This section provides guidance for investors on using their leverage to prevent/mitigate and enable remedy for actual or potential adverse impacts on Indigenous peoples. As a general principle, the starting point for prioritizing actions and using leverage should be to identify the perspectives of the potentially impacted Indigenous communities.
8.1 Using leverage to prevent/mitigate adverse impacts
The UN Guiding Principles and the OECD Guidelines set out that businesses should address all their adverse impacts and where it is not possible to address them simultaneously, businesses should first seek to prevent and mitigate those that are the most severe or where delayed response would make them irremediable.248 This severity of an impact is understood as the scale, scope, and irremediability of actual or potential impacts, and should be understood based on the perspectives of Indigenous peoples concerned, taking into account the collective nature on impacts on Indigenous peoples, as well as their cultural and physical survival, dignity, and well-being as peoples.
While exercising shareholder rights is one way to use leverage, leverage can be exercised in a multitude of ways, including via contractual and non-contractual avenues,249 and by addressing systemic human rights issues investors may be exposed to by their business relationships.250 Investors can also use their leverage by engaging with a wide range of stakeholders beyond the first-tier investee company, including companies and financiers throughout the value chain, industry associations, civil society, standard-setting bodies, data providers, and government agencies.
As such, investors can use their leverage both proactively and reactively:
- Proactively: By setting clear expectations on investee companies to respect Indigenous peoples’ rights and by engaging on systemic human rights issues with a broader range of stakeholders.
- Reactively: When investors have identified actual or potential impacts on Indigenous peoples, using their leverage to prevent and/or mitigate the harm and to enable remedy for those impacts by prioritizing the perspectives of the Indigenous peoples concerned.
8.2 Using leverage over investee companies
Prioritize Indigenous perspectives and real-world human rights outcomes
When using leverage to address actual or potential adverse impacts on Indigenous peoples’ rights, investors should first seek to understand what affected or potentially impacted Indigenous peoples themselves perceive to be most severe and believe would be a fair outcome. Investors should also be aware that this may change over time as the context shifts or new information becomes known.
For reference, a report published by Forest Peoples Programme identified four general demands of rightsholders to businesses in commodity supply chains:
- Investigate and verify past and ongoing human rights and environmental impacts through independent assessments validated by communities and their advisors.
- Develop time-bound action plans in close consultation with affected rights holders and their freely chosen representatives to agree on essential remedy measures and future actions required with suppliers, including decisions on continued engagement or disruption/termination of business relations.
- Put in place adequately resourced monitoring and implementation frameworks to ensure remediation actions are implemented as per agreements reached through good faith FPIC processes respecting affected community decision-making practices, customary laws, and timeline.
- Work with rights holders, government agencies and other actors to enable effective remedy, including land restitution and the settlement of tenurial disputes.251
Case Study: Investor Engagement on the Goldcorp Marlin Mine (Guatemala)
Since the Marlin gold mine began operating in 2004, concerns about the environmental impacts of the Marlin mine escalated into conflicts as Indigenous communities protested the mine. In 2008, various investors, including the Ethical Funds Company (Canada), Public Service Alliance of Canada Staff Pension Fund, and the Fourth Swedish National Pension Fund filed a shareholder resolution, urging the Goldcorp Marlin mine to commission an independent Human Rights Impact Assessment (HRIA) of its operations.
Nonetheless, the shareholder engagement with Goldcorp has been criticized for undermining the agency of Indigenous communities by praising the mining company for engaging with the shareholders, while nothing had changed for the Indigenous communities. Indigenous communities had not expressed a demand for an HRIA, nor were they consulted about it.252
Consult and cooperate with Indigenous peoples through their representatives
To have a better understanding of the impacts, and to increase leverage, investors should seek to consult and cooperate with Indigenous peoples through their freely chosen representatives in accordance with the principles of Free, Prior and Informed Consent. This should include informing affected Indigenous peoples that the investor is committed to consulting and cooperating in good faith with Indigenous peoples to address actual or potential impacts. Engaging directly with Indigenous representatives can also serve as a way to enable a good-faith dialogue and better understanding of Indigenous peoples’ perspectives.
