’-inexchangeforvarious‘commitments’bythemembersthatwillincreaseinclusivebusiness(Prodoc,pgs.5-6).AndasUNDPishostingtheSecretariat,itisassumingalargerrolethanotherfundingpartnersinthefunctioningofBCtA.

58. Finally,thePolicy’sdescriptionoftypesofengagementsindicativeofpartnershipsincludeengagementssimilartothoseofUNDPwithBidcoandothermembercompaniesthroughBCtA.ThePolicy’sdescriptionofengagementsindicativeofpartnershipsinclude‘Harnesstheprivatesector’scorebusinessstrengths(expertise,services,technology,etc.)toimplementorpromoteinclusivebusinessmodels’and‘Influenceandencouragetheprivatesectortobringaboutachangeinthewaybusinessisdonethroughmoreresponsibleandsustainableapproaches’(Policy,Annex2,pgs.15–18,See,also,Annex2tothisreport).3

3ThePolicy’sAnnex2:TypesofEngagement,labelsthisfirsttypeofengagementas‘CoreBusinessforInclusiveMarketDevelopment,’anddescribesitasfollows,‘Inthiskindofpartnership,UNDPhasanagreementwithoneormorecompaniesandotherdevelopmentactorstocarryoutcertainactivitiesthatcanhelptoimplementmoreinclusivebusinessmodelsatthesecompanies.TheseactivitiesmightincludeupgradingthesupplycapacityoflocalproducersandSMEs,improvingtheabilityofproducerstocomplywithindustrystandards,ortransferringknowledgeandrelevantskillsformoreefficientproductionprocesses,forexample’andthesecondtypeofengagementas‘AdvocacyandPolicyDialog’,describingitas‘‘Inthistypeofpartnership,UNDPwillmainlyactasafacilitatorandbrokerofpublic-privatedialogandcooperationmechanisms’byconvening‘public-private



59. BCtAdocumentationreviewedbySECUconfirmsthattheintendedpurposeofthecooperationwasatypeofpartnership.4

60. ForallengagementsthePolicyrequiresattentiontocertainprinciples.Itnotes:‘RegardlessofthenatureofUNDP’sengagementorpartnershipwiththeprivatesector…theyshouldbeguidedbytheprinciplesoutlinedbelow.’Theseincludeto:(1)advanceUNDPgoals–‘aclearpurposeforthepartnership…shouldbeclearlydefined’;(2)maintainintegrity,independenceandimpartiality;(3)ensuretransparency–‘cooperationwiththeprivatesectormustbetransparent,withinformationonthepurposeandscopeofthecollaborationbeingavailable…RelevantinformationaboutthepartnershipshouldbemadeavailableonUNDP’swebsite’;and(4)ensure‘non-exclusivityandnounfairadvantageorimpliedendorsement…whichmightleadtounintendedconsequences’(Policy,pgs.12-13).

61. DespitetheapparentapplicabilityofthePolicyandfullRATtoUNDP’sengagementwithBidcothroughBCtA,thefullPolicyandfullRATwerenotappliedtothescreeningandassessmentofcompaniesformembershipintotheBCtA.Asdetailedbelow,theUNDP/PSDformusedwasnotfullyconsistentwithPolicyandRATrequirements.

62. TheProdocdoesnotindicatewhythefullPolicyandfullRATwerenotapplied,although,afterthecomplaintwasfiled,theUNDPSecretariattotheBCtAapparently(basedon“before”and“after”screenshots)revisedthewebsitetoindicatethatprivatesectorcompanymemberstoBCtAwerenot‘partners’–with,perhaps,animplicationthatUNDPdidnotneedtoapplythefullPolicyandRATtoitsengagementswithprivatesectorcompaniesthroughBCtA.

63. ThefollowingsectionevaluatesthemeasurestakenbyUNDPstaff,throughBCtA,toassessandaddresssocialandenvironmentalrisksrelatedtoengagementswithprivatesectorcompanies.ItprimarilyconsidershowthesemeasureuptoUNDP’sPolicy,RAT,andGuidelines,butalsotouchesuponotherpossiblemeasures(inadditiontothePolicyandRAT)toaddresssocialandenvironmentalrisksrelatedtoBCtAmemberactivities-includingthosefocusednotprimarilyonriskstoUNDP’sreputation.

MeasurestoAddressPotentialRisks:ThePrivateSectorDueDiligencePolicy,RAT,andGuidelines

dialogsandcollaborativeplatformsaimedatcatalyzingandincentivizingsustainableprivatesectorsolutionsandinvestment,andbuildingsustainableandinclusivemarkets.’4ThePolicyimpliesthat‘partnerships’neednotinvolveaformalagreementorfinancialimplicationsforUNDP.Itnotes,‘WhenapartnershiparrangementwillhavefinancialimplicationsforUNDP,aformalwrittenagreementshouldbeestablishedbetweenUNDPandtheprivatesector’(Policy,pg.13).Thisstatementimplicitlyacknowledgesthatapartnershipmayexistwithoutthesetwoconditions.Asnotedearlier,whilenoformalwrittenagreementexistedbetweenUNDPastheBCtASecretariatandBidco,Bidco’swrittenapplicationandagreementtocertaincommitments,BCtA’sexplicitwrittendescriptionofbenefitstobesecuredthroughmembership,andBCtA’sapprovalofBidco’sapplicationandnoticeofsuchapprovalinwriting,constituteatleastaninformalagreement.



asComparedtoUNDPDueDiligenceEffortsintheContextofBCtA64. Asdescribedearlier,UNDPdidnotfullyapplytheUNDPPolicyandRATforscreeningandassessmentofBidcoasamemberofBCtA,butdidapplyanotherriskassessmenttool-theUNDP/PSDform.ThisformwasusedtoassessrisksrelatedtoUNDP’spossibleassociationwiththeapplicantcompany.Informationfromthisformwas,additionally,summarizedinBCtA’s‘ApplicantSummary’formsenttoDSCmembers.

65. ThisformprovidedimportantrecognitionoftheneedtoscreenpotentialmembersofBCtA,reflectedaneffortbyUNDPtopursueduediligencerelatedtoitsassociationwithmembercompaniestoBCtA,andcapturedmanyoftheissuesandconcernsreflectedinthePolicyandRAT.

66. However,asdetailedbelow,thestepsandquestionsintheUNDP/PSDformarenotascomprehensiveasthosereflectedinthePolicyandRAT,theapproachtogatheringandverifyinginformationislessrobustthanrequiredbytheRAT,andconclusionsdrawnaboutnextstepsarelesssoundthanrecommendedbythePolicyandRAT.

