Sustainable or socially responsible investment has been growing in relevance and influence globally for decades.
Driven in part by socially conscious investors, the push for sustainable business practices has led to a dramatic increase in the adoption of environmental, social and governance (ESG), sustainable investment standards and measures for corporate performance. Introduced by the United Nations in 2006, ESG-compliant funds now top US$40 trillion. In Canada, this figure is nearly $3.6 trillion. And it’s expected to grow by nearly 15% per year.
The adoption of ESG standards has become almost a basic requirement for most of Canada’s large companies and investment managers – reflecting a now widespread consensus that a commitment to sustainable investment should not only be part of a company’s practices but can also directly improve its profitability and performance.
While the adoption of ESG standards by Canadian companies and investors has become common, the standards they are using were developed outside of Canada without consideration of the rights, interests and input of Indigenous peoples.
The leading ESG standards in use today include those developed by the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-Related Financial Disclosures and the Climate Disclosure Standards Board. Of these, only GRI and SASB make cursory references to Indigenous issues.
GRI considers Indigenous people and their rights to be of importance only if Indigenous people launch a legal challenge. This is hardly a pathway to reconciliation. SASB makes reference to the United Nations Declaration on the Rights of Indigenous People (UNDRIP) but does not provide advice on how to include Indigenous rights in company operations or decision making. The remaining standards are silent on all Indigenous issues.
Indigenous rights in this country have repeatedly been affirmed in Canadian court rulings. Further, Canada has constitutionally enshrined fiduciary obligations to Indigenous people, has adopted UNDRIP and is expected to soon enshrine the declaration into Canadian law. These factors, at least from a legal perspective, eclipse the influence of private sector or investment firm-developed ESG criteria.
By excluding the individuals and communities who hold constitutionally entrenched and, soon, United Nations-defined rights, to the land and resources on which Canada’s prosperity depends, currently applied ESG standards significantly undermine the interests and concerns of Indigenous peoples. As a result, this introduces an unacceptable level of investment risk to proposed commercial and infrastructure projects.
The First Nations Major Project Coalition has produced a report that outlines the risks and opportunities of how institutional investors, companies and First Nations can improve ESG standards as they are applied in Canada.
The report, and the accompanying Indigenous Sustainable Investment Conference scheduled for March 18-19, highlight how Indigenous-led efforts in each area of ESG could serve as templates for investors to reduce risk and improve investment decisions in major projects. They include successful examples of Indigenous-led environmental assessment and permitting, the case of First Nations raising over $1 billion in capital through the sale of debentures in Toronto and New York to advance social development and the positive role that Indigenous participation in corporate governance offers companies.
The report is a continuation of a pressing conversation about the need to co-create an inclusive Canadian interpretation of ESG standards that offers investors, capital markets and host First Nations certainty about investments in our host territories.
As Indigenous people we are the multi-generational stewards of the lands, waters and resources that are now known as Canada. We are a vital part of, and have a vested interest in, building an environmentally and socially responsible future that will benefit all Canadians, Indigenous and non-Indigenous alike.
Indigenous standards, knowledge, values and aspirations at all levels in corporate decision-making, and in ESG standards, data collection and evaluation, will improve company performance, investment stability and social outcomes. •
Mark Podlasly is the director of economic policy and initiatives at the First Nations Major Project Coalition and a member of the Nlaka’pamux Nation.