Complexity is no excuse for inaction

When we were developing our new framework for evaluating accountability for Indigenous rights within investment chains, the word “complexity” felt like an understatement.

On the investment side, energy and mining investment chains are getting more complicated. Often numerous corporate entities and relationships exist between the investors who provide capital and project operators who are responsible for what happens on the ground. This kind of complex intermediation can muddy the waters regarding who is responsible for critical relationships with the Indigenous communities affected by or participating in a project. On the community side there are often many different governments, jurisdictions, legal systems, business partners and others involved.

For investment decision-makers, that complexity makes it challenging to assess how well companies respect Indigenous rights and manage relationships with Indigenous governments and communities.

Yet the duty to respect what are now well-defined Indigenous rights in international law still remains, for companies and investors alike. And it’s not just a duty: there are clear benefits for companies and investors to develop a mature, respectful and productive relationship with Indigenous governments, communities, businesses and employees. Conversely, of course, the financial consequences of failing to adequately address these rights can be substantial, with growing recognition of those rights in legislation, court decisions and international standards that apply to projects and investment decisions.

For all this complexity, there are some fairly basic underlying principles.

SHARE’s latest investor brief, Energy and Mining Investment: Assessing Accountability for Indigenous Rights in Complex Investment Chains, outlines how accountability for Indigenous rights can become dispersed when projects extend the distance between investor decisions and project operators through mergers and acquisitions, minority shareholdings, joint ventures, royalty arrangements and other complex business relationships. Funded by and developed with Canadian independently-owned asset manager Leith Wheeler, the report should help asset managers and asset owners untangle that web of complexity and apply consistent expectations within their own investment chain.

As our report concludes, complexity is no excuse for inaction. There are models of companies doing this right, just as there are examples where we got it wrong. Let’s learn from both of those and do better.

Sign up for latest news & updates

Kevin Thomas
Written By:

Kevin Thomas

Kevin Thomas is the Chief Executive Officer of the Shareholder Association for Research and Education. Kevin joined SHARE in 2013 as a Senior Analyst on social issues and became Executive Director in 2018.

More By This Author