67. DifferencesbetweenUNDP’sRATandtheUNDP/PSDformmaybemostevidentintheirlengthandwhentheyareapplied.TheRATisatwelve-pagedocumentwithquestionstowalkstaffthroughafive-stepprocess(SeeAnnex3tothisInvestigationReport).Thedescribedprocessbeginspriortooutreachtoaprivatesectorpartner(ifUNDPpursuesoutreach),andcontinuesafteroutreachifthepartnerisnotdisqualifiedfromengagingwithUNDP.Incontrast,theUNDP/PSDDueDiligenceformincludesthreepagesofquestions,withprimarily‘yes’and‘no’responses,andappearsexplicitlytailoredforuseonlyinprescreening.

MeasurestoAddressPotentialRisks:ExclusionaryCriteriaand‘SignificantControversies’forPre-Screening68. ThefirststepofthePolicyandRATistoconsiderlisted‘exclusionarycriteria’toexcludefromconsiderationprivatesectorentitiesthatinvolve‘highestrisk’engagements‘withsectorsoftheeconomyorbusinesspracticesthatareincompatiblewithUNDP’svision,missionandvalues,orcompaniesthatareinviolationofUNresolutionsorincludedonUNineligibilitylists.(Policy,pg.2).

69. Thesecriteriainclude,primarily,thoserelatedtothemanufacture,sale,etc.ofharmfulproducts,e.g.,gunsandtobacco,butalsoinclude,‘Violationofhumanrightsorcomplicityinhumanrightsviolations’andquestionsrelatedtolaborrights(Policy,pgs.3-5).

70. Thesecriteriaarerelevantwhenpotentialpartnersareinvolvedinactivitiesthrough



subsidiariesorthroughsupplychain/distributionactivities(Policy,pgs.3-5).5Morespecifically,UNDPisdirectednottoengagewithagivencompanywhenanexcludedactivityisoccurringviaabusinessrelationshipandtherelationshipmeetsacertainthreshold,i.e.,theexclusionarycriterion‘Violationofhumanrightsorcomplicityinhumanrightsviolations’requires‘Noengagementifpotentialpartnerowns>20%ofsubsidiary’(Policy,pgs.3-5).

71. TheBCtAProdoc’sAnnex2,whichdescribesthe‘DueDiligenceReviewProcess’forBCtA,similarlyreflectstheimportanceofexclusionarycriteriausedbyUNDP.Inonesection,theAnnexindicatesBCtAwillapplyallexclusionarycriteriausedbyUNDP–includingthecriteriadealingwithhumanrights.Itstates,‘TheRiskScreeningFrameworkapplies(sic)followingprocedure:Checkingagainstexclusionarycriteria…companiesfromanyindustrysectorareeligibleforparticipation,exceptthosecompaniesthatareinvolvedwith:…i)Violationofhumanrightsorcomplicityinhumanrightsviolations,j)Useortolerationofforcedorcompulsorylabor,k)Useortolerationofchildlabor’(Prodoc,Annex2,pg.71).

72. Annex2indicateselsewhere,however,thatBCtAwillcheck‘thecompanyagainsttheBCtA’sexclusionarycriteria’(Prodoc,Annex2,pg.70).TheseincludeonlythreeofUNDP’sexclusionarycriteria-tworelatingtothemanufactureofarmamentsandonerelatingtomarketingofbreastmilksubstitutescontrarytoWHOguidelines.Itomitsthehumanandlaborrights-relatedcriteriafromexclusionarycriteria.

73. ThelatterwastheapproachemployedintheUNDP/PSDduediligenceform;humanrightsandlaborcriteriawerenotincludedas‘exclusionarycriteria.’

74. ThisomissionofhumanrightsfromexclusionarycriteriaintheUNDP/PSDformcontrastsnotonlywiththeassertioninAnnex2thatBCtA’sRiskAssessmentFrameworkwouldincludethesecriteria,butalsowiththeexplicitattentiontohumanrightsfoundinAnnex6totheProdoc,titled,‘TheBCtA’sFocusonGenderInclusionandHumanRights’(Prodoc,pgs.85-87).

75. ThisAnnexdescribes‘areasinwhichtheBCtAincludeahumanrightsperspective,andagenderperspective’initswork,andexpressesacommitmenttoactonhumanrightsprinciplesthrough‘usingtheappropriatecriteriainscreeningapplicantcompanies’and‘trackinganyrelevantcontroversiesthroughthelifetimeofcompanies’affiliationwithBCtA(Prodoc,pg.85).SimilartothePolicy,theAnnexprovidesattentiontobothviolationofhumanrightsandcomplicityinhumanrightsviolations(usinglanguagesimilartothePolicyonthispoint).6The

5Additionally,theGuidelinesfortheRATstate,‘BasedontheUNGuidingPrinciplesonBusinessandHumanRights,responsibilityforrespectinghumanrightsrequiresthatcompaniesseektopreventormitigateadversehumanrightsimpactsthataredirectlylinkedtotheiroperations,productsorservicesbytheirbusinessrelationships(businesspartners,entitiesinitsvaluechain,othernon-StateorStateentity),evenifthecompanyitselfhasnotcontributedtothoseimpacts’(Guidelines,pg.9).6Itstates,‘responsibilityforrespectinghumanrightsrequiresthatcompaniesseektopreventormitigateadversehumanrightsimpactsthataredirectlylinkedtotheiroperations,productsorservicesbytheirbusinessrelationships(businesspartners,entitiesinitsvaluechain,othernon-StateorStateentity),evenifthecompany



paragraphconcludeswiththeobservationthat‘Shouldanyevidencebefoundofongoingviolationsduringtheduediligencereview,BCtAwillfollowUNDP’spolicytodiscontinueengagementwiththecompany’(Prodoc,pg.85).

76. DespiteBCtA’sapparentcommitmentinAnnex6toactingonhumanrightsprinciplesthrough‘appropriatecriteriainscreening,’theformusedbyBCtAtoscreenpotentialpartners–theUNDP/PSDform-omittedexplicitattentiontohumanrightsnotonlyintheexclusionarycriteria,butalso,asdescribedbelow,inotherrelevantquestions.

77. Moreover,thisformabbreviatedattentiontoothersocialandenvironmentalconcerns(inadditiontohumanrights)inboththeexclusionarycriteriaandsubsequentquestions,includingthoserelatedto‘controversies.’

