Community Benefit Agreements (CBAs) are an essential part of stakeholder management. Increasingly, they are required to qualify for subsidies or to comply with regulatory requirements – as is the case with new energy projects – so it’s vitally important that they are properly managed and monitored.
Beyond the financial incentives that may be involved, meaningful CBAs that stem from effective stakeholder engagement can have a positive impact on project social acceptance and even improve quality of life for the communities affected by their projects.
CBAs don’t just address community concerns; they also formalize collaboration between the parties, and strengthen long-term relationships.
The negotiations that take place within the context of these agreements do involve significant challenges, including complex regulations and inconsistent community dynamics. Even once a Community Benefit Agreement has been approved, implementing it effectively will still require rigorous monitoring and careful management.
What is a Community Benefits Agreement?
Community Benefit Agreements (CBAs) usually take the form of legally binding contracts between developers (responsible for construction, infrastructure or development projects) and a coalition of community groups. However, this may vary from one country to another, and even within the same country (Canada, for example).
These agreements are designed to ensure that the communities also benefit when industrial, commercial, institutional, or public sector development projects occur in their region. CBAs are usually negotiated and signed before infrastructure construction begins, to ensure that the necessary conditions and commitments are in place at this crucial stage.
CBAs detail the specific benefits communities will experience when a project is carried out, for example:
- Local job creation
- Fair hiring practices
- Investments in training
- Construction of affordable housing
- Community improvements
- Support for local/social businesses
Find out how our Local Employment and Procurement add-on can help your team track and report on local initiatives, to mitigate social risk and secure community support.
Why is a Community Benefits Agreement important?
When faced with a project that could upset their routines and peace of mind or threaten their social and environmental balance, citizens will (understandably) object. Complaints that are not acknowledged can turn into protests, strikes, or, in extreme cases, violent acts. These events can interrupt a project and tarnish a company’s reputation, both locally and internationally. Meaningful CBAs that result from good stakeholder engagement give stakeholders a voice in the project and reassure them that their rights and needs will be respected, making it easier to secure social acceptance.
Issues of environmental justice and corporate social responsibility (CSR) are gaining ground, and developers are increasingly aware that they need to work hand-in-hand with stakeholders to ensure the long-term success of their project.
Investing in disadvantaged communities has become so important that in the United States, a major public funding program was launched under the Biden administration. The ‘Justice40 Initiative’ stipulates that 40% of government investment in an infrastructure project must be invested into programs benefiting communities that are marginalized, underserved or overburdened by pollution.
Advantages of Community Benefit Agreements
Respond to community concerns
When citizens see major projects coming to their backyards, they may fear for the future of their neighborhoods. Sometimes, past experiences have left communities with negative expectations. They may have seen large-scale projects use local labor during the project construction phase, only to abandon local workers once construction is complete. Others may have witnessed the closure of project sites after resources have been depleted, with no plans for reclamation or remediation.
Residents, environmentalists, trade unions, advocates for good governance, and faith-based organizations are among the groups concerned about the negative impacts of large-scale projects. A Community Benefits Agreement can provide them with opportunities to express their fears and wishes, a space for negotiation, and finally a legal document that formalizes the company’s commitments to the community.
Establish a collaborative decision-making process
The negotiations necessary to reach a Community Benefits Agreement require companies to invite stakeholders to the discussion table. For this exercise to be effective, the views of each stakeholder must be heard and taken into account. This ensures that discussions will lead to decisions based on cooperation and respect.
Once a collaborative relationship has been established, similar consultation and decision-making processes can be repeated as needed over the course of the project.
Build strong, long-term relationships with communities
CBAs demonstrate a company’s ability to listen, show consideration and respect, and assure stakeholders that their projects will benefit local communities and improve people’s lives. Companies that excel at this will be more successful in their projects, wherever they go. (Their good reputation will precede them.)
This type of relationship certainly helps to strengthen the bonds between parties, as long as companies keep their promises. A sense of trust is established, which can last a long time and make it easier to carry out subsequent stages or even other projects.
Improve quality of life in the community
The ultimate goal of a Community Benefits Agreement is to balance the gains when a company begins to operate in an area where it will affect people’s lives. Financial compensation is no longer necessarily enough. Companies are expected to engage directly with communities, and to actively involve stakeholders in their project.
Organizations can also help improve affected communities by providing good jobs that pay well, and making sure that these jobs, the necessary training, and access to adequate, affordable housing are accessible to disadvantaged communities.
Examples of Community Benefit Agreements
California High-Speed Rail Authority
In 2013, this U.S.-based organization responsible for planning, designing, building and operating the country’s first high-speed rail system signed a labor and workforce-based Community Benefits Agreement. It is designed to help small businesses and unemployed individuals secure construction contracts, jobs or training related to the project. The agreement specifically targets residents of economically disadvantaged areas and those designated as ‘disadvantaged workers’, such as veterans, people experiencing homelessness, recipients of public assistance, or people who do not have a high school diploma or GED.
