Infrastructure projects should have the potential to provide notable opportunities for local communities. Often these opportunities lead to the creation of new jobs, long term investments and thereby, increases the chances of strong, long term economic growth. With this in mind, local governments are increasingly looking for policy tools to help promote socio-economic impacts, thus requiring infrastructure businesses to source locally, a policy referred to in North America and the UK for instance, as Community Benefit Agreements (CBA).
Initially, the move towards contractual agreements was met with resistance from industry leaders and business owners. By adhering CBA frameworks, businesses are required to adapt their sourcing activities to the local communities. Critics complain that the new policies bring many delays and increased costs to development projects, e increasing costs for governments and ultimately the public.
Those in favour of these policies argue that the long term benefits to society far outweigh those immediate complications. When utilized correctly, CBAs can be a win-win for both businesses and the community. With the correct design and understanding of the agreement, infrastructure projects can underpin the necessary changes for achieving social equity and encouraging full stakeholder involvement with the redevelopment of communities. In addition, this should set up local businesses for the long run with some initial revenue and IP that can be the catalyst for long term growth. For companies who are focused on achieving their economic, social, and government (ESG) goals and promoting a strategic corporate social responsibility (CSR) plan, following CBAs is essential.
What is the Community Benefit Agreement and Why Should You Use Them?
A classic Community Benefit Agreement is usually privately contracted between a prospective developer and a community representative (government entity). In the shortest explanation, the CBA will specify how the developer aims to provide benefits to the community in exchange for the local support of their proposed development. By adhering to CBAs, a legal framework is therefore provided for both the community and developer.
CBAs are generally crafted with the core principles of fair and just inclusion as well as creating equitable and sustainable development for the community. As part of this contract, clarification of the developer's expectations - such as ensuring an increase in job access, wages, suitable training, as well as other benefits that may improve the surrounding area, will be stipulated. Not only are developers held accountable but community coalitions and public officials are also expected to adhere to these core principles, in order to bring about sustainable development.
In terms of the benefits that the infrastructure industry can expect to contribute to, The Tamarack Institute states that are three kinds of initiatives that CBA’s mainly revolve around.
As we’ve already touched on, a large part of CBA’s aim is to bring about economic growth within local communities. For this to happen, infrastructure stakeholders are required to provide equitable employment and training opportunities to members of historically disadvantaged communities. Generally speaking, these communities are mainly made up of historically underrepresented workers. This form of CBA's aim is to complement the government’s current and broader workforce development plan.
Social Procurement Policies
For any infrastructure development, a cohesive and effective supply chain is an important component of a successful project. To ensure that your chosen supply chain creates opportunities for the local community, a CBA will require the purchasing of local goods and services. This means that all produce, machinery, and manpower should be sourced from local businesses or social enterprises. The outcome of such an initiative is to improve business processes thereby achieving a lighter environmental and greater social impact.
Supplementary Benefit Initiatives
Overall, CBAs have the main focus of making neighbourhoods a better place to live. For larger infrastructure projects, the agreement may require benefits that are of a physical public asset nature (parks, housing, schools). Alternatively, major projects could be asked to improve existing public assets that are already established.
The effectiveness of these initiatives is tenfold. The Partnership of Working Families estimated that between 2000 and 2006, over 104,000 construction jobs and 113,000 permanent jobs were created from the CBAs.
From a business perspective, being able to contribute to such progress not only looks good from a PR point of view but from an investor buy-in perspective too. Organizations that strive within the CBA framework can expect to see greater buy-in across all levels of stakeholders and maximize a smart growth agenda. By increasing transparency and accountability on all levels of public spending, CBAs can be an effective tool for managing sustainable mechanisms and public engagement.
The Bottom Line
Around the world, governments are endeavouring to increase their rate of infrastructure spending to achieve multiple policy objectives, beyond just building much-needed infrastructure. A Community Benefit Agreement is an effective way to accomplish these goals through supplementary social and economic improvements for local communities while implementing a solid CSR strategy. The involvement of both developers and community representatives ensures that essential resources are being leveraged in order to meet both the short and long term needs of these communities.