78. TheRAT’s‘controversies’questionincludesthefollowinglistofillustrativeissuestobeconsideredandadditionalconsiderations(See,also,Annex2tothisreportforfullRAT):

2.1PotentialControversiesPotentialpartnercompaniesmaybeexposedtocontroversies.Annex2oftheRATGuidelinescontainsguidanceonhowtogatherinformation.Listbelowanycontroversiesthatarenotalreadycoveredinstep1.1.,i.e.controversiesnotdirectlyrelatedtoexclusionarycriteria.Usethecommentboxtoprovidedetailsofthecriticism.Controversiesmayrelatetoissuessuchas:Labor Governance

• Discriminationatwork• Freedomofassociationandtheright

tocollectivebargaining• Occupationalhealthandsafety• Pooremploymentconditions

• Corruption• Fraud• Taxevasion

Communities Product-related• Communityhealthandsafety• Impactonlivelihoods• Localparticipation• Socialdiscrimination• Indigenouspeoples

• Productsafety• Controversialproductsorservices• Marketingofbreastmilksubstitutes

contrarytotheWHO'sInternationalCodeofMarketingofBreast-MilkSubstitutes.7

Environment Ownershipormanagement

itselfhasnotcontributedtothoseimpacts.Theseincludeviolationofhumanrightsorcomplicityinhumanrightsviolations,useortolerationofforcedorcompulsorylabor,anduseortolerationofchildlabor,amongothers’(Prodocpg.85).7TheWHO'sInternationalCodeofMarketingofBreast-MilkSubstitutesisavailableatWHOwebsite



• Pollution(includingclimatechange)• Impactonecosystemsand

landscapesOveruseofresources• Wastemanagement• Mistreatmentofanimals

• Controversiesrelatedtotheindividualsowningormanagingthecompany

SignificantcriticismfromlocalorglobalNGOs/media/socialmediaorothersignificantpartnersofUNDP(includingCSOadvisorycommittee,marginalizedpeopleetc.)locallyorglobally

Noevidence

EvidenceNot

knownSignificantcriticismfromgovernmentalagencies/politicalpartiesthatmakesUNDPparticipationpoliticallysensitive

Noevidence

EvidenceNot

knownRecurringlocalpubliceventsagainstthecompany(e.g.localdemonstrations)

Noevidence

EvidenceNot

knownGlobalpublicevents(e.g.significantdemonstrationsatseverallocations,significantonlineprotests)

Noevidence

EvidenceNot

knownRelevantlegalcaseinprogress/incourtetc. No

evidenceEvidenceNot

knownOther(specify): No

evidence

EvidenceNot

knownComments:[Comments]79. Finally,theRATdirectsUNDPstaffto‘providedetailsofthecriticism’inthecommentbox,andfurtherto‘Researchpubliclyavailablesources(e.g.searchforpublicstatementsfromthecompany),orcontactthecompanytoassesshowitaddressestheidentifiedsignificantcontroversies’andto‘Listtheseelementsinthecommentboxbelow’(RAT,pg.5).80. Incontrast,theUNDP/PSDformrequeststhatcontroversiesrelatingtoenvironmentalsocialandcorporategovernancebedisclosed.81. DespitethelessdetailedrequestintheUNDP/PSDform,BCtAstaffdidlist,inthisformforBidco,severalrelevantcontroversiesinresponse.Theseresponsescannotbequoted–theformismarked‘Internal,notforcirculation’-butthesummaryofduediligencefindingsintheApplicantSummary(whichisprovidedtotheDSCevenintheabsenceofasigneddisclosureform)reflectsthatstaffidentifiedseveralimportantrisks–atleastpartiallyfulfillingtherequirementtoassessrisks–butdidnotclearlyfollowupinasatisfactorywayorcharacterizerisksaccurately.InformationwidelyandpubliclyavailableatthetimeindicatedseveralactivitiesthatcouldposerisksforUNDP,includingallegationsofso-called‘landgrabbing’in



Uganda,therelatedpendinglawsuitfiledbyUgandanfarmersclaimingtohavebeenevictedfromtheirlandfortheBidcoUgandaproject,andoccasionalworkerstrikesoverpoorworkingconditions.Informationcapturedintheformwasconsistentwiththisinformation.82. ThisUNDP/PSDformdidnot,however,providedetailsofthecriticism,indicatewhetherand/orhowUNDPstaffevaluatedthecontroversies,e.g.,whetherstaffeddiscussedthecontroversieswiththecompanyorothers,orindicatehowthecontroversieshadbeen,orwouldbe,addressed.NoanalysisofpossibleimplicationsfortheBCtAinitiativewasprovided(orrequestedintheform),and,perhapsmostsignificantly,theformdidnotincludeaspacetoidentifymeasuresthatmightpreventsimilarconcernsinthecontextoftheBCtAinitiative.83. Instead,inresponsetocontroversiesthatwerelisted,andverybriefanswerstoafewadditionalpre-outreachquestionsrelatingtosocialandenvironmentalconcerns-includinghowthesectorisviewedbylocalcommunitiesatlargeandwhetherthecompanyisaparticipantintheUNGlobalCompactand/oradherestosustainabilityorethical-relatedprinciplesorguidelines,e.g.,VoluntaryPrinciplesonSecurityandHumanRights,EquatorPrinciples,etc.–UNDPstaffcharacterized(indocumentsandinin-personinterviews)socialandenvironmentalrisksrelatedtoBidcoas‘moderate,’andindicatedthatBidcowasastrongcandidateformembershipinBCtA.84. MakingadecisiontoproceedwithengagementwithBidco,e.g.,viamembershipinBCtA,atthispointsuggestsUNDPstaffmayhavebeenpursuinga‘limitedduediligence’approachtoitsengagementwithBidco.85. UndertheRAT,ifthepartner’sfinancialcontributionislessthanUS$100,000ANDthesectorofactivityatthecenterofthepartnershipisnota‘highrisk’sector,adecisiontoadvance(ornot)withthepartnershipisappropriatewithoutadditionalduediligenceunlessthereisevidencethecompanyshouldhavebeenexcludedfromengagement(pursuanttotheexclusionarycriteria)orevidenceof‘significantcontroversies’(RAT,pg.12).86. BidcomadenofinancialcontributiontoBCtA,butthesectorofactivityatthecenterofthepartnershipmaybeconsideredrisky.Promotinginclusivebusinessisnotinherently‘highrisk,’butBidco’sproposedinitiativeforBCtAmembership–theFullValueChainInitiative–involvedagriculturesupplychains.AsnotedinthePolicy,the‘Growingofcrops,includingpalmoilorotherlargemonocultures’maybeconsideredhighrisk,andforsuchsectors,‘anextracarefulapproachisrequired’(Policy,pg.5).87. Itisnotclearthecompanyshouldnothavebeenexcludedfromengagement–notallexclusionarycriteriawereincludedandconsideredduringduediligence.And,asdescribedingreaterdetailbelow,theevidencewasrelativelymoreclearthatidentifiedcontroversieswere‘significant’andnotjustmoderate.Afindingof‘significant’controversies’wouldhaverequiredafullassessment.



