June 22, 2009
Lack of Indigenous Rights Policies Puts Companies at Risk
by Robert Kropp
Report finds that few companies engaged in extractive business activities in indigenous lands have
policies that address indigenous rights concerns.
Despite the fact that 250 companies listed on the FTSE All World Developed Index have a high- or
medium-risk exposure to the rights of indigenous people, the quality of corporate reporting on
indigenous rights issues is poor, and fewer than 20% have policies that require free prior informed
consultation for indigenous peoples.
The report, entitled Indigenous
Rights: Risks and Opportunities for Investors, identifies several key issues for indigenous
people, who account for 5% of the world's population but over 15% of the world's poor. Perhaps the
most important key issue is that of consultation or consent regarding extractive business
activities in ancestral lands. Because only consent gives indigenous people veto power over such
activities, the report grades management response as good only when companies commit to free prior
The other key issues for indigenous people addressed by the report
include employment and involuntary resettlement.
Because many countries have adopted laws
that regulate the rights of indigenous people, the report finds that "companies with strong
commitments and effective engagement processes will undoubtedly benefit in an environment where
access to land and resources is becoming increasingly restricted."
Some of the potential
impacts on companies engaged in the extractive industry sectors in indigenous lands include access
to investment capital, increased regulation, litigation, and reputational risk.
concludes that only seventeen companies analyzed "have reached an intermediate grade for their
response to indigenous rights," and provides investors with steps to take to engage with companies
active in indigenous lands.
The report recommends that investors use their influence to
encourage companies to implement an indigenous rights policy across all business operations, follow
a free prior informed consultation or consent process throughout their operations, provide
employment and educational opportunities for indigenous people, and proactively respond to
indigenous rights concerns.