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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.

A report issued by Ethical Investment Research Services (EIRIS) and the Center for Australian Ethical Research (CAER) also found that only 19% of companies disclose employment data on indigenous people, and 6% have a policy addressing involuntary resettlement.

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 informed consent.

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.

The report 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.


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