Introduction to the Company
CMPC, based in Santiago, Chile, is one of the leading pulp and paper companies and one of the largest companies in Latin America. More than 17,000 employees work at production facilities in eight countries to supply products to customers in 45 countries.
Building strong relationships in the communities where it operates is a fundamental part of the way CPMC does business. The company supports a range of social, entrepreneurial, and communication programs to strengthen economic resilience and social capital while also building better relations with neighboring communities.
Introduction to the Approach
In 2015, CMPC developed the Berries Project in Huapitrío Neighborhood, a Commune of Collipulli in the region of Araucanía, Chile. Many Mapuche (Chilean indigenous) communities live in this Neighborhood. The aim of the project is to support the economic development and autonomy of communities living near CMPC’s land that is scheduled to be harvested over the next few years. These communities are particularly vulnerable as a result of small plots of land, lack of viable economic opportunities, and historical conflicts regarding indigenous land.
After assessing the community’s needs, CMPC and the people of Huapitrío agreed on a project to cultivate and sell berries as a way to enhance the value of the land in the community. The advantage of growing berries is that it is a labor-intensive endeavor, thus relying on many workers, and the price of the berries produced is relatively high and therefore generates larger margins. The Project could also be sustained beyond the initial investment of the company, providing a sustainable and stable source of income for the communities. As part of the Project, the company provides plants, installs irrigation, and offers agriculture and business management training to families for the first two years. CMPC also helps farmers find networks to market their berries and is currently exploring ways to achieve Fairtrade certification.
40 families participated in the Project in 2015 and an additional 30 in 2016. 50 more families are expected to participate in 2017. Measurement and valuation of the program’s impact on both local people and CMPC operations is a key feature of the Project, as it helps inform implementation and maximize results.
Understand social capital and its relevance to the business
Every year, CMPC classifies the communities near its operations based on the expected expanse of harvest area and the conflict risk level in the communities. Indicators such as poverty, conflict, and community relations are used to assess the communities. CMPC identified Huapitrío as particularly vulnerable, and conflicts with the community were fairly common.
A needs assessment revealed that a significant root cause of conflicts was economic insecurity. The community consisted of many subsistence farmers who owned small plots of land (1 hectare or less), which made the planting of pine and eucalyptus economically non-viable. There was high unemployment, and many family members left their families for 2-3 months in the year to find work in the agriculture sector in other parts of the country. According to national statistics, more than 40% of the population was living in poverty compared to 22% nationally.
To conduct the needs assessment the company engaged various stakeholders including mayors, community leaders, CMPC employees and contractors, governmental organizations (such as the National Institute of Agricultural Development), as well as industry bodies. CMPC also relied on its own conflict index and the local community development plan (PLADECO) developed by the Municipality. Focus groups and interviews with community members were also used to identify their dreams (Peuma in Mapuche language) and challenges.
Identify the business case and potential business decisions
The Berries Project offers a way to strengthen economic security and social capital in communities. Some of the key business drivers for the Project and associated valuation included:
- Generating and maintaining a harmonious environment that benefits communities and CMPC employees
- Reducing conflict and strengthening relations with the communities where CMPC operates
- Improving relationships with local leaders and local government
- Strengthening the economic independence of local communities vis-à-vis CMPC
- Generating employment and increasing the income generated by local communities
- Taking advantage of a prior restriction: small plots of land
- Improving water use efficiency
- Valuing and protecting natural resources.
Determine target audience and objectives
Measuring and valuing the impact of the Project is important for both internal and external stakeholders. Inside the company, both the Board and those working in operations are interested in community and employee satisfaction metrics. CMPC also tracks the cost of conflicts between communities, this data helps to inform operational and community investments.
External stakeholders such as the local government also have a stake in reducing conflict. Additional key audiences for communicating the results of this Project to are: public bodies, other forestry companies, CMPC employees, and local communities themselves.
Define the Impact pathway
As illustrated below, the company developed an impact pathway capturing its theory of change.
Choose indicators and metrics
The valuation technique used included a mix of quantitative, qualitative, and monetary indicators. CMPC incorporated existing global and company specific indicators as well as project specific indicators to measure and value the Project from both the community and business perspectives. Indicators reflect a significant number of the Sustainable Development Goals (SDG1: No Poverty, SDG2: Zero Hunger, SDG6: Clean Water and Sanitation, SDG 8: Decent Work and Economic Growth, SDG9: Industry, Innovation and Infrastructure, SDG 10: Reduced Inequalities, SDG12: Responsible Consumption & Production, SDG13: Climate Action). Specific indicators included were:
- Income Level or Poverty Level: through the CASEN (National Socioeconomic), and the new HSR (Home’s Social Registration) surveys.