88. UndertheRAT,afullassessmentrequiresattentiontoresponsestoarelativelylonglistofenvironmental,social,andgovernancequestions(RAT,pgs.7-10,andsee,also,Annex2tothisreport).89. ThesequestionswerealmostentirelyabsentfromtheUNDP/PSDform.Asnotedinparagraph83,theUNDP/PSDformaskedafewofthesequestions,includingthoserelatedtomembershipintheUNGlobalCompactandadherencetosustainabilityorethical-relatedprinciplesorguidelines,butthemajorityofotherpertinentquestionswereomitted.90. IfallquestionsintheRAThadbeenused,orifothermeasurestoidentifyandaddressrisksassociatedwithUNDPengagementwithmembercompaniestoBCtAhadbeenadoptedbyUNDP,staffmayhavegivenmorethoroughconsiderationtopossibleconcernsidentifiedintheUNDP/PSDformandApplicantSummary–someofwhichweremirroredinthecomplaint.91. Itispossible,forexample,thatifUNDPhadrespondedtoquestionswithanexplicitfocusonhumanrightsandcomplicity,UNDPmayhavegivenmorethoroughconsiderationtoBidcoAfrica’srelationshiptoBidcoUganda,theUPOLproject,andthelandrightsanddisplacement-relatedclaimsandtheirrelevance(orirrelevance)fortheBCtAproject.92. Tobeclear,thisobservationinnowayimpliesthatBidcohas,orhasnot,violatedhumanrightsoriscomplicitinhumanrightsviolations.Suchadeterminationisbeyondthescopeofthisreport,whichisfocusedprimarilyontheadequacyofUNDP’sduediligenceandrelatedtransparencyinthecontextoftheBCtAproject.93. However,amorethoroughconsiderationofconcernslikelywouldhavebeenprudent.BidcoAfricaanditsFullValueChainInitiativemaynothavebeendirectlyinvolvedinactivitiesthatwerethesubjectofthecomplaint–indeed,severalintervieweesindicatedthatthecomplaintwasunwarrantedbecauseBidcoAfricaandtheproposedinitiativeinKenyawerenotdirectlyrelatedtoactivitiesofBidcoUgandaandUPOLinUganda.However,BidcoAfricahasatleastfinanciallinkstoBidcoUgandaandtheKalangalaoilpalmprojectreferencedinthecomplaint.8AUNDPstaffmemberwiththeBCtASecretariatindicatedinanemailthatBidcoUgandais‘ajointventurebetweenWilmarGroup…andBidco[Africa]withfinancingfromIFAD.’Accordingtoseveralwebsites,includingtheOPULwebsite,OPULisasubsidiaryofBidcoAfrica.9ArecentIFADreportstates,‘Kalangalaisthefirstphaseofalonger-termPPPbetweenthegovernmentandBidcoOilRefineriesLtd.ofKenya(Bidco)’10(nowknownasBidcoAfrica).

8http://www.bul.co.ug/about-us.html9http://www.bul.co.ug/palm-oil-uganda.html;http://www.bul.co.ug/about-us.html;http://www.monitor.co.ug/Business/Commodities/Bidco-dismisses-land-grab-claims-Kalangala-farmers/-/688610/3091206/-/jrgpktz/-/index.html10IFADandInstituteofDevelopmentStudies(IDS).(2015)BrokeringDevelopment:EnablingFactorsforPublic-Private-ProducerPartnershipsinAgriculturalValueChains,SummaryofUgandaCaseStudy



Additionally,sinceBidcoAfricalendsitsnametoBidcoUganda,thereisbrandingandreputationalsupportfromBidcoAfricatoBidcoUganda.94. Additionally,moredetailedquestionslikelywouldhaveledtomorein-depthconsiderationoflaborrights-relatedconcernsatBidcoAfrica’soperationinKenya(concernspreviouslyraised),andpossibleimplications(includingthepossibilityofnoimplications)forsupplychainlaborersinKenyainvolvedinBidco’sBCtAInitiative.

DueDiligenceandFindingof‘ModerateRisk’forBidcoMembershipinBCtA95. WhenaskedabouttheprocessforarrivingatthefindingofmoderateriskwithnoobviousrecommendationstoavoidconcernsinthecontextoftheBCtAinitiative,staffprovidedthefollowingreasons:(1)thegovernmentofUgandaandthecompanyhadindicatedthatBidcowasnotinvolvedinthelandacquisitionprocess–andthegovernmenthad,inthatsense,‘clearedBidco’intermsofland-relatedclaimsandconcerns;(2)therehadyetbeennofinding–specificallynodeterminationofculpability-inthelawsuitrelatedtoBidco,Bidcoexpressedawillingnesstoabidebyanycourtdecisionandindicatedallotherissueshadbeenresolved,andtheexternalentityusedbyUNDPtoinformunderstandingsofrisksrelatedtoagivenprivatesectorcompanyindicatedthatpendinglawsuitsposeonlymoderaterisks;(3)the2013IFADreportsupportedtheideathattheprojectwasmorebeneficialthanharmfulandsocialandenvironmentalconcernswerelargelyaddressed,andotherlocalfarmerassociationssubmittedstatementsindicatingasmuch;and(4)BidcowasamemberoftheUNGlobalCompact.

UNDP’sDueDiligenceFindingthatLand-relatedClaimsWereofInsignificantConcern96. AmongtheseveralreasonsUNDPstaffprovidedfortheirdecisionthatcontroversieswerenot‘significant’includedpoint(1)-thatBidcodidnotdirectlyengageinlandtransactionsfortheproject;thesewerehandledbytheUgandangovernment.97. UgandangovernmentofficialsandaBidcoUgandarepresentativeconfirmedthatthegovernmentwasresponsibleforacquiringtheland.SaidarepresentativefromBidcoUganda,‘Allthestakeholderswaswillingbuyer/willingseller….Alllandmustbepurchasedbythegovernmentandthengiventousforuse.’11Agovernmentrepresentativeindicated:‘Thedistrictidentifiedthisland,surveyedit,andgaveittoUgandaLandCommissionwhothenleasedittoBidco.Therewasprivate–youownitandyousellittotheUgandaLandCommission.Theycalledpeopleandtheycametobuyandsellwillingly.TheGovernmentwasbuying,inthenameofLandCommission.’1298. Moreover,bothdescribedthatBidcoUgandahadindicateditdidnotwantthe

1125May2016in-personinterviewwithSECU.1227May2016in-personinterviewwithSECU.



