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When companies and indigenous peoples collide

“In all corners of the world, indigenous peoples are increasingly being displaced and challenged by major investment and development projects that are encroaching on their lands, territories and resources. Despite good intentions, good laws and progressive human rights instruments, there remains a gap between words and actions.1

So said Mariam Wallet Aboubakrine, the Chair of the United Nations indigenous body UNPFII, as the UN General Assembly marked the tenth anniversary of the adoption of the United Nations Declaration on the Rights of Indigenous Peoples in September 2017. Indeed, indigenous peoples are facing even greater struggles and rights violations than they did 10 years ago. And the implications of such human rights abuses will be far-reaching not just for companies, but investors too.

In the last decade, the time taken to bring oil projects online has doubled, with 73% of delays due to non-technical problems – including resistance from indigenous stakeholders2. According to the UN, there has been an increase in the number of indigenous people denouncing the lack of compliance with the UN Declaration on the Rights of Indigenous Peoples (UNDRIP), particularly with companies not obtaining their Free, Prior and Informed Consent (FPIC) before enacting projects on their land3. Such tumult has prompted investors to engage with companies about FPIC.

FPIC is a specific right that pertains to indigenous peoples in UNDRIP. It is supported by the Protect, Respect and Remedy Framework for human rights (as discussed later under Indigenous rights, human rights and international law). In brief, consent should be sought by companies - and authorities - before any project, plan or action takes place (prior), it should be given voluntarily without coercion, intimidation or manipulation (free) and based on accurate, objective, and timely information, provided in a culturally appropriate way (informed) for it to be considered a reasonable outcome of a collective decision-making process4.

A sense of scale

There are approximately 370m indigenous people living across all regions of the world today, comprising over 5,000 different tribes5. Although they make up just 5% of the global population, they account for 15% of the extreme poor6. As such, indigenous peoples tend to be heavily dependent on their land, which is also inextricably linked to their identities, cultures, livelihoods and spiritual well-being. But many large corporations, particularly those in extractive and agricultural industries, also want access to this land to invest in projects, which are often large in scale. An estimated 46% of extractive companies’ reserves lie on land inhabited by indigenous peoples. What’s more, 39% of their current production takes place there7.

On the FTSE All World Developed Index, 250 large-cap companies were identified as having an exposure to indigenous rights. Only 19% of these companies have an enterprise-wide indigenous rights policy, while 20% disclose employment data on indigenous peoples8.

Figure 1: Indigenous rights: where companies fall short

Source: Survival International, First People Worldwide, World Bank and Experts in Responsible Investment Solutions as at October 2017

Respect and disrespect

Companies should respect human rights. According to the UN Guiding Principles on Business and Human Rights, such respect is the global standard of expected conduct for all companies, wherever they operate.

In order to meet their responsibility to respect human rights, some companies may seek to provide infrastructure on indigenous lands where they are undertaking corporate projects. Forms of compensation offered by companies could include building housing, schools, and medical facilities, as well as skills training and jobs. But this is not necessarily a sufficient or appropriate approach.

Rather, obtaining FPIC from indigenous peoples is essential and, as previously mentioned, companies must respect the rights, land and culture of indigenous peoples during this process. In order for FPIC to be truly meaningful, the right to refuse consent to development projects must be respected. While building infrastructure or providing other resources may be part of the way in which companies seek to obtain FPIC, it is not sufficient in isolation without ensuring that the indigenous communities’ other concerns are identified and addressed. Therefore, companies and indigenous people must engage each other to create a mutually beneficial agreement (see Figure 2).

However, some companies fall short as they often fail to engage meaningfully with local tribes, or worse still, make insufficient effort to establish a mutually beneficial agreement through FPIC. This failure can be detrimental to the cultures and livelihoods of indigenous peoples.

The irresponsible extraction of natural assets, including mineral resources, timber, water and agricultural lands, is another significant worry for indigenous peoples. Furthermore, the loss of land through brutal evictions has caused deep psychological damage for indigenous peoples. According to Survival International, the global movement for tribal peoples’ rights, the most important factor by far for tribal peoples’ wellbeing is whether their land rights are respected9. And here, the numbers speak for themselves. Brazil’s Guarani tribe has a suicide rate 34 times higher than the national average, with the youngest member of the tribe to die by suicide just nine years old. The tribe has lost almost 95% of its ancestral land to industrial scale biofuels, sugar cane and soya plantations, and to cattle ranchers. Indeed, research suggests agricultural producers are among the worst at addressing indigenous rights, with 84% of companies showing no evidence of adopting a formal corporate response aiming to the concerns of indigenous people10. This is unacceptable, particularly as FPIC is a universal standard of international law outlined in the UNDRIP, the ILO Convention 169 and the Convention on Biological Diversity (CBD).

Even if communities remain on their native lands, there are residual dangers from extractive and agricultural projects. They can affect traditional hunting routes, for example, which are an important food source for indigenous people, or damage sacred sites or the local ecology. Air pollution is a significant health risk and water sources and land used for traditional agriculture subsistence or hunting may also become polluted. In addition, an influx of migrant, predominantly male, workers can lead to the threat of sexual violence against indigenous people, as well as anti-social behaviour that is often linked to alcohol or drug abuse11.

Figure 2: Indigenous rights, indigenous wrongs

Source: Hermes Investment Management as at January 2018. Note: Both case studies are examples of engagement with indigenous peoples by Rio Tinto and Samling Global in Australia and Malaysia, respectively.

Indigenous rights, human rights and international law

The history of relationships between indigenous peoples and companies is marred by conflict. It is often characterised by exploitation and violations of human rights, as well as disputes about rights to lands, territories and resources.

Furthermore, since few countries have historically recognised indigenous peoples as legitimate groups, governments have also contributed to the discord between indigenous peoples