Table 5. Indigenous and civil society organizations
Native Land tracks Indigenous territories, treaties, and languages across the world, and provides links to local Indigenous organizations’ websites.
A coalition of civil society organizations working to address attacks against human rights defenders.
List of National Human Rights Institutions (NHRI)
Case Study: Boston Common Asset Management and Brethren Benefit Trust collaboration with various NGOs and Indigenous organizations
In September 2003, Boston Common Asset Management collaborated with Amazon Watch to initiate shareholder engagement with Burlington Resources regarding its operations on Indigenous lands in Ecuador. The engagement process and shareholder resolutions involved various NGOs and Indigenous communities, including a “fact-finding mission” in which investors traveled to Ecuador to speak with Indigenous representatives. Through this initiative, investors could see with their own eyes the priorities and perspectives of Indigenous peoples.
In 2006, Burlington resources was acquired by ConocoPhillips, and after Boston Common Asset Management and Amazon Watch continued the engagement, ConocoPhillips strengthened its policy on Indigenous rights in 2011.253
Case Study: Investors & Indigenous Peoples Working Group
The Investors & Indigenous Peoples Working Group is a coalition of investors and Indigenous peoples that seeks to promote Indigenous peoples’ rights through capital markets, including:
- Indigenous peoples' right to FPIC
- Addressing the impact of extractive industries on Indigenous communities and the environment
- Ending the use of racist images, stereotypes, and cultural appropriation
- Building corporate and investor support for Indian Country.
The group hosts monthly calls to bring together investors and Indigenous communities and promotes participation of Indigenous leaders at investment and industry events.
To support investors filing shareholder resolutions on human rights, the Investor Toolkit on Human Rights has included templates for filing shareholder resolutions on human rights. Those templates include sample language for “whereas” clauses and sample text for five different “resolved” clauses, including:
- Human rights policy commitment
- Human rights governance
- Assessing real and potential human rights impacts
- Human rights disclosure
- Company grievance mechanisms
The template provided by the Investor Toolkit on Human Rights can also be used to tailor shareholder resolutions specifically on Indigenous rights. For example, in 2022, similar language to the sample text of the Investor Toolkit on Human Rights was used by investors in shareholder resolutions on Indigenous rights at the Annual General Meetings of Citigroup and Wells Fargo, respectively.
Set thresholds for engagement, voting against board, and exclusion
Investors can use their leverage by setting thresholds for engagement for investee companies in high-risk sectors or regions. This could entail, for example communicating how the investor will respond to the company and its board when it fails to meet specific actions, such as:
- Adopting a policy commitment to respect the rights of Indigenous peoples, including the right to give or withhold Free, Prior, and Informed Consent.
- Adopting a policy requiring suppliers and contractors for high-risk sectors or commodities to have policy commitments to respect Indigenous rights.
- Adopting effective grievance mechanisms that meet the UN Guiding Principles’ effectiveness criteria, in accordance with the recommendations of the OHCHR and Forest Peoples Programme, and disclosing grievances.
- Adopting policies that require suppliers and contractors in high-risk sectors or commodities to adopt effective grievance mechanisms and disclose grievances.
- Publicly disclosing suppliers in high-risk commodity supply chains, including beyond first tier suppliers.
- Where risks of Indigenous rights violations have been identified, requiring companies to take sufficient measures to cease, prevent, and mitigate any actual or potential violations of Indigenous peoples’ rights.
- Where adverse impacts have occurred, taking sufficient action to provide just and equitable remedy in accordance with the UN Guiding Principles, UNDRIP, and that rightsholders find satisfactory.
Case Study: Storebrand Asset Management Engagement with Eolus Vind
In 2022, Storebrand Asset Management placed the Swedish company Eolus Vind on its Observation List, due to concerns of significant negative impacts on the Sami people’s right to enjoy their own culture. According to Storebrand’s procedures, it expects companies under observation to show improvement within a predetermined time in order to be removed from the list, or risk being excluded from the investment universe. As such, Storebrand asked Eolus to carry out a new consultation process to seek FPIC, and to adopt a policy on respect for Indigenous peoