A global group of 158 investors wants banks and oil financiers to know that even during a time of worldwide energy concerns – and related price instabilities –  the Indigenous perspective on pipeline and natural resource development is critical.

Not getting that input — and consent — up front can have major and wide-ranging costs, they say.

“[W]e ask that financiers of clients with oil sands projects develop policies which eliminate financing for projects or companies that do not protect Indigenous rights, such as the right to give free, prior, and informed consent (‘FPIC’),” the investors wrote in a recent letter to several major banks in the U.S. and Canada. 

“Additionally, we ask financiers involved in oil sands development to engage their own environmental, social, and corporate governance commitments by supporting FPIC in their lending and investment practices.”

The letter was delivered by the Investors & Indigenous Peoples Working Group to Bank of America, Bank of Montreal, Citi, CIBC, JP Morgan Chase, Morgan Stanley, Royal Bank of Canada, Scotiabank, TD, and Wells Fargo.

Investors say they were prompted to send the letter due to poor consultation and consent practices involving tribes and the recent Enbridge Line 3 development in northern Minnesota.

“While now complete, the construction and operation of Line 3 demonstrates the multiple legal, environmental, reputational, and human rights risks attendant to construction without a social license to operate from affected Indigenous Peoples – in this case the Anishinaabe,” the letter states. 

“The project was publicly opposed, and affected tribes and organizations filed lawsuits in federal, state, and tribal courts that challenged the permitting process throughout project implementation; noting among other things that the project moved forward without the FPIC of the Anishinaabe, despite the fact that they are the most uniquely impacted among all the stakeholders by leaks and spills that actively threaten vital cultural resources and practices.” 

The investors say that it is not only the Indigenous people who will suffer, but also Enbridge, in terms of reputation – and potentially in terms of finances: “The response to the Line 3 project demonstrates that when governments and corporations fail to take the steps to consult impacted Indigenous Peoples and procure FPIC, there may be significant social risks which become material to the proponent company. To avoid these risks, companies must conduct due diligence as to Indigenous rights risks and other social risks, create an iterative FPIC-based process that influences the design and deployment of the project, and report publicly on these policies.” 

The letter notably does not say that the investors will pull their money out of the banks if they don’t pay attention and take action on this matter, but it does pointedly ask banks to answer several questions:

1. Have you committed to reduce your financed GHG emissions to net zero by 2050? 

2. How is your financing of such activities consistent with your commitments to reduce financed emissions? 

3. How is your financing of these companies consistent with your human rights policies? 

4. How have you supported the United Nations Declaration on the Rights of Indigenous Peoples? 

5. Do you require the companies you finance to support and enforce FPIC by Indigenous Peoples? What are the mechanisms in place to monitor this FPIC commitment?

The letter asks for a response at the banks’ “earliest convenience” and requests a meeting. 

Kate Finn, executive director of First Peoples Worldwide, which helps organize the working group, told Indigenous Wire that investors want to hammer home the point to banks that Indigenous peoples own and control vast areas of lands and water – and they have related cultural and health concerns – that are all impacted by major infrastructure development, including pipelines. 

“The banks need to pay attention,” Finn said. “Indigenous voices are important. Ignoring their consent is, in fact, material risk.”

Steven Heim, director of ESG Research with Boston Common Asset Management – a signatory of the letter and longtime leader within the working group – said that both Enbridge’s Line 3 pipeline and the Dakota Access Pipeline provide examples as to why global banks must demonstrate policies and practices that respect the rights of Indigenous peoples, thereby reducing risk for banks and investors. 

“Indigenous Peoples may withhold consent from projects – a right protected by the United Nations Declaration on the Rights of Indigenous Peoples,” Heim said. “Bank lending, in addition, must be aligned with the bank’s climate commitments.”

Nick Pelosi, engagement manager of EOS at Federated Hermes, said that opposition to infrastructure projects from Indigenous peoples creates risks to communities, companies, and banks financing such projects. 

“The resulting reputational risks to banks has the potential to erode shareholder value if not adequately addressed,” Pelosi said, noting his company’s support for the letter. “We urge banks to adopt and implement enhanced safeguards in their lending and investment practices that both protect the rights of Indigenous peoples and mitigate social license to operate risks to banks."

As the U.S. government is in the process of considering how to spend the billions of dollars in funds signed into law as part of the bipartisan infrastructure law in November, this issue is especially prescient, members of the working group say, as there hasn’t been this level of federal investment in infrastructure development in decades.

Governments worldwide have long taken Indigenous resources by force and have built an infrastructure system on their homelands, and this system has had detrimental impacts to many tribes and Native peoples. Some tribes, of course, have benefited financially – not every Indian person is a water protector or a land defender – but the health and culture of all communities are impacted when consent does not occur, as has been the common practice for decades upon decades.

“The domestic policy in the U.S. and Canada – but the U.S. in particular – doesn’t always account for that consent,” Finn noted. “We have environmental review processes, we have consultation processes – and those are good – but they don’t always encompass every part of the story, every part of what needs to be considered, and that is also up to and including the consent of the tribe itself.”

Jonas Kron, chief advocacy officer at Trillium Asset Management, another signatory of the letter, told Indigenous Wire that his company has been “painfully aware” of the disproportionate impacts of energy and mineral development on Indigenous peoples for hundreds of years. 

“A statement where over two-trillion dollars of investment is represented is significant,” Kron said. “That’s not a small amount of money.”

Banks shouldn’t be the only ones paying attention, Kron added, noting President Joe Biden’s recent signature of the Defense Production Act, promoting domestic mineral development. 

Therein, the Biden administration made reference to tribal consultation, which Kron said is inadequate.

“It’s fine, but it doesn’t go far enough,” Kron said. “There must be tribal consent. A lot more work needs to be done to make that happen.”