- Income ($): through national surveys and CMPC’s focus group interviews. National surveys are carried out on an annual basis. Participants are asked to place themselves in one of the different fixed income ranges. CMPC conducts focus group interviews with community members approximately once a month to determine the annual income of participants, and whether they perceive it to have increased, remained constant or decreased in comparison to last year and previous months.
- Employment: through national surveys and CMPC’s focus group interviews. The national surveys are implemented annually and CMPC focus group interviews are carried out on a monthly basis.
- Conflict index: through CMPC’s measurement (number of fires, number of protests, number of incidents of stealing wood). This is incorporated into the social impact data as incidents occur.
- Conflict related expenses: from CMPC’s annual budget.
CMPC employed an additional indicator on behavior change that emerged as a key impact of the Project. The company found that more family members were staying in the community rather than seeking work elsewhere during the summer, helping to keep families together. This was investigated by surveying the families participating in the Project. By not leaving their families for 2-4 months, families were more stable, diminishing the risks associated with abandonment and solitude such as drug and alcohol use.
Undertake or commission measurement and valuation
Data collection was carried out using three main methodologies:
- Through third parties: this included surveys and focus groups, gathering monetary (income level) and qualitative data (including the perception of CMPC, and perception of the Project).
- Through use of internal data collection: this included quantitative data that the company tracks on a regular basis within communities where it operates, and the results of social programs (the number and level of conflicts), and monetary data concerning the financial impact of conflict on CMPC.
- Through academic literature: this included drawing on existing estimates of berry production and plant productivity under similar conditions in order to estimate production levels and income based on the price of berries. This was conducted with the help of an agronomist.
Capturing accurate income estimates proved to be challenging because of the sensitivity of the topic. Many people did not want to talk about income, which is why CMPC employed various alternative techniques to capture this data, including focus groups, surveys, regular/adhoc engagement in communities as well as using existing production estimates for the Project.
Conflict is an important indicator for CMPC. The company uses quantitative measures of total incidences of everything from intentional fires and cutting down trees to more pronounced manifestations of conflict such as protests. This data is collected by the CMPC staff overseeing each parcel of land. They visit every area multiple times a week, and are in constant communication with communities and rangers. The company also monetizes conflict based on CMPC budget spent on rebuilding infrastructure and conflict resolution. The results indicate that there was an 85% reduction of burned areas (2015-2016 v/s 2014-2015), 55% reduction in fire fighting (2015-2016 v/s 2014-2015) and 60% reduction in stoppages of CMPC productive activities resulting from local community actions (2015-2016 v/s 2014-2015).
Apply results to key business decisions
There are a number of important lessons from the Project that are being applied to business decisions in the community and company:
- It is important to address the right problem: The Project revealed how important it is to understand and address the root cause of conflict, which in this case was poverty and economic insecurity. The company also realized early on that the success of the Project depended on improving water availability and thus additional assessments of water availability are being undertaken at all potential Project sites.
- Long-term view on the return on investment: While the initial investment in the Berries Project may be higher than some other CMPC community programs, the pay offs for the community and company are expected to be much greater in the long-term. Not only does this reduce the costs of dealing with conflict but also reduces the community’s dependence on the company.
- Leveraging company expertise: The Project offered an opportunity for the company to apply its know-how and expertise in agriculture, irrigation and land management to a different context. While the Project was not focused on eucalyptus, CMPC employees and contractors were able to showcase the value they can bring to communities, especially in agriculture.
- Engagement with government bodies: The company also learned more about the most effective ways to work with government bodies. People inside municipalities can change, which is why it is important to build relationships with public institutions not just individuals. At the same time, it is important to take the time to speak with stakeholders one-on-one so that they see the company as a partner rather than just a corporate entity.
- Working with communities: It is also important to work directly with communities rather than intermediary stakeholders. Although CMPC has good relations with local government and administration, it still faced significant conflict on the ground in communities. The company realized that many municipalities didn’t understand the different community perspectives, especially with regards to indigenous communities and land. When working with communities it’s important to create trust before initiating dialogue. To maintain trust, expectancies must be accomplished, or trust built up over a long period can instantly disappear.
Integrate social capital into business processes
The analytical approach adopted in the Berries Project is already being applied inside the company as a way to identify potential new programs and ensure community projects maximize value for communities and minimize investment or costs over the long-term. The approach is also informing the way the company works with stakeholders and builds alliances, so that community development is now designed, owned and managed by communities themselves.