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Free, Prior and Informed Consent and
Indigenous Relations Irene Sosa, Sustainalytics
Philippe Bélanger, RRSE François Meloche, Bâtirente
Speakers
Irene Sosa, Senior Analyst, Sustainalytics
Phillippe Bélanger, Analyst, RRSE
François Meloche, Extra Financial Risk Manager, Bâtirente
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Sustainalytics
Sustainalytics is an independent ESG research and service provider with global coverage of capital markets.
We have more than 50 analysts involved in
environmental, social and governance (ESG)
research and analysis
Our company research includes detailed ESG
profiles of more than 3,500 companies
worldwide
We have developed a robust and fully
transparent methodology to assess company
performance based on 70 to 90 indicators per
sector
Free, Prior and Informed Consent (FPIC)
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Consent given by people fully informed of the consequences, without coercion, intimidation or manipulation, before the activity begins and according to their own decision making processes.
FPIC as a Right of Indigenous People
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Art. 16: The relocation of indigenous and tribal people “shall take place only with their free and informed consent. Where their consent cannot be obtained, such relocation shall take place only following appropriate procedures established by national laws and regulations….”
Convention 169 of the International Labour Organization (1989):
UNDRIP (2007)
FPIC required prior to:
– Relocation
– Disposal or storage of hazardous materials
Consultation with IP “in order to obtain their free and informed consent prior to the approval of any project affecting their lands or territories and other resources, particularly in connection with the development, utilization or exploitation of mineral, water or other resources.”
Redress for property taken without FPIC
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FPIC in Domestic Laws
Philippines’ Indigenous Peoples' Rights Act (1997)
Australian Aboriginal Land Rights (Northern Territory) Act (1976)
Yukon Oil and Gas Act (2002)
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Institutions Adopting FPIC
Inter-American Development Bank
European Bank for Reconstruction and Development
Conference of the Parties (governing body to the Convention on Biological Diversity)
International Fund for Agricultural Development
Roundtable on Sustainable Palm Oil
Forest Stewardship Council
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IFC Performance Standard # 7
FPIC required:
“…If the client proposes to locate a project on, or commercially develop natural resources on lands traditionally owned by, or under the customary use of, IP and adverse impacts can be expected…
[Before the] relocation of IP from lands and natural resources subject to traditional ownership or under customary use ….
Where significant project impacts on critical cultural heritage are unavoidable …
Where a project proposes to use the cultural heritage….of IP.”
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Companies Adopting FPIC
Rio Tinto: “we strive to achieve the FPIC of indigenous people to proceed with
developments.”
De Beers: commitment to “always seeking a community’s FPIC prior to
initiating any significant operations that will have a substantial impact on their interests.”
Talisman Energy “…in engaging with Communities….. Talisman will incorporate the
broad principles of FPIC..”
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ICMM’s Position on FPIC
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Following consultation, “a decision may sometimes be made not to proceed with developments or exploration even if this is legally permitted.”
“… a blanket endorsement of the right to FPIC is not currently possible, particularly given the difficulties entailed in applying the concept in practice.”
Questions and Challenges
What constitutes proof of consent?
Consent prior to what?
– Exploration vs. mining.
Whose FPIC?
– Neighboring communities?
– Challenges identifying customary use.
– Challenges identifying community representatives.
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Questions and Challenges
Could a policy on FPIC create tensions between a mining company and a government? Between indigenous and non-indigenous communities?
How can consent be free in countries with repressive regimes or weak rule of law?
Free and informed consent requires time.
Informed consent may require capacity building.
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Questions and Challenges
Climate change
Natural resource depletion
Water Crisis
Population Growth Biodiversity
Energy Issues
Financial Markets
Activist Shareholders
Consumers
NGOs/ Civil Society
Employees
Local Communities
Capacity
IBAs
Repressive regimes
Hunting rights Indigenous/non-indigenous
Legitimacy
Referendum
Conflicting land claims
FPIC
Governance
Mechanisms to Engage with Indigenous People (IP)
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Companies should implement mechanisms for engaging with and for benefitting IP.
In most cases, implementing these mechanisms in a timely and iterative manner will lead to consent.
Mechanisms: • Policy on IP and land rights • Managerial responsibility • Stakeholder mapping • Consultation at an early stage and through
closure • Grievance mechanisms • Consultation in indigenous language • Consultation with vulnerable groups • Use of participatory methods and traditional
knowledge • Protection of culturally sensitive areas • Cross cultural training for employees • Formal agreements (IBAs, MoUs) • Joint committees to implement IBAs • Programs and targets to provide jobs and
business opportunities • Royalty sharing, equity or payments • Capacity-building for consultation
Impact Benefit Agreements (IBAs)
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A contract between a community and a company that provides aboriginal support for a project in exchange for commitments in the areas of employment, training, business opportunities, revenue or equity sharing, and/or environmental protection.
Establish clear, formal channels for communication and dispute resolution.
Can be renegotiated.
De facto or legal requirement in some jurisdictions in Canada and Australia.
Implementation of Best Practices
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Among the 46 largest mining companies in developed markets: 13 have implemented relatively strong mechanisms to
consult with and benefit indigenous people. (Leaders: Rio Tinto, BHP Billiton, Anglo American, OZ Minerals, Xstrata and Teck Resources).
20 do not report any information on such mechanisms.
16 have signed IBAs, but predominantly in Australia and Canada.
