Social impact assessment of Veracel’s small-scale agriculture project

Introduction to the Company

Veracel Celulose, a 50/50 joint venture between Fibria and Stora Enso, is an agro-industrial enterprise integrating forest, industrial operations and logistics. Its operations are concentrated in the State of Bahia, Brazil, generating 2,904 direct and indirect jobs, and an average annual production is of 1.1 million metric tons of pulp. 

Introduction to the Project

In 1991 Veracel established its operations in the State of Bahia, Brazil, and was confronted with longstanding poverty and famine in the local communities. As the only large corporation operating in a 500-kilometer radius, the local communities expected that Veracel would provide them with jobs and would support their development. Veracel was aware that there could be competition over land between Veracel’s eucalyptus plantations and the community’s traditional family farming practices, and the company wanted to make sure that this did not turn into a conflict with the local communities. Thus Veracel established the Agrovida project in 2008 to train local leaders to empower them to coordinate projects in the local communities that would lead to the continuation of subsistence farming and the possibility of generating new income through the selling of surplus produce.

Stage 1: Frame

The project represented a lot of investment on the part of the company; thus a social impact assessment was required to demonstrate the effectiveness and the legacy of the project. 

The assessment allows for monitoring of the progress of the project, attracts and engages project investors, and contributes to improving the business enabling environment because the local communities recognize the value of the investment made by Veracel. 

Stage 2: Scope

Veracel chose the Agrovida project among several community engagement projects carried out in the region as it demonstrates a successful model of engagement with the local communities in União Baianan. Veracel set the organizational and geographic boundaries to capture this successful and sustainable model in order to be able to replicate it in other communities. The company set up the project in 2008 and captured data in 2011, 2014 and 2015 for the assessment. Finding socio-economic data from 2008 to set the baseline was very difficult to accomplish and was only achieved recently through in-depth field interviews.

The main beneficiary stakeholder groups are: 

  • Community leaders, trained by Veracel and partners to implement the project through community empowerment, to conduct data collection and measurement, and to identify needs/investment opportunities within communities. 
  • Communities, who take part in and benefit from the projects. 
  • Local governments, which purchase some of the surplus produce generated to distribute as part of school lunch programs.

The main audiences for the results of the projects are:

  • Community leaders, who use the data to understand the progress of the project and where improvements can be made.
  • Local partners, such as NGOs, government institutions and technical agencies that participate in the implementation of the project, helping them to understand the progress and impact of the project.
  • Internal project managers and investors, so that they understand the impact the project is having and to make decisions about which communities and projects to invest in.

While the company conducted the assessment primarily to demonstrate to investors and sponsors the positive impact of the project on people’s lives, the need for local communities to take ownership and become self-sufficient in their data gathering and reporting drove the measurement approach and choice of indicators.

Stage 3: Measure and Value

Four types of indicators are tracked through this assessment: 

Community engagement 

  • Number of families benefiting from the program
  • Number of families leaving the project
  • Level of satisfaction with the project
  • Number of people trained
  • Number of hours of training
  • Mass of produce per hectare of land
  • Average family income
  • Average gross income from production/year
  • Profit from production/year

The intention was to develop indicators that are:

  1. Comparable to other projects that Veracel sponsors;
  2. Replicable within and between projects;
  3. Aligned with Veracel’s principles and values;
  4. Provide decision-making support.

One challenge in creating indicators that adhere to these four principles was that Veracel relies on the community leaders to collect data and independently monitor the progress of their own projects. The indicators therefore needed to be simple and relevant for each specific community. Based on this requirement, the company customized the final indicators chosen to each project and each community’s specific needs and ideas. 

The community ownership of the data collection and monitoring has been a real success in many communities as it has led to strong self-management and the community leaders share the results with their communities to get buy-in and ideas for improvements.

Stage 4: Apply and Integrate

Except for top management, 100% of Veracel employees come from the region. However, it is still critical for Veracel to demonstrate how the company is supporting the local people who it cannot employ to avoid conflict and unrest.

Assessing the social impact of the project and communicating these results has meant that local communities understand the investments that Veracel has made to support the communities and how much they have benefited from that support. This leads to a strong positive reputation for Veracel in the region and therefore an improved business enabling environment.

Being able to evaluate the social return on investment is crucial for Veracel. The results of the assessment are fed back into investment decisions so that community projects that are performing against the chosen indicators benefit from increased investments. This means the company’s resources are channeled towards the most impactful projects.