Complex energy and mining investment chains may hide Indigenous rights risks

A new report by SHARE offers investors guidance on Indigenous rights due diligence

August 6, 2020 – Continuing legal uncertainty surrounding the $4 billion Dakota Access Pipeline points to the importance of early and adequate Indigenous rights due diligence before investing in energy-sector joint ventures, according to a new report from shareholder advocacy organization SHARE.

That project is just one example of the hidden risks that can indirectly impact investors across increasingly complex finance structures in raising capital for energy and mining projects.

Energy and Mining Investment: Assessing Accountability for Indigenous Rights in Complex Investment Chains explores how investors can assess the degree to which accountability for Indigenous peoples’ right to Free Prior and Informed Consent is addressed in project and corporate decision-making. This investor brief outlines the types of indirect exposure to Indigenous rights concerns as well as key questions investors can ask about due diligence for independently-managed operations.

“Indigenous rights are increasingly recognized in law and in practice,” says SHARE CEO Kevin Thomas. “Understanding and incorporating Indigenous perspectives in investment decision-making helps investors to align their approach with international standards related to Indigenous rights. Complex ownership patterns result in gaps in the information investors require to assess accountability for respecting those rights. To properly conduct due diligence, investors first need to understand where that accountability is breaking down.”

“Assessing how well investee companies respect Indigenous rights and manage relationships with Indigenous governments and communities is a challenge for investment decisionmakers,” said Lisa Meger, Portfolio Manager at Canadian independently owned asset manager Leith Wheeler Investment Counsel, which provided funding for this report.

“It is even more challenging when complex financing structures for energy and mining projects extend the distance between investor decisions and management accountability through mergers and acquisitions, minority shareholdings, joint ventures, royalty arrangements and other complex business relationships,” Meger said. “We wanted to share what we’re learning about best practices with the broader investor community.”

Read the full report here: https://share.ca/wp-content/uploads/2020/09/SHARE_Mining-Report_FINAL_Web-High-Res1.pdf

About SHARE (Shareholder Association for Research & Education)

Since 2000, SHARE has built a community of values-driven investors who are committed to amplifying their voices in support of a sustainable, inclusive and productive economy. SHARE is the leading non-profit investor voice on human rights and responsible investment in Canada, representing a growing network of institutional investors with more than $23 billion in assets under management. SHARE provides proxy voting analysis, shareholder engagement, education, policy advocacy, and practical research. Clients include pension funds, universities, foundations, Indigenous trusts, faith-based organizations and asset managers.

About Leith Wheeler

Leith Wheeler is an independent, client-focused investment manager with a national client base of institutions and private clients. We have a long history of responsible investing which dates back to our founders Murray Leith and Bill Wheeler, who were strong advocates for shareholder rights. Evaluating environmental, social, and governance issues has been an important component of our investment process since our inception in 1982. In addition, Leith Wheeler has been working with Indigenous communities directly since 2004 and now manages in excess of $1 billion for over 30 Indigenous clients in every province from British Columbia to Quebec, and the Yukon and Northwest Territories. Our objective is always to act as responsible stewards of our clients’ capital, which must be preserved and grown prudently for both current and future generations. 

CONTACT:

Damon van der Linde, Communications Officer | SHARE
[email protected] | +1-604-772-2188

Mike Wallberg, Vice President, Marketing & Communications | Leith Wheeler Investment Counsel
[email protected] | +1-604-677-0195