PS1 Social and Environmental Assessment and Management System
Although the business model remains at pre-commercial funding stage, BioCarbon has developed an E&S management system with the required components specified in PS1. At the operational level, these have been piloted at the two West Kalimantan sites. BioCarbon will need to demonstrate that PS1 requirements can be applied consistently throughout its operations and underlying project portfolio.
Social and Environmental Assessment:
BioCarbon has a procedure for pre-screening of potential sites and the subsequent management decision to further investigate and develop potential sites. The procedure requires proponents of potential sites to provide site details including the legal status (land, tenure), drivers of deforestation, estimates of carbon content and carbon emission reductions and/or sequestration potential following project implementation, population and community engagement, estimated costs for project development and sources of financial support. Selected sites are subject to further carbon, biodiversity and social assessment by implementation partners or contracted expertise. Finally depending on host country regulatory requirements, sites may also be subject to development and submission of a formal Environmental and Social Impact Assessment (ESIA).
In Indonesia potential sites will be derived through three channels - first, through securing Ecosystem Restoration Concessions (ERCs) allocated by the Ministry of Forestry; second, through acquisition of rights from entities holding logging concessions and third, by working together with owners of palm oil plantation concessions to protect and restore areas of high conservation value. Projects applying for an ERC are required to implement an ESIA (either an AMDAL or UKL/UPL). A review of information for the two West Kalimantan sites indicated that the assessment was strongest for carbon and biodiversity with further work required for social impact assessment.
BioCarbon will strengthen its social assessment capacity in line with the requirements of IFC Performance Standards and the CCBA Standard. This will include:
improved definition of baseline social assessment requirements, including livelihoods, household incomes, land use mapping, assessment of community-level use of forest resources, drivers for community-level forest degradation and conversion and economic analyses of the viability of potential alternative livelihood activities)
recruitment of additional qualified resources with oversight for project-level social assessment; and
early project-level implementation of the recommendation from such assessments.
Final investment decisions will be taken by BioCarbon’s Board of Directors, with certain key decisions to initially be decided by an Investment Committee. Both the Board of Directors and the Investment Committee will comprise representatives from shareholders in BioCarbon.
To ensure that BioCarbon’s due diligence and project structuring meets IFC’s expectations for the consistent interpretation and application of the Performance Standards, IFC will retain approval rights for new projects until satisfied that BioCarbon’s assessment procedures meet IFC’s requirements, and will retain prior notification and review rights for any proposed investment assessed considered to be high risk.
Management program
BioCarbon has developed a set of draft policy statements to address core aspects of its business model (corporate and project level). Where sites are accepted, BioCarbon, together with the technical partner assumes project management responsibilities including liaison with government, compliance with government legislation, licensing and permitting, site assessment and development (including carbon assessment, biodiversity and livelihood assessments) and ultimately monitoring with the aim of achieving certification to BioCarbon’s selected standards.
On-going management of portfolio projects will include programs addressing the core project attributes including: carbon stocks; biodiversity conservation; community development; VCS and CCBA maintenance, and community-level management of forest resources. Such on-going project implementation will involve conservation and economic development initiatives involving project staff, consultants, local NGOs and the affected communities. BioCarbon will ensure on-going, adequate resourcing of these programs.
As a component of its corporate level E&S management system, BioCarbon will clearly specify the obligations of selected partners responsible for development and management of individual projects’ attributes.
Action Plan
For the proposed portfolio of projects in Indonesia, BioCarbon has a generic outline of component actions associated with site assessment, acquisition and development. However integrated action plans were not available for individual selected projects at this early stage, making it difficult to understand the component activities, the implementation schedule and management responsibilities. BioCarbon will develop integrated action plans for project sites allowing it to oversee its partners’ component activities including resourcing and implementation schedules.
Organizational capacity
Given the stage of Project development, the Project organization (including BioCarbon, its technical partner and project-level staffing) is focused on securing land tenure; carbon assessment; biodiversity assessment, and initial community engagement. To drive the quality assurance across the portfolio, BioCarbon will recruit a specialist with oversight for (i) the biodiversity and social work of counterpart organizations; (ii) the development of standard procedures for assessment and management of project-level impacts (including stakeholder analysis and engagement, labor, land acquisition and involuntary resettlement, indigenous peoples and cultural heritage) and (iii) provision of monitoring and quality assurance services to the Project. In addition BioCarbon will require partners to contract or build expertise to ensure adequacy of social baseline assessments and economic analyses of displacement and viability of proposed livelihood alternatives.
Community Engagement
The CCBA stipulates project requirements for consideration of traditional claims to and/or use of lands, community engagement and demonstration of Free, Prior and Informed Consent (FPIC). In Indonesia the projects (through FFI) use these criteria as a basis for the identification of the affected communities i.e. those that stake claims to lands within, or are directly responsible for extraction of resources derived from, the concession. While this framework may be suited to identification of directly affected communities and subsequent development of community-based management regimes, it does not always allow for explicit consideration of all stakeholders driving forest resource exploitation. For example, at the West Kalimantan site that was visited, demand for timber was recognized to be driven by stakeholders outside the directly-affected villages.
