This blog originally appeared on Cambridge Core.

By Lukasz Czerwinski

Doing business in the Global South can be a risky proposition. Unfortunately, no matter how much planning a company does in advance of launching an investment, unforeseen challenges such as competing land claims or other investment-related disputes or trends can occur, causing negative impact on the operation. To mitigate risks and challenges, one of the biggest priorities for any company should be to maintain meaningful relationships with communities.

Unanticipated issues challenges to a land-based investment are often varied and wide-ranging. If they rise to the level of significant disputes between the company and community, they can create reputational and financial risk for a company’s operation. This can result from evolving social and cultural trends that determine who has control over land and natural resources and how a community engages with the company. Periodic fluctuations in the market place could cause uncertainty around compensation and benefit sharing with the community, which can lead to conflict. Eroding environmental conditions may create land scarcity, heightening tensions among community members and between the community and the investor.

For individual women and men within communities, these challenges can have severe and negative effects on their land and livelihoods. This is especially true for more vulnerable members of the community: widowed or divorced women, youth, and ethnic minorities.

In this type of high-risk environment, even a small misstep by a company can create a domino effect that is hard to halt or pull back. In the words of one legendary Jedi Master, “Once you start down the dark path, forever will it dominate your destiny, consume you it will.” I particularly like this quote from Yoda. The underlying premise is that to a large extent we are in control of our own destiny – whether we know it or not.

What can companies do to keep their investments from going down a dark path? Over the last several years, I’ve been fortunate to lead Landesa’s team in implementing a Department for International Development (DFID) funded project called Responsible Investments in Property and Land (RIPL). The purpose of RIPL is to develop step-by-step “how to” guides for companies, government and communities so they are better positioned to comply with international standards for responsible investment. Country specific guides are being developed in Ghana and Tanzania, which is informing a model template to be used in other countries.

Our work included extensive field research and regular feedback from all stakeholder groups, so our team has been able to understand land investment issues and risks from several viewpoints. We see that when companies choose to invest in establishing an effective grievance mechanism, they strengthen their social license to operate within a community and in turn reduce their risks.

Social license reflects the confidence and perception from the broader community that a company will behave in a legitimate, transparent, accountable and socially acceptable way. It’s very Jedi in nature — an intangible asset that isn’t always apparent. Yet, one can sense its presence and feel a dark void when it’s absent. If a company happens to damage it, social license can be difficult to repair, and it can be irreparably damaged when land-related issues are not addressed at the very start of an investment.

Social license is particularly important in environments where policies, laws, regulations and state administration and judicial systems are insufficient to safeguard land rights for citizens. As the entity with most resources and the one seen as being in a position of power, companies are often expected to fill the vacuum left by government. Under these circumstances, social license becomes vital.

We found that there is one key component of social license that is often overlooked by companies; an effective grievance mechanism. To improve the investment approach, companies should ground this mechanism in meaningful community consultation and engagement, and include regular monitoring and evaluation.

To establish a grievance mechanism, we first found that companies should develop and implement an inclusive consultation and engagement plan that facilitates clear, well-planned and frequent communication with communities, including diverse groups within communities, not just dominant voices or traditional leadership. Like any heathy relationship, good communication leads to trust and credibility which is the underlining fabric of a company being able to identify risk. Companies should view this as an opportunity to understand the state of their social license with the community and the associated level of risk. Because social and cultural norms often exclude women, the development of consultation and engagement plan should include a gender analysis to ensure women’s needs are being considered and address. Even though a company may have a good sense of the issues, they might consider conducting a rapid rural appraisal to validate information or go deeper on certain topics.

Once a company has identified the issues, the second step is to work with a cross-section of women and men within the community to design and implement a grievance mechanism. To do this effectively, companies must dedicate sufficient resources to sensitize staff to land and livelihood issues in the community. Actual grievance procedures should be developed in a manner that ensures all community members are able to file complaints easily and in confidence. Social norms will make access to the grievance mechanism more difficult for less powerful members of the community, especially women. Companies should understand and seek to mitigate those constraints. Companies should validate the process with the community, train members as needed, use discussions as a platform to reaffirm the company’s commitment to the community and start taking corrective actions.

We’ve learned that the third step is for a company to have clear, robust monitoring and evaluation procedures. At regular intervals, companies should collect data related to the number and types of complaints, whether they were resolved and the average length to resolve them. Disaggregating data by gender and other groups can identify important patterns during the analysis and share findings with the community. Findings should be incorporated into the grievance mechanism to keep it relevant despite changing dynamics.

Finally, the entire process needs to include the voice of all land users: men, women, pastoralists and any other groups. A strong social license and effective grievance mechanism pertains to the entire community, not just for elites or men. That means approaches should consider and address barriers women face to accessing information and participating in community discussions and decision making.

I think Yoda would agree that this is not a Jedi mind-trick. Companies have the ability to make choices that prevent problems from arising. At the same time, they have the ability to take corrective action when their choices lead them down the wrong path. These practices can make companies masters of community engagement and lead to stronger, more profitable investments.

Lukasz Czerwinski is Program Manager, Global Programs & Sr. Land Tenure Specialist at Landesa.