governmenttoacquirelandthatwasbeingclaimedbyindividuals,andthatitsoughttoresolveoutstandingdisputeswithindividualsafterlandwasacquired.‘Wenevertouchedaplacewheresomeonewasalreadycultivatinganarea.Wewalkedparceltoparcel,didthesurvey.Iftherewerecropswedidn’ttouchit.Wealsoleft200metersofbuffer.Thismeant2,500haendedupnotbeingused.’1399. InformationgatheredduringtheinvestigationindicatedthatwhileBidcoUgandawasnotdirectlyinvolvedinacquiringlandforcropsforitsrefinery,itknewof,reliedon,andencouragedthispurchasebythegovernment.BidcoUgandaalso,apparently,wasengagedindecisionsanddiscussionsrelatedtothepurchase.TheseactivitiesmeanIFhumanrightsviolationswereestablished(thisreportdoesnotreachadeterminationofBidco’sculpabilityornotwithregardtoviolationsofhumanrights),Bidcocouldbecomplicitintheseviolations.100. Inthisregard,asindicatedbrieflybelow,thisinvestigationdeterminedthathumanrightsconcerns(includingcomplicityissues)relatingtothelandacquisitionaboutwhichcomplainantshaveconcerns,were‘live’–ofgreatconcerntoatleastsomecommunitymembersandunresolvedlegally.AndpotentialimpactsbothtoUNDP’sreputationandforlocalcommunitiescouldandshould,therefore,havebeenmorerobustlyconsideredduringtheduediligencereview.Asnotedbyoneinterviewee,“ItisnotgoodforBidco.Eveniftheyweren’tinvolvedinlandacquisition,itlooksbad.Theyhavetitle(lease)byUgandaLandCommission.EvenifBidcowinsthecase,ifalocalmanisnothappy,itdoesn’tlookgood.’14101. AlthoughBidcoUgandabelievesthedisputeisaboutonlyonelocation,stating,‘Thedisputeweweretalkingabout-thereisonlythisoneplace…’15morethanonepersonclaimstohavebeenimpactedbytheBidcoUgandaproject;in-personinterviewsindicatedconcernsfromotherindividuals.Meetingswithagroupofindividualsincludedassertionsthat29familieswerewronglydisplaced.MeetingswithseveralwomenwhoclaimtohavebeenresettledfromlandnowusedbyBidco(forthe‘nucleusestate’),providedthefollowingassertions:(1)theywereeithernotcompensatedornotinformedoftheiroptionsanddidnotfeelabletonegotiateorrejecttheoffermade;(2)whenmoneywasprovided,theamountwasmuchlowerthananamountthatwouldhaveallowedthemtopurchasenewland–thepriceoflandincreasedsignificantlyafterplansbythegovernmentandBidcobecameknown;(3)theyarenowlivinginashantytown,wheregrowingfoodisnotpossible,andtheyhavenomeansofmakingmoneytopayfortheirneeds;(4)theyarelivingwithoutthefathersoftheirchildrenbecausethereisnowayforthesementomakealivingintheshantytown.Someofthesewomenclaimedtohavebeenonthelandformorethantenyearsandbelievetheyhadcustomaryrightstothisland.Othershadoccupiedthelandforlessthantenyears.16

1325May2016in-personinterviewwithSECU.1427May2016in-personinterviewwithSECU.1525May2016in-personinterviewwithSECU.1626May2016in-personinterviewwithSECU.



102. Frominterviewsitappearsthat,foratleastsomeofthelandacquired(possiblymostofthelandrelatedtothecomplaints),negotiationsoccurredwiththeregisteredownersoftheland–someofwhomweremailoownerswhoseownershiprelatedtocolonialoccupationandhadnotlivedonorusedthelandforasignificantnumberofyears.Inthissituation,theoccupantshadbeenpayingtheregisteredlandownernominalrent,but,apparently,werenotinvolvedinnegotiationsrelatingtogovernmentexpropriationoftheland.Occupantswereexpectedtodiscusscompensationand/orotherformsofredressfortheirevictionwiththeregisteredowner.Oneintervieweeexplainedthearrangement,‘…thiswasalocalarrangementbetweenthelandlordandhistenants.Thedistrictwasnotinvolved.Theydidtheirpart.Thestandwasthatyounegotiatewithyourtenants.Someofthemwantedtogotocourtcallingthemsquattersanditwassaidifyoutakethemtocourtwearenotbuying....Itwassaidgositwiththesepeopleandagree.Ifyouagree,thenyoubringevidencetheyhavesigned,andyouwillbepaid[forpurchaseoftheland].’17

103. Oneintervieweewhohadfarmedlandformorethantwentyyearsdescribedthatnegotiationsbetweenhimandthemailoownerbrokedownbecausehebelievedtheoffertohimfromthetitledownerwasinadequate.Heclaimshehascustomaryrightstolands,butwithoutformalregistration–aprocessthatisunclearanddifficultforhim.18

104. AUSAIDanalysisindicatesthatUganda’s2009LandActrecognizesthatoccupancyofcustomarylandforacertainnumberofyearsconveyslegalrights,butalsonotesthatUgandantenantswithunregisteredcustomaryrightsdofacesignificantchallengesandpressures.Itnotes,‘Thereare13stepstoregisteringpropertywhichtake227daystocompleteandcostseveralmillionUgandaShillings(Ush)(WorldBank2009a;2009b).Mostunregisteredlandisundocumentedcustomaryland.Themajorityofpoorpeopledonotholdgrantedrightsofoccupancy,oftenbecausetheylacktheknowledge,capacity,andresourcesneededtonavigatetheapplicationprocessandmeetthetitleconditions.Unregisteredlandisvulnerabletoexpropriationbythegovernmentandgrabbingbypoliticalandeconomicelites—anincreasinglycommonoccurrence.’19

105. Someinterviewees,includingrepresentativesfromBidcoandthegovernment,indicatedthatoutstandingclaimstolandwereexaggerated,andrequestsforcompensationoutsidereasonablebounds.20

106. Otherinterviewees–includingindividualswithknowledgeofthesituationbutnotapparentlybenefitingfromorharmedbyBidcoactivities–believebothsideshavevalidpoints.Onesuchintervieweeindicatedaperceptionthatwhilesomeclaimsbycomplainantswere

1728May2016in-personinterviewwithSECU.1826May2016in-personinterviewwithSECU.19USAID,August2010.USAIDCountryProfilePropertyRights&ResourceGovernanceUganda,http://www.usaidlandtenure.net/uganda.2025May2016and28May2016in-personinterviewswithSECU.



exaggerated,otherswereaccurateandwarrantedaresponse.Thisindividualconcurredthatoptionslikelywerenotcleartoindividualsoccupyingthelandand‘negotiating’withtitledowners,thatmostoccupantslackedthecapacitytounderstandthepersonalandeconomicimplicationsofsellingtheirland(e.g.,‘peoplewantedthatquickmoney’‘but‘Ifyousellyourlandyouarejustmakingyourselflandlessanddeprivingyourself’),andthatthepriceoflandskyrocketed(e.g.,landthatwaspurchasedfor80thousandshillingmaynowbeworth10millionshilling).Thispersonfurthernoted,forexample,thatatleastoneindividual,‘hadalegitimateclaim.Exceptnow…isinflating.Theonlyproblemwiththisissueisagreeingontheamountofcompensation.Andeventheseotherpeople…itwasnotgrabbingland…itwasfailingtoagreeoncompensation.’21Thisintervieweealsoindicatedthattheprojecthasbeenbeneficialforothers.

107. ThedeterminationofBidco’sculpabilitywasbeingconsideredbytheUgandancourtsystemthroughthependinglawsuit.Giventhesignificantrisksrelatedtoissuesraised,itwouldhavebeenprudenttoreservejudgmentonmembershipuntilthiscourtcasewasresolved.