17 have adopted formal grievance mechanisms.
Concluding Remarks
FPIC is gaining support among banks, NGOs and investors.
FPIC should not be conceived as a one-time yes or no vote, but as an ongoing, iterative process.
There are challenges and uncertainties related to the implementation of FPIC.
Some challenges can be addressed by implementing strong management systems, but companies lag behind in this regard.
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Amsterdam | Boston | Brussels | Copenhagen | Frankfurt | Madrid | Paris | Timisoara | Toronto
For more information please contact:
Irene Sosa Senior Analyst, Research Products Phone: +1 416 861 0403 ext. 11 Email: [email protected] Website: www.sustainalytics.com
Shareholder engagement: Free, prior and informed consent policy at Talisman Energy
Webinar : License to Operate: Indigenous People and FPIC in the Mining Industry
March 8, 2012
Investors
• Regroupement pour la Responsabilité sociales des entreprises (RRSE) is a network of religious communities, organizations and individuals promoting corporate social responsibility through shareholder engagement.
• Bâtirente is a labour pension system for member of unions affiliated with the CNTU-CSN.
Talisman in Peru
• 2004: Acquired exploration blocks from Occidental Petroleum
• Legacy issues
Talisman in Peru
• Consulted and signed agreements
• with the 7 Ashuar and Shuar communities identified in the EIA as in the area of interest
• With communities along the Morona river
• Agreements: land access, compensation and river navigation protocols
• No agreement with communities East of area of interest (strong opposition)
• Tension between communities
Oil concessions in Peru
• Source : Talisman
J. Manzoni, CEO Talisman, April 2008
• « Talisman will not work in Peru in areas in which it does not have an agreement with the community. We consider an agreement allowing Talisman to work would require a General Assembly with a positive vote of no less than two thirds of all the members of the community.»
Engagement timeline
• 2008 : RRSE and Bâtirente are informed by Amazon Watch
• Met with Talisman to discuss our concerns about Peru
• 2009: filed shareholder proposal asking for an FPIC report
Shareholder proposal
• BE IT RESOLVED THAT: The Board prepare a report that will assess the benefits and costs of adopting and implementing policies and procedures for securing and maintaining free, prior, and informed consent of aboriginal communities impacted by Talisman’s international operations.
(inspired by a similar proposal by NEI for Enbridge)
Engagement timeline
• 2009 : Talisman accepts to do a study
• We agree on terms of withdrawal • Study must be done by independent third party and must be
public
• We want to be consulted throughout the process
• Talisman proposes Foley Hoag
• Investors propose WRI do a review of the Foley Hoag study
• Similar cases: Newmont and Goldcorp
Engagement timeline
• Meeting in Washington DC in April 2009
• Discuss scope of research
Discussion on the challenges of implementing FPIC
• Who consents ? local communities versus federations ?
• When ? exploration or production? How to determine if potential impacts are significant enough to triggers an FPIC requirement ?
• How ? Resolution by traditional leaders, by referendum, how to include marginalised groups ?
• Capacity building: how to ensure communities have access to resources to understand potential impacts on their rights ?
Engagement timeline
• Investors and WRI recommend individuals and organizations that Foley Hoag should consult
• Investors and WRI review several drafts of the Foley Hoag study
• May 2010: FPIC report is released with WRI’s commentary
Foley Hoag Report
• “… in the long-term, the benefits for oil and gas companies of obtaining community agreement based on FPIC principles, and thereby both supporting their social license to operate and reducing legal and reputational risks, may outweigh the substantial challenges of securing consent.”
• “FPIC may be better understood as a formalized and documented social license to operate.”
• “Talisman should seek consent prior to activities with ‘substantial impacts’ on indigenous peoples in locations where the policy of seeking community agreement based on FPIC principles applies.”
WRI’s review of FPIC Report
Issues that require further discussion
1. When should a company seek FPIC? What is the meaning of “substantial impacts”?
2. Should a company seek FPIC during the exploration phase? Exploration phase can have “substantial impacts”
3. What is an “indigenous people” and who represents them?
4. How should a company resolve conflicts between its FPIC policy and local laws?
Engagement timeline
• Talisman reviews its policy using the FPIC report
• Investors and WRI review two drafts of Talisman’s FPIC policy
• December 2010: Talisman’s board adopts its Global Community Relations Policy
Global Community Relations Policy
• Policy acknowledges the importance of the UNDRIP • Policy commits Talisman to incorporate the broad principles
of FPIC as interpreted below: • Free: will not engage in, or facilitate coercion when
dealing with communities • Prior: will always endeavor to engage … with Communities
before undertaking significant activities and at appropriate stages throughout the life of a project.
Global Community Relations Policy
• Informed: will work to build trust and understanding through an open exchange of information that enables knowledgeable decision-making by Communities
• Consent: will endeavor to obtain and maintain the support and agreement of Communities for its activities, in ways that are respectful and sensitive to local cultural and consultative processes and to the interests of the Community and Talisman.
• Policy will be reviewed at least every 3 years
Global Community Relations Policy
Since 2011: Implementation of policy
• Talisman is attempting to commission an independent study to analyse what is needed to comply with the policy in Peru
• Developing guidelines for its global operations
Merci!
• Philippe Bélanger, Analyst and director assistant, RRSE
• François Meloche, Extrafinancial Risk Manager, Bâtirente