The site visit demonstrated that FFI and contracted local NGOs were actively involved in engaging affected communities. Initial activities focused on building awareness of climate change, REDD and the community dependence on the forest’s ecological and productive services. FFI indicated that engagement would turn to community-based forest management regimes, the distribution and utilization of carbon-derived revenues and alternative livelihood development, once national approval of the projects was secured and carbon-derived revenue streams guaranteed.
CCBA requires the demonstration of Free, Prior and Informed Consent (FPIC). IFC requires the implementation of Free, Prior and Informed Consultation and demonstration of Broad Community Support (BCS) for Category A projects (or in this case, project sites which BioCarbon assess as having high risk/category A attributes). The CCBA requirement, to which BioCarbon is committed as part of its business model, will satisfy IFC’s requirements on this issue. Discussions with regional FFI management staff in Indonesia indicated that they were able to provide a detailed explanation of the minimum requirements to achieve FPIC.
BioCarbon will develop procedural guidelines for stakeholder identification, stakeholder engagement and Free, Prior and Informed Consent (FPIC) to ensure that FPIC is developed in a consistent manner in all countries in which the Project develops sites. Guidelines for stakeholder engagement should require project-level stakeholder analysis, development of a stakeholder engagement plan and development of both project and community-level grievance mechanisms. The latter will be developed once community-based forest management regimes are adopted and allow community-level grievances to be filed with the relevant community institution(s). Further the guidelines should include explicit consideration of (i) stakeholders driving resource extraction from forest concessions and (ii) the relationship between stakeholder engagement and the schedule for project development.
Monitoring
The Project will define a monitoring framework applicable to all projects in due course (see Organizational Capacity). The VCS and CCBA outline the need for defined monitoring systems addressing carbon, biodiversity and communities.
PS2 Labor and Working Conditions
As described in the PS1 analysis, the Project’s implementation model relies on establishing relationships between the Project and qualified partners who have the capacity to identify and evaluate sites, and manage the carbon, biodiversity and community aspects of individual projects.
Currently BioCarbon has an established relationship with FFI. This agreement allows for full-time and part-time contributions of FFI staff to BioCarbon projects. In Indonesia, FFI-led project development and implementation is associated with the recruitment of consultants and contracting of local NGOs to implement selected activities e.g. community engagement. Project staff fall under the auspices of the BioCarbon Human Resource policy and procedures. At this time FFI does not have overarching global standards or an Indonesian Human Resource policy and manual. BioCarbon will develop a Human Resource Policy requiring its technical partners and their contractors to abide by national labor standards and the requirements of IFC Performance Standard 2: Labor and Working Conditions. As part of the ESMS, the policy will also require appropriate reporting and monitoring of the partners’ and contractors’ workforce.
With regards to occupational health and safety, project identification, assessment and development may involve travel to and working in relatively isolated environments. Prior to field visits, it will be important to undertake hazard analysis and emergency planning including emergency transport and first aid kit. With prolonged periods spent in such environments, drinking water, food, heat stress, accidental cuts from machetes, eye safety and safeguarding against disease and infection should be a matter of priority. The Project will establish OHS assessment and management procedures to address these issues.
PS3 Pollution Prevention and Abatement
The Project has limited activities that may be associated with pollution events. Site assessment of carbon stocks and biodiversity will involve use of transport and extended periods of residence in the forest environment. The Project and its partners will define and enforce minimum guidelines to address (i) transport, storage, use and potential spillage of fuels used in travelling to and working on site, and (ii) management of domestic waste generated during extended residence in the forest.
PS4 Community Health, Safety and Security
The Project has limited activities that have direct impacts on community health, safety and security. However the Project proposes to work with local communities to define and enforce agreed forest management regimes. These management regimes will anticipate both positive and negative scenarios. For example it is anticipated that (i) fire-fighting equipment will be placed in local communities to facilitate control of fires on peat forest areas and (ii) implementation and enforcement of new (albeit agreed) forest management regimes may negatively affect some households and stakeholders. Community-level enforcement of agreed restrictions (e.g. no logging) on resource utilization may be associated with conflict within communities including deliberate destruction of natural resources (e.g., setting fires), damage to property or the threat of violence. Further, project activities may also improve access to forest resources facilitating the entry of external stakeholders and their use of the forest resource. Finally the delivery of project-derived revenue stream and other benefits may encourage different behavior and in-migration.
The Project will ensure that such concerns are addressed in community development guidelines and specifically (i) the design of community-based forest management regimes, (ii) the type/s of benefit streams selected and (iii) the delivery mechanisms for these benefits.
PS5 Land Acquisition and Involuntary Resettlement
The VCS and CCBA require establishment and demonstration of secure title to carbon rights as a condition for certification and hence carbon trading; this is obtained by securing land rights. Various means of obtaining securing land tenure are recognized – for example, secure tenure may be obtained through concessions from the relevant national authority (typically the Ministry of Forestry), acquisition of the rights of other concession holders or long-term lease arrangements with land owners. The basis of securing land tenure will be country and context specific. Nonetheless it can be assumed that secure tenure will be obtained by utilization of national frameworks governing ownership and management of forest resources or by willing buyer-willing seller negotiations with various stakeholders (e.g., concession holders, smallholders).