UNDP’sDueDiligenceFindingthatPendingCourtCasePresented‘ModerateRisk’108. Regarding(2),andUNDP’sduediligencedeterminationthatthependinglawsuitagainstBidcobylocalfarmerswarrantedafindingofonlymoderaterisk:Staffagreedthat,althoughBidcohadnotbeenfoundculpable,Bidcohad,conversely,notbeenfoundnotculpable.Assuch,staffacknowledgedthat,ifBidcoweretolosethelawsuit,impactstoUNDPandBCtA,e.g.,reputationalrisks,wouldbesignificantgiventhatthecompany’sinitiativethroughBCtArelatestoworkwithsmallholderfarmers.

109. Thisacknowledgmentsuggeststhatstandarddefinitionsof‘risk’inthiscontext–including,inparticular,riskascorrespondingtoafutureuncertaineventthatmayimpacttheachievementofobjectives-maynothavebeenconsideredfullybyUNDPwhenfillingouttheUNDP/PSDform.IfafutureverdictagainstBidcomightsignificantlyimpactUNDPandBCtA,asacknowledgedbyUNDPstaff,risksrelatedtoinvolvementwithBidcolikelyshouldhavebeenconsideredsignificant.Moreover,aculpableverdictmightposenotonlysignificantreputationalrisksforUNDP,butalsoindicatepossiblysignificantrisksforlocalcommunities.

UNDP’sDueDiligenceFindingThatExternalReviewsProvidedAdequateReassuranceRisksWereInsignificant110. Concerningpoint(3),above,UNDPwasreassuredbyanIFADreport,aswellastatementandrepresentationsbysomefarmers’associations,thatbenefitsoftheprojectaresignificant,andkeysocialandenvironmentalconcernsaddressed.

2127May2016in-personinterviewwithSECU.



111. Indeed,anApril2013IFADreport–IFAD’sfirstcountryprogrammeevaluationinUganda,whichassessedtheIFAD-Ugandapartnershipovertheperiod1997-2011,22indicatesthatsupportforoilpalm(includingIFAD’sfinancialsupport),‘hasahighprobabilityofhelpinghouseholdsescapepovertyforgoodwhilealsohavingahighlypositiveimpactonthefuturetradebalance.’Additionally,Bidco’s‘refinery,millandnucleusestateprovidemuchneededjobs;andBidco’slocalfirmOPULhasbecomeoneofUganda’slargesttaxpayers.’Itnotestheconcernthat‘smallholdershavenoalternativemarketoutletandareentirelydependentonthebehaviorandperformanceofBidco.Thus,potentiallythereisariskofexploitation.’Itindicatesinresponse,‘However,Bidcohas,inlinewithitspastrecord,demonstratedsocialandenvironmentalresponsibility…andsignificanteffortswerealsoinvestedinorganizingandempoweringthesmallholdersandensuringthemafaircontractwithBidco/OPUL.’Anin-personmeetingwithanIFADrepresentativeindicatedmuchthesame,‘Webelievetheprojecthasoneofthehighestimpactsintheregion-1,700farmerssofarearning900-1000netperhectare,whichisabsolutelymuchhigherthanwhatevertheyweregettingbefore.Overallimpactisabsolutelyimpressive….’23

112. UNDPstaffandtheIFADreportnotedthattheKalangalaOilPalmGrowersAssociation(KOPGA),anassociationoflocalfarmers,indicatedsupportfortheBidcoinitiative.AFebruary2016lettersubmittedbyKOPGAtoUNDPAdministratorHelenClark,afterthecomplaintwasfiledtoSECU,describesthatKOPGAincludes1800farmerswhosupportandbenefitfromtheinitiative.

113. However,asubsequentreportbyIFADandtheInstituteofDevelopmentStudies(IDS)highlightsnotonlymanyofthebenefitsdescribedintheearlierIFADreport,butalsoseveralnegativeunintendedconsequences–includingsomethatarereflectedinthecomplaint.Intermsofbenefits,theExecutiveSummarystates,‘EvidencesuggeststhatthePPPhascertainlygeneratedsignificantlivelihoodandemploymentopportunitiesinKalangala–formerlyoneofthecountry’spoorestandmostremotedistricts,withlimitedlivelihoodoptionsbasedonsubsistencefarmingandfishing(dominatedbymen).ThePPPhasincreasedhouseholdassets,formalizedtenurerightsformanysmallholders(andexpandedlandholdingsforsome,includingwomen)andprovidedmorestableincomes(manyfamiliesreportedbeingabletoaffordtosendchildrentoschoolasaresult).Ithasovercomethechallengesfacingsmallholdersbyprovidingaguaranteedmarketfortheirproduce,andthroughmechanismstosetpricesbasedonmarketrates.Ithasalsobroughtmanynewjobopportunities(inthemill,processingplant,andtheconstructionandservicessectors),whileimprovementstoinfrastructure(particularlyroadsandanewferryservice)havebenefitedtheentirelocal

22IndependentOfficeofEvaluation,IFAD.Number23,April2013,‘Valuechaindevelopmentthroughpublic-privatepartnerships:opportunitiesandchallengesforsmallfarmers.’2325May2016



population.’24114. OnnegativesdescribedintheExecutiveSummary:‘Buttherehavealsobeensomelesspositiveoutcomes.Manyofthenewjobopportunitieshavebeenfilledbymigrants,puttingpressureonlocalhealthandeducationservices.Therisingpriceoflandasaresultofthedevelopmenthasincreasedtensionsandledtorisingconflicts,particularlyassomeabsenteelandownershavebeguntoreturn.Thereareconcernsaboutlonger-termimpactsonhouseholdfoodsecuritywhentheoilpalmtreesbecometoolargetoallowintercropping.Andtheenvironmentalimpactshaveledtoagreatdealofpublicscrutiny,particularlygiventhesizeoftheinvestment.Finally,athouseholdlevel,therehasbeenareportedincreaseindomesticconflict,althoughmorepositiveimpactsareevidentintermsofwomen’sempowermentandbuildingcapacityoffarmers’organisations.’25

115. Anadditionalobservationthatiscloselyrelatedtocomplaintconcernsincludesthefollowing:‘Anotherunintendedconsequenceisthesignificantriseinthepriceoflandontheisland(fromUGX150,000peracrein2002to800,000in2008).Whilethisisbeneficialforpoorfarmerswantingtoselllandoruseitascollateralforloans,itriskspoorerfarmerslosinglandtheyusedtoaccessthroughtraditionaltenuresystems.Alawsuithasrecentlybeenfiledbyfarmerswhoclaimtheywereevictedfromtheirlandillegally.Absenteelandownershavealsobegunreturningtothearea,causingproblemsforfarmerswhohadnotregularisedtheiroccupancyrights.Aroundtwo-thirdsofparticipantsinthefocusgroupsreportedgreaterincidenceoflandconflictssincetheintroductionofoilpalm.’26

116. Althoughallofthesereportssupportapparentbenefitsforalargepercentageofthepopulation,thelatestreportreflectssignificantsocialandenvironmentalconcernsthatwerenotclearly,robustlyconsideredinUNDP’sduediligence.

