Published: Nov. 15, 2023

RRII FPW Investor BriefThe transition to a low-carbon economy through renewable and clean energy development represents an opportunity to re-design business policies and processes “to robustly account for local-level solutions, empowerment, and capacity building among Indigenous communities,” according to Investor Brief: Responsible Investment and Indigenous Peoples’ Rights in the Energy Transition. 

The brief, published by SHARE Canada’s Reconciliation and Responsible Investment Initiative and First Peoples Worldwide, examines how investors can identify and eliminate material risks from impacts to Indigenous Peoples in their portfolios and foster a just and inclusive energy transition that respects Indigenous Peoples’ rights.

“This is the moment to establish a new paradigm for the green economy that recognizes the contributions of and impacts on Indigenous Peoples, so that the next decade of economic transition proactively addresses and remediates legacies of colonization and exclusionary policies and standards,” concludes the report.

Indigenous Peoples are often the first and most negatively affected by extractive economies and the climate crisis. As outlined in the brief, adverse impacts to Indigenous communities can include:

  • Economic impacts: Curbing the extraction of fossil fuels may cause significant economic disruptions in Indigenous communities that rely on this industry as a source of jobs, revenue, and energy. Conversely, past patterns dictate that Indigenous Peoples will not be included in economic benefits even though they bear the long-term environmental and social extraction costs.

  • Health and environmental impacts: Several transition minerals are mined through sulphide mining and the leaching of sulfuric acid, which is highly hazardous to freshwater rivers, lakes, streams, and groundwater. Biodiversity, cultural, and sacred sites, which are inherently tied to Indigenous lives, particularly the right to fish for social and ceremonial (FSC) purposes, would be negatively impacted.

  • Social impacts: The Business and Human Rights Resource Centre reported 495 human rights allegations related to the extraction of transition minerals between 2010-2021. Violations against Indigenous Peoples include lack of the implementation of FPIC [free, prior and informed consent], displacement and dispossession, forced labour, and child labour, leading to violence against Indigenous women and sex trafficking, repression, and murder of Indigenous human rights defenders.

  • Self-determination: The right to equitable participation in decision-making that can affect Indigenous Peoples’ lands, territories, resources, and ways of life.

Companies have experienced significant material losses from failure to respect Indigenous Peoples’ self-determination and their right to FPIC: 

FPIC breaches are pervasive around the globe, exacerbated by economic incentives in favour of rapid deal-making and direct sourcing. With recent moves towards the adoption of UNDRIP [the United Nations Declaration on the Rights of Indigenous Peoples] into policy-making regimes in both the United States and Canada, there will soon be strong levers to drive further protection of the rights and welfare of Indigenous peoples in these jurisdictions. 

Failure to respect Indigenous Peoples' rights and FPIC exposes companies and investors to multiple risks, including legal, political, operational, reputational, and material risk. One study showed that a  $3-$5 billion global mining operation “could lose around $20 million per week because of stoppages due to conflicts between the company and the community."

Where the UNDRIP has been instrumental in communicating the relationship between Indigenous Peoples’ self-determination and the emerging energy transition and green economy, the United Nations Guiding Principles on Business and Human Rights’ “Protect, Respect, and Remedy” centers the discussion around business enterprise brdiges gaps in engagement and implementation.

The brief encourages investors to engender an inclusive and rights-informed transition through the following recommendations:  

  1. Articulate a clear vision of Indigenous Peoples’ rights that centers self-determination to guide policies and operations: This includes recognizing and understanding the importance of the relevant national and international frameworks, laws, and reports and how they apply to the industry operations, strategy, priorities, and outcomes for Indigenous Peoples. 

  2. Undertake due diligence across the investment chain and use shareholder voice to advance Indigenous rights: This includes pursuing dialogue with portfolio companies, advocating for meaningful corporate policies and reporting metrics on reconciliation, Indigenous Peoples’ rights and FPIC, and supporting votes on Indigenous relations at investee company Annual General Meetings (AGMs).

  3. Review, identify and explore partnerships with Indigenous communities, businesses, and organizations: This includes fostering relational partnerships with Indigenous communities that can add mutual value, improve investors’ and companies’ understanding of Indigenous Peoples’ aspirations and priorities, and enhance economic reconciliation. 

“Indigenous Peoples must be included in decision-making when proposed policies and projects may affect their rights and livelihoods,” says the brief.

Without scoping for Indigenous Rights Risk, the low-carbon economy will continue harms of the fossil fuel-driven economy, in which corporations and financial institutions accumulate profits and opportunities while “Indigenous Peoples and other marginalized groups face increasing environmental and social burdens and inequities.” Investors now have the opportunity to “widen the conversation to ensure that the solutions pursued by companies and policy-makers do not repeat past patterns but rather establish new ones rooted in equity."

Updated 12/28/23