Lessons learned from Kachung

The Swedish Energy Agency has faced criticism for its purchase of ‘carbon credits’ from a pine tree plantation in Kachung in Uganda. Important lessons can be learned from the project, according to Swedwatch.

As part of its mandate to combat global climate change, the Swedish Energy Agency (Energimyndigheten), entered into a 20-year contract agreement with the Norwegian forest company Green Resources. The Agency is buying so-called ‘carbon credits’ from a 2600 hectare pine tree plantation in Kachung, Uganda. Swedish media now alleges that the plantation has negative side effects on people and the environment at the local level. However, taking a step back, the project can be used as an example for future forestry and land use projects. Both in terms of a proper response to allegations and in terms of questionable risk assessments during the project design phase.

The allegations are not new

Green Resources got the plantation license in 1999. In 2011 the project was recognised as a so-called ‘Clean Development Mechanism’ (CDM) with a large area of grass and shrub lands eligible for afforestation – mainly with Eucalyptus and Pine trees. Subsequently the agreement with the Energy Agency was signed.

The allegations in the Swedish media are not new. A number of organisations like Ejolt and Oakland Institute have documented Kachung cases of forced evictions of farmers, pesticide pollution of adjacent watercourses, and instances where indigenous peoples’ rights to land, consultation and project consent were not considered. Since the trees are planted on land formerly used by communities, the families now allegedly have less land to grow food on and cannot access grazing land for their cattle. And, according to the accusations, the company has not provided adequate community development benefits to balance the negative impacts.

Role model response

In the media the Energy Agency is now accused of ignoring the project problems. However, their response can be seen as a good example of how parties in a business relationship can take responsibility and use their influence to get a problematic project on track. In public statements the Energy Agency pledges to investigate the accusations thoroughly. Further, they are requesting Green Resources to develop a concrete action plan with nine focus areas to improve the social and environmental situation on the ground. The Energy Agency even introduces a possible additional contract, which would oblige Green Resources to produce tangible improvements for local communities – all to be verified by external consultants.

But better to get things right from start

The United Nations’ Guiding Principles on Business and Human Rights require companies to conduct due diligence for projects in order to identify, prevent and mitigate environmental and human rights risks on an on-going basis through the whole project cycle – the logical emphasis being on solid and proactive risk assessment in order to prevent negative impacts. What the Energy Agency is doing now can be considered as ‘remediation and compensation’ for adverse impacts, and should be seen as a last resort when damages on people and on the environment have already occurred.

As mentioned, the Kachung case is a typical illustration of sustainability challenges facing other land use projects in complex environments. For example in Stora Enso’s large Eucalypt plantation in a poor area in Guangxi in China, a number of indigenous farmers are still waiting for the company to revise and rectify faulty land lease contracts. Allegedly some farmers signed their contracts under threats of violence. In hindsight, Stora Enso attributes part of the responsibility to local Chinese entrepreneurs who had earlier leased the land from farmers, and then, in turn, leased it on to the company.

What questions should be asked?

Obvious questions to be asked at this stage of the Kachung project are whether the Energy Agency’s proactive risk assessments were solid enough. And if the concluding assessment that Green Resources had ‘good capacity to handle the risks’ was sound.

The Energy Agency states on their website that a consultancy report from 2011 alerted them to some of the risks, and the agency staff conducted a field visit in the area. Since neither the risk assessment report nor the field trip findings are publicly available, it is impossible to hold the Energy Agency accountable for the quality of the risk assessment and the decision to trust Green Resource’s capacity.

Given the lack of public transparency, Swedwatch does not know how well the strategic, bigger picture issues were analysed and carefully weighted during the project inception phase. Our research has found several key issues that should have alerted the Energy Agency that this was a project in a high-risk environment:

• Green Resources forest plantation projects in Eastern Africa systematically face similar types of accusations to those presented against the Kachung project.
• The Ugandan state provides large land leases to companies, where in many cases the state has already acted in breach of local land rights.  Moreover, Uganda does not recognise indigenous peoples’ right to land and their right to give free and informed consent to decide on the go ahead of a project.
• The criteria for how CDM projects should contribute to ‘sustainable development’ vary between countries, and there is a lack of firm follow-up mechanisms and guidelines on how consultations with communities and stakeholders should be conducted.

Lessons learned - summary

Swedwatch believes that stakeholder dialogues and transparency on behalf of companies and ‘customers/clients’ during project inception can prevent negative impacts on people and the environment. Hence, when companies enter into difficult operating environments with complex histories of land use – be it Stora Enso in Guangxi or Green Resources in Kachung – they need to consult with farmers, local and international NGOs and media, as well as government officers and businesses in order to form a full understanding of the risks. The company should openly publish their risk assessments and concluding assessments in order to ensure accountability – in accordance with the UNGP provisions on ‘knowing and showing’.

Over the coming months the Energy Agency will investigate the allegations further and develop an action plan accordingly. Swedwatch looks forward to a verification that that adequate measures have or will be been taken in the short run, as well as for the remaining contract period until 2032, in order to ensure that:

• The livelihood situation of the local residents of Kachung Reserve Forest is improved.
• Conflicts between local staff and the local community are resolved.
• The issue of land ownership within the reserved forest is handled in a responsible manner.

Frida Arounsavath, researcher, Swedwatch

Sanjida Shamsher, researcher, Swedwatch