UNDP’sDueDiligenceFindingThatMembershipinUNGlobalCompactReducedRisk117. UNDPstaffalsofeltreassuredaboutBidcobecauseofBidco’smembershipintheUNGlobalCompact,andexpressed,‘…themoderateriskmeansthereareissuesweshouldbeawareof,butthecompanyhaspoliciesinplacetomitigateimpactssuchasthecommitmenttoGlobalCompact,theirinternalpoliciesandcommitmenttohumanrights.Thegrievancemechanismthatcompanyhasinplace.’27

118. Itappearsthatdetailsaboutthismembershipwerenotrequested,anditisnotapparent

24InstituteforDevelopmentStudies(IDS)andIFAD.2015.BrokeringDevelopment:EnablingFactorsforPublic-Private-ProducerPartnershipsinAgriculturalValueChains,AcasestudyoftheOilPalmPPPinKalangala,Uganda.https://www.ifad.org/documents/10180/479f2ed6-c77f-4acc-8474-62e7cc0d1b9025Id.26Id.2730May2016in-personinterviewwithSECU.



fromtheUNDP/PSDformorApplicantSummaryhowthecommitmenttotheGlobalCompactensures‘policiesinplacetomitigateimpacts’orthatBidcohasaneffectivegrievancemechanisminplacetorespondsoindividualandcommunityconcerns.

119. Incontrast,asnotedearlier,thePolicyandRATprovidearelativelylongerlistofquestionstoassessacompany’scommitmenttoenvironmental,socialandgoodgovernance(ESG)issues.TheseincludeaquestionrelatedtoassociationswithentitiessuchastheUNGlobalCompact.ThePolicyindicatesthatpreferencewouldbegivenfor‘aboveaverage’ratingsinglobalassessmentsliketheonesdonebyoutsidereputablevendors(Policy,pg.7).Bidco’sscoreisaverage.

UNDP’sDueDiligence,ApplicantScreening,andInformationGathering120. Abroaderissuemadeapparentduringtheinvestigationrelatestoinformationgatheringandverificationinthecontextofduediligenceandevaluatingtheinitiative.Staffappearedtorelyheavilyonassurancesfromthecompanythat(1)theinitiativewas/wouldbesupportedbylocalcommunities;and(2)pastconcernsrelatedtoBidcowereresolved(orwouldbeafterthelawsuitconcluded)andirrelevanttotheinitiative.

121. TheApplicantSummaryformdidnotincludeanyadditionalevidencethatintendedbeneficiaries(the‘poor’)oftheinitiativebelievedpotentialcommitmentsproposedbyBidcowouldbefairandwelcomedtheinitiativeasproposed.

122. Similarly,theUNDP/PSDDueDiligenceformdoesnotindicatehowcompany-providedinformationwasverified.

123. ThePolicy,RATandGuidelinesindicatethatcollectinginformationfromacompanyisaneffectiveandefficientapproachtoinformationgathering,butalsonotethatassertionsshouldbeverified–includingthroughdocumentationfromthecompanyandconsultationswithcommunitiesifcommunity-relatedconcernsarepartoftheproject,etc.

DueDiligenceandMemberCompanies:MakingaDecision124. UnderthePolicy,RAT,andGuidelines,thefourthstepintheduediligenceprocessisadecisionaboutwhetherornottoproceedwithengagement,basedonthecompletedduediligenceandincludingarisk/benefitanalysisofthepartnership.Thisdecisioncanincludeconditionsthatshouldbeputinplaceforthepartnershiptobeworthpursuing.

125. ThereisnoindicationintheUNDP/PSDformthatanyadditionalassessmentorconditionswerepossibletoaddressanyidentifiedrisks.

DueDiligenceandMemberCompanies:MonitoringImplementationofPlans



126. ThefinalstepinthePolicy,RAT,andGuidelinesistodeveloparisklog,amonitoringplantofollowpossiblecontroversiesrelatedtothepartnerandassesswhetherpartnerismeetingconditionsofpartnership,andcommunicationsmaterial.

127. TheUNDP/PSDDueDiligenceFormincludesnosuchstep.

DueDiligence–ObservationsbyBCtAstaff128. InameetingheldwithUNDPstaffintheBCtASecretariat,UNDPstaffagreedthatarobustduediligenceprocesstoavoidexploitationisimportant,asisatransparentrobustgrievancemechanism.Communities,itwasagreed,shouldbeempowered.28

OtherConcerns–Transparency129. Inadditiontoscreeningandassessmentofprojectsandduediligencetoassesspotentialpartners,UNDPrequiredattentiontotransparency,includingtransparencyrelatedtoresultsofthescreening,assessmentandduediligence.

130. InthecontextofBCtAthiswouldhaverequiredmakingresultsofscreeningandassessmentoftheBCtAProdocpublic.

131. Atthelevelofengagementwithpotentialmembercompaniestotheplatform,thePolicysimilarlyrequiresattentiontotransparency.‘UNDPisapublicorganizationandcooperationwiththeprivatesectormustbetransparent,withinformationonthepurposeandscopeofthecollaborationbeingavailabletothepublic.Developingaccountableandtransparentgovernancestructures,settingmeasurabletargets,andhavingarobustmonitoringandreviewingframeworkalsoreinforcesthetransparencyofthepartnership.RelevantinformationaboutthepartnershipshouldbemadeavailableonUNDP’swebsite(Policy,pg.12).ResultsofsuchduediligenceareimportantforcommunitiespotentiallyhelpedandharmedbytheBCtAprojects–itisespeciallyimportanttoprovidethesecommunitiesinformationandanopportunitytoexpresssupportfororconcernaboutaprojectintendedtobenefitthem.TheentireBCtAprojectisdescribedascommunity-focused,toempowerthoseinpoverty,andthusthereleaseofprojectdetails,inappropriatelanguagesandexplainedatalevelwherepeoplecanunderstandtheissues,isparticularlyimportant.

VI. RecommendationsScreeningofBCtAandDueDiligenceRelatedtoMemberInitiatives

2830May2016in-personinterviewwithSECU.



