A Case Study on Large-Scale Forestland Acquisition in China

Date: June 23, 2011

This study examines the case of one FDI made by Stora Enso with International Finance Corporation support in forestland plantations in Guangxi , China. Stora Enso is a company which explicitly adheres to CSR principles and committed to gaining Forest Stewardship Council certification by 2007. The study was prompted by prior field visits by Rural Development Institute (RDI) and Rights and Resources Initiative (RRI) staff in April of 2006 which identified irregularities in the respect of local rights and the implementation of China’s land laws. RRI and RDI informed Stora Enso of these irregularities and risk of conflict at that time. In 2009 there were a series of conflicts between farmers and Stora Enso’s Chinese partners in Hepu of Guangxi over the compensation these farmers received for the land acquired by Stora Enso in 2009. This study was conducted between December 2009 and June 2010 by a team of legal experts from the Rural Development Institute , a highly respected international research organization on land rights with a strong history of research and advisory to legal reforms in China. The research method included fieldwork , interviews with government , village cadres , and village members , as well legal analysis of documents from communities , local governments and intermediaries. Stora Enso staff in Beijing and Guangxi were contacted in December 2009 to inform them of the study and request interviews and participation in the fieldwork. Unfortunately , Stora Enso staff in Beijing had one meeting with RDI and did not follow-up to supply information to RDI or RRI. They also chose to not be interviewed or participate in the field study.

In brief , the study finds that despite Stora Enso’s good intentions as revealed by its establishment of the “Principles for Sustainable Wood and Fibre Procurement and Land Management” in March 2005 among other CSR principles , there are major limits to their legal due diligence. In effect , this is raising risks for local people to both their rights to land and livelihoods. Since weak governance and limited recognition of local land rights is more the norm than the exception in developing countries , the study points to the continued difficulty of meeting local laws , much less global standards , by foreign investors who hold a commitment to CSR.

Contact Information:

For more information or to request an interview , please contact:

Coimbra Sirica: +1-301-943-3287 or csirica@burnesscommunications.com
Michelle Geis: +1-301-280-5712 or mgeis@burnesscommunications.com

Stora Enso has asked RRI to provide contact information for a company representative. Please write to Mr. Lauri Peltola for more information , Lauri.Peltola@storaenso.com.

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