Impact Benefit Agreement
Over the past 30 years in Canada, numerous Impact Benefit Agreements (IBAs; a type of CBA) have been negotiated between mining companies and Indigenous communities. These agreements include provisions that prioritize Indigenous peoples for training, hiring and the awarding of contracts related to natural resource development in their ancestral territories.
In 2016, First Nations of Quebec and Labrador Sustainable Development Institute (FNQLSDI) created the Centre of Expertise on Impacts and Benefits Agreements (CEIBA). Its mission is to help communities negotiate agreements, particularly in the mining, forestry and energy sectors.
The Giant Mine and the Yellowknives Dene First Nation
While a Community Benefits Agreement usually refers to an agreement between private companies and communities, it may sometimes deviate slightly from this definition when the main party is the government. The objectives, however, remain the same.
For example, in August 2021, the Government of Canada and the Yellowknives Dene First Nation signed three agreements to formalize their relationship, and their commitment to work together to repair the damage caused by the Giant Mine, which ceased operations in 2004.
Among these agreements, one CBA provides funding of up to $20 million over ten years, in particular to finance capacity building.
How to meet the challenges of CBA management?
Businesses face a number of challenges when it comes to identifying their stakeholders, tracking comments and issues related to negotiations, reaching agreements, and ensuring that these are honored. Fortunately, modern, fit-for-purpose tools can help teams manage these challenges more effectively.
For nearly 20 years, Borealis stakeholder management software has helped organizations efficiently manage all aspects of stakeholder engagement. Borealis has developed a range of tools designed to meet these challenges, making it an excellent solution for teams that need to manage Community Benefit Agreements.
Challenge #1: The instability of community dynamics
Communities are complex systems with diverse and evolving demands and interests. Negotiating a Community Benefits Agreement requires companies to make a sustained commitment and constantly adjust to shifting community dynamics. Regular communication and flexibility are essential, as shifting community priorities, changes in management and leadership, and the involvement of new community organizations can make negotiations progressively more challenging.
In particular, Borealis makes it possible to:
- Establish a complete register of all project stakeholders, with individual records that contain all relevant information about their interests and position with respect to the project.
- Map stakeholders to obtain a global view of the necessary outreach work.
- Track all communications between stakeholders and project representatives.
- Deal more easily with difficult stakeholders, by eliminating annoyances such as communication errors, misunderstandings, oversights, and long response times.
Challenge #2: The complexity of regulatory and legal frameworks, implementation, and monitoring
Infrastructure projects are governed by complex regulatory and legal systems that have an impact on practically every part of the project, including the negotiations required for a Community Benefits Agreement. The viability and scope of benefits included in these agreements may be impacted by compliance with environmental rules, labor laws, zoning requirements, and other legal obligations. Navigating these frameworks and ensuring compliance can be challenging and time-consuming.
In the United States, for example, there are at least two public interest programs involved in the promotion and implementation of agreements which can potentially complicate compliance activities. The Bipartisan Infrastructure Bill, enacted as part of the Infrastructure Investment and Jobs Act (IIJA), authorizes an investment of up to $108 billion in public transit. The Inflation Reduction Act (IRA), signed into law in 2022, provides $500 billion in new federal spending to reduce carbon emissions and healthcare costs.
After a Community Benefit Agreement has been ratified, it can be difficult to ensure implementation and follow-up. Clear monitoring, evaluation and enforcement mechanisms need to be put in place, as lack of resources, capacity, or accountability mechanisms can jeopardize the completion of promised actions.
Fortunately, the Borealis Compliance Management module provides tools perfectly suited to these requirements and tasks, allowing users (among other things) to:
- List all commitments made to stakeholders, including Community Benefit Agreements.
- Maintain records of all compliance documents and agreements related to the project (internal policies, government regulations, community benefit agreements, etc.) and link them to the commitments.
- Closely monitor compliance efforts to ensure that all conditions are met on schedule, and adjust if necessary.
- Access data by community, commitment, engagement plan, document, and more.
The Analytics tools in Borealis provide information on the general status of commitments (e.g.: satisfied, in progress, planned, suspended), as well as results by document, risk, or subject.
Key Points to Remember
- As sustainable development gains momentum, Community Benefit Agreements (CBAs) take on even greater value due to their environmental, economic and social considerations.
- In addition to providing access to financing and permits, CBAs improve community relations through commitments to communities.
- The negotiations leading to CBAs involve a host of complex details, such as recording and tracking communications and complying with regulatory and legal frameworks. Organizations must be able to manage this information efficiently and quickly adapt to changing community dynamics.
- Borealis software offers multiple features, tools and modules to help organizations effectively manage Community Benefit Agreements.