Lands obtained via national frameworks may be subject to local level traditional ownership claims and customary use and in this way, individual projects may involve economic displacement associated with acquisition of land rights and development of pro-carbon, pro-restoration, pro-conservation management regimes although the possibility of physical displacement cannot be ruled out.
The CCBA standard specifies the requirement for just and fair compensation where involuntary relocation of physical habitation or activities important for the livelihoods and culture of the communities occurs. The CCBA standard also requires that projects generate net positive impacts on the social and economic well-being of communities and ensure that the costs and benefits are equitably shared among community members and constituent groups. Finally the CCBA standard also specifies the need for community-level monitoring to demonstrate this outcome.
To address concerns regarding involuntary resettlement, the Project will: (i) develop a Land Acquisition and Involuntary Resettlement Policy committing the Project to meeting the requirements of IFC PS5 Land Acquisition and Involuntary Resettlement. The Policy will commit BioCarbon to: (i) include compensation for physical and/or economic displacement in the project development costs; (ii) ensure that the screening and pre-appraisal of proposed projects includes an assessment of the need for physical and/or economic displacement and the potential costs of addressing such displacement (including compensation); (iii) where a project is accepted, BioCarbon will commit to providing appropriate compensation and include the estimated costs of addressing physical and/or economic displacement in the project development budget; and, (iv) develop specific methodologies and supporting guidelines to ensure baseline social assessment of livelihoods, the determination of physical and/or economic displacement, and the delivery of appropriate compensation addressing such displacement.
PS6 Biodiversity Conservation and Sustainable Natural Resource Management
The management of carbon stocks is strongly correlated with conservation of biodiversity and forest resources. In recognition of this, the CCBA standard requires that the projects seeking certification (i) achieve net positive impacts on biodiversity within the project zone and within the project lifetime; (ii) maintain or enhance any High Conservation Values present in the project zone, and; (iii) establish systems to monitor biodiversity impacts. IFC considers certification to CCBA at the project level as meeting the PS6 requirement to demonstrate sustainable management of resources through an appropriate system of independent certification.
At the project sites where BioCarbon and its partners are already active, comprehensive baseline reviews have been undertaken of biodiversity values and related threats. Such practice will be implemented for all sites and by the nature of the assets being sought, critical habitat is likely to be encountered. The PS6 requirements for critical habitat will be captured in the biodiversity management plans for each site, which in turn will be integrated into the community-based forest management regimes that drive the BioCarbon business model. This includes various restoration activities that aim to both protect and restore degraded ecosystems (while simultaneously maximizing carbon stocks).
No commercial timber extraction is currently envisaged as a component of any project management plan, although it will be considered if: (i) it was essential to the commercial viability of a project site (carbon and other non-extractive income streams insufficient) and; (ii) BioCarbon was satisfied it could be managed in full compliance to sustainable forest management principles and criteria. In such a scenario, IFC would require (i) prior notification and review rights (see PS1 for high risk projects) and (ii) certification beyond CCBA and which is specific to this scenario (e.g. Forest Stewardship Council-Forest Management or equivalent).
PS7 Indigenous People
Indigenous peoples may be traditional owners and customary users of lands and resources on selected sites. The nature of the proposed projects may impact Indigenous Peoples. Based on use of the CCBA standard, individual projects are required to recognize customary rights, integrate Indigenous Peoples’ concerns into project development, and demonstrate Free, Prior and Informed Consent. However the CCBA standard is both high-level and relatively generic in nature and as such cannot be relied on to provide similar outcomes to those intended by PS7.
The Sponsor will develop detailed procedures to ensure the identification, assessment, recognition and integration of Indigenous Peoples in project development. Over and above these general requirements, the procedures will require:
(i) the development of guidelines addressing the identification and rights of indigenous peoples (with reference to national and regional frameworks) for each country of operation. For example, in Indonesia reference should be made to national legislation pertaining to the identification and rights of Indigenous Peoples; for projects located in Papua further reference would need to be made to Papuan legislation developed subsequent to passage of the Special Autonomy Law which contains specific provisions for recognition of Indigenous Peoples rights and the distribution of benefits.
(ii) that projects affecting Indigenous Peoples will contract independent experts to assess the affected IP communities and identify required actions to ensure project development plans comply with the requirements of IFC PS7.
PS8 Cultural Heritage
The selection and development of target sites may impact upon cultural heritage. As described above the Sponsor will develop methodology and guidelines to assess the existence of cultural property and its management. Such guidelines will: (i) require explicit consideration of cultural heritage in detailed site assessment procedures; and, (ii) where cultural is identified, ensure adequate awareness, recognition and appropriate protection of such cultural heritage. In support of this requirement, the Sponsor will also develop a chance find protocol.
