An impressive level of expertise exists in Indian Country around renewable energy and sustainable resource development.
First Peoples Worldwide held its first public forum on December 10, 2019, to share findings and gather stakeholder feedback during early research on the First Peoples private equity modeling initiative.
Attended primarily by tribal leaders and leaders of business development in Indian Country, as well as impact investors and resource development stewards, the listening session was a robust and deeply insightful conversation about the opportunity and unique challenges in researching a first-of-its kind investment vehicle that brings together private equity, a focus on Indigenous Peoples, and renewable energy development.
A primary goal of the research initiative is to promote tribal self-determined sustainable development. Many Tribes are currently engaging with this type of business development in real time, and First Peoples is researching a private equity strategy that can be accessed by all of Indian Country.
In its advocacy and business development work, First Peoples has seen first-hand where investors would like a place to invest in Indian Country and to make large-scale contributions, as well as where there is a need and a gap in access to capital in Indian Country. It has also recognized patterns where conventional engagement between Indigenous Peoples and outside entities often result in investments that are not beneficial to Tribes.
Though this type of impact investment does not yet exist, preliminary findings from a stakeholder survey conducted in October have confirmed that there are currently many projects across a spectrum of readiness in Indian Country. Findings have also shown that one of the most important things to investors is to have a general partner with a proven track record to deploy a private equity strategy.
“Our core values in designing the Fund are Indigenous self-determination, equity in power and decision-making, financial excellence, and positive social impact,” said Carla Fredericks, Director of First Peoples Worldwide, who moderated the event. First Peoples’ next step will be to collate the information gathered from experts and partners into core design tenets.
RENEWABLE ENERGY & LEVERAGING THE HIGH-LEVEL EXPERTISE IN INDIAN COUNTRY
One question that came up from participants was to understand the focus on renewable energy. As survey results and the depth of the listening session discussion have demonstrated, an impressive level of expertise already exists in Indian Country around renewable energy and sustainable resource development. Tribes throughout the U.S. are seeking large-scale development in renewables, which fits well with the goals and size of the vehicles contemplated.
While the tribal renewable energy space is indeed complex – participants pointed out issues around tax credits, sovereign immunity, grant matching challenges, utility policy, etc. – the power of the private equity model is that it assumes additional expertise needs to be built on the ground in order to monetize investments and set them in motion. Partnering with a capital asset manager as well as a renewable energy developer would ensure that both pieces are connected from the outset.
Ultimately research will point to creating access to capital for tribal governments who are deploying scaled entrepreneurship in their own communities. Particularly in the U.S., Tribes are sophisticated government actors who have varying but often tremendous levels of capacity to be able to manage their unique challenges.
Financial vehicles must be built to create mechanisms so that the Tribe can determine what’s best for their own people, rather than outside entities making those determinations. “That may sound a little different than a lot of the lingo around impact and community investing, but as a matter of Indigenous rights and Native American rights, it is very familiar to tribal members and tribal communities,” Fredericks said.
As one participant lauded, the Fund has the potential to provide Tribes with energy sovereignty, which would have massive positive impact on communities.
CREATING A COMMON LANGUAGE BETWEEN IMPACT INVESTORS & INDIGENOUS ENTERPRISE
“A lot of the equity investors don’t understand the needs of Indian Country, and Indian Country doesn’t often understand the needs of an equity fund or an investor.”
Fredericks noted that a major challenge to collating an investment approach for Indian Country is that among the more than 570 federally recognized tribes in the U.S., there are perhaps 570 plus different approaches to tribal business development given individual Tribes’ needs, perspectives and access to resources.
There is a critical need for a space where investors and Tribes can go to know exactly what the model is and what the values are. A trust relationship is crucial, and individualized project needs must interweave to ensure a real operationalized commitment is being responsive to community needs.
One participant pointed out that structuring private equity deals is one of the most complicated and difficult parts of the process, and that “a lot of the equity investors don’t understand the needs of Indian Country, and Indian Country doesn’t often understand the needs of an equity fund or an investor.” Having set standards so each party understands the benefits for themselves and for each other is a priority for the modeling.
Another participant said that from her experience in investing, the success of an equity fund stems from the cooperation of multiple partners, specifically sharing lessons and learned structures that work, as well as knowing that investment dollars can be patient dollars given the right conditions. First Peoples seeks to create these conditions through amplifying the roles of due diligence, trust and transparency between all parties involved, and keen oversight throughout the project and process.
Other questions and concerns raised by participants, which are being considered and researched for this initiative: the high cost of feasibility and site suitability studies in the initial design phase; the complexity of negotiating power purchasing agreements; the potential for creating a model energy code that Tribes could adopt as part of legislative action; the possibility to expand beyond energy into infrastructure, entrepreneurship, emergency planning, resiliency issues, and other needs throughout Indian Country; and the fact that Tribes with the most need do not have the resources or readiness as Tribes with access to capital do.
Thinking through these issues and incorporating solutions from the start is critical to ensuring the financial success of this type of strategy. Throughout the research process, First Peoples is developing ways to bring together tribal leaders, developers and impact investors who have successfully navigated these spaces.
The tools that First Peoples have developed, especially those around free, prior and informed consent will come into play as we look at developer, investor and government decision making, and the UN Guiding Principles on Business and Human Rights will be the basis for guidelines when considering positive and negative impacts of the model, both in terms of measurability and of remedial structures.
In terms of next steps, First Peoples is conducting a series of in-person consultations and aims to release an article encompassing all research and results from stakeholder meetings by summer 2020.
If you would like more information, to set up an in-person consultation or to offer your expertise and support in any capacity, please be in contact directly at email@example.com with the subject line “First Peoples private equity research”. You can also share your thoughts and ideas by filling out the readiness survey here.
We thank you for your interest and look forward to your participation and sharing more with you!
Photo via WikiCommons.