Tenure-related disputes increase financial risks for companies in land-dependent sectors. The “land tenure risks” that companies confront, either through direct acquisition of land or through their supply chains, are thus of great relevance for informed voting and investment decisions. Given the importance of understanding these risks, the Columbia Center on Sustainable Investment (CCSI) has sent a submission to the U.S. Securities and Exchange Commission (SEC) to provide input into how land tenure risks could be addressed through disclosure requirements for public companies. This submission was made during the public comments period set by the SEC as it explores modernizing business and financial disclosure requirements in Regulation S-K, including whether Regulation S-K should be amended to require disclosure of public policy and sustainability information.
Given the evidence that public policy and sustainability concerns are of rising importance for investors, CCSI supports mandatory disclosure of environmental, social and governance (ESG) issues. Among the ESG issues important to informed voting and investment decisions is land tenure risk.
CCSI’s submission asserted that, due to the significant financial risk created by land tenure disputes in countries with weak or transitioning land governance systems, companies should be required to report on land tenure risks. More specifically, CCSI’s submission called for mandatory line-item reporting on direct land acquisitions in countries with weak land governance; it further called for mandatory disclosure of due diligence policies relating to land tenure issues that may emerge through supply chains.
The full submission is available at: http://ccsi.columbia.edu/2016/07/22/submission-to-the-sec-on-addressing-land-tenure-risks-through-regulation-s-k/
The Columbia Center on Sustainable Investment (CCSI), a joint center of Columbia Law School and the Earth Institute at Columbia University dedicated to the study, practice and discussion of sustainable international investment. As a partner in DFID’s LEGEND program, CCSI has created tools and conducted a suite of practice-focused research concerning the following topics as they relate to large-scale land-based investments in the global south.