WerecommendthattheUNDPProject/ProgrammeManagerintheBCtASecretariatperformthefollowingtasks:132. ScreentheBCtAprojectusingtheSESPtoidentify:(a)socialandenvironmentalrisksandpotentialimpactsassociatedwithprovidingaplatformforinclusivebusinessandwithdownstreamengagementsofUNDPwithprivatesectorentities;and(b)measurestoavoidandmitigatetheserisksandimpacts;133. Relatedly,requireuseofthePolicyonDueDiligenceandPartnershipswiththePrivateSectorandcompleteRATaskeymeasurestoavoidandmitigaterisksinthecontextoftheBCtAproject.IfthefullRATisnotapplied,explaininwritingandindetailwhyitisnot,andindicatehowkeyconcerns,e.g.humanrights,environment,andlabor,etc.willotherwisebeaddressed.134. Ensureattentiontothecorrectdefinitionof'risk'inthiscontextduringthescreeningprocess,and,inparticular,changeconsiderationof'risk'fromriskthatexistsafterpossiblemitigationmeasurestoriskasitexistspriortomitigationmeasures,e.g.,riskascorrespondingtoafutureeventthatmayimpacttheachievementofUNDP’sobjectives.135. RevisetheProdoctospecifyhowindividuals/communitiespotentiallysupportedthroughBCtA-relatedactivitiescanknowabout,andbeinvolvedin,initiatives,i.e.,describehowtheprimarybeneficiariesofBCtAinitiativeswillhaveadequateinformationandopportunitiestoengageinBCtAinitiative-relatedprocessesandtosharetheirthoughtsonhowtheprojectandinitiativescanbestsupportthemand/ornotimpactthem.136. RevisetheProdoctoensurethatwhentheBCtASecretariatreliesonaffiliationswithotherentities,e.g.,theUNGlobalCompact,topartiallyallaypotentialconcernsrelatedtosocialandenvironmentalrisks,projectdocumentationindicatesthefullextenttowhichthememberiscomplyingwithstandardsofthatentity.

EligibilityofMemberCompaniestotheBCtAWerecommendthatUNDPSeniorManagementensurethefollowing:137. BCtAmembershipcriteriaisrevisedtoensureattentiontosocialconcerns(includingfundamentalhumanrightsconcerns,e.g.,fairpay/wages,healthyworkingconditionsandnon-exploitationinthesupplychain,etc.,inadditionto‘integrationintocompanyvaluechains’),andenvironmentalconcernsinthecontextofeachinitiative.138. Theprocessforassessingeligibilityisclearandrobust.Morespecifically,describeingreaterdetailhoweligibilitydecisionsaremade.IsUNDPtheprimarydecisionmaker?How



muchtimedoDSCmembershavetoaskquestionsandreceiveinformation?Issilenceclearlyacquiescence?etc.139. SeparationexistsbetweenstaffinvolvedindevelopingrelationshipswithprivatesectorcompaniesandstaffmakingrecommendationsanddecisionsrelatingtomembershipinBCtA(consistentwithRATGuidelines).140. Membershipbenefitsandtenurearetiedexplicitlyandcloselytotheinitiative.MembershipinBCtAisfocusedonthecapacityandwillingnessofthemembertoadvanceinclusivebusinessinthecontextofaspecificbusinessinitiativeproposedbythemember.BenefitsofBCtAmembership,including,particularly,BCtA‘verificationandvalidation’shouldbetiedtheinitiative-includingonthememberwebsiteandinmembermaterialsandpresentations.Additionally,thecriteriaandprocessforcontinuedmembershipin,andbenefitsfrom,BCtAaftertheconsideredinitiativehasendedshouldbemoreexplicitandinwriting.SuchanactionwouldrespondtothePolicyrequirementtomaintainimpartialityandprovide‘noimpliedendorsement’ofanyprivatesectororganization‘whichmightleadtounintendedconsequences….’Additionally,createformalstandardsforhowamemberwouldbedelisted.

RespondingtoGrievancesWerecommendthatUNDPSeniorManagementensurethefollowing:141. Aformalgrievancemechanismexistsforreceivingandrespondingtocomplaintsallegingthatagiveninitiativemayharmcommunities.ThisshouldbeadvertisedontheBCtAwebsite.

Annex1.UNDP’sminimumEnvironmentalandSocialStandards(priorto31December2014)–asreflectedinUNDP’sPOPPSocialandenvironmentalsustainabilityisfundamentaltotheachievementofdevelopmentoutcomesincludingtheMDGs,andshallbesystematicallymainstreamedintoUNDP’sProgrammeandProjectManagementCycles.Opportunitiestostrengthensocialandenvironmentalsustainabilityshallbeidentifiedattheearlieststageofprogrammeandprojectdesign,realizedthroughimplementationandtrackedthroughmonitoringandevaluation.Aprecautionaryapproachshallbeapplied,andpotentialadverseimpactsandrisksshallbeavoidedor,whereavoidanceisnotpossible,adverseimpactsshallbeminimized,mitigatedandmanaged.Assuch,UNDPshallstrivetoensurethatitsprogrammesandprojects:

Annexes



• Shallnotknowinglyengageinprogrammesorprojectsthatareincontraventionof

domesticorinternationallaw.• Ensureeffectiveandinformedparticipationofstakeholdersintheformulationand

implementationofprogrammesandprojects.• Providefairandequitableaccesstobenefitsinamannerthatisculturallyappropriateand

inclusiveanddoesnotimpedeequalaccesstobasicservices(includinghealthservices,cleanwater,energy,education),safeanddecentworkingconditions,housing,andlandrights.

• Contributetoreducinggenderinequalitiesinaccesstoandcontrolovertheresourcesandbenefitsofdevelopment.

• Respectandpromotethehumanrightsprinciplesoftransparency,accountability,inclusion,participation,non-discrimination,equalityandtheruleoflaw,andstandardsderivedfrominternationalhumanrightslaw.

• Fosterfullrespectforindigenouspeoplesrighttoself-determination,humanrights,andculturaluniqueness;ensureindigenouspeoplesfullandeffectiveparticipationindesigning,implementing,andmonitoringprogrammesorprojectsthataffectthem;applytheprinciplesoffree,priorandinformedconsent(FPIC)asitisdefinedintheUNDGguidanceonIndigenousPeoples.

• Avoidtheneedforinvoluntaryresettlement.Wheninvoluntaryresettlementisunavoidable,UNDPshallstrivetoensurethatdisplacedpersonsareinformedoftheirrights,consultedontheiroptions,andofferedtechnicallyandeconomicallyfeasibleresettlementalternativesorfairandadequatecompensation.

• Enhanceclimateresiliency,reducewaste,maximizeenergyefficiency,andminimizematerialresourceuse(includingharmfulchemicalsandpesticides),inordertominimizethereleaseofpollutantstotheenvironment,avoidunwarrantedincreasesingreenhousegasemissions,andavoidpotentialriskstohumanhealth.

• Supportthesustainablemanagement,protection,conservation,maintenanceandrehabilitationofnaturalhabitatsandtheirassociatedbiodiversityandecosystemfunctions.Thisincludesavoidingtheintroductionofknowninvasivespecies,andtheconversionordegradationofcriticalnaturalhabitats,includingthosethatare(a)legallyprotected,(b)officiallyproposedforprotection,(c)identifiedbyauthoritativesourcesfortheirhighconservationvalue,or(d)recognizedasprotectedbytraditionallocalcommunities.

• Conservephysicalculturalresourcesandavoidthealteration,damageorremovalofanyphysicalculturalresources.Physicalculturalresourcesincludearchaeological,paleontological,historical,architectural,andsacredsitesincludinggraveyards,burialsites,anduniquenaturalvalues.

Annex2.AttachedPolicyAnnex3.AttachedRAT

investigation findings and recommendations · 2016. 11. 8. · relation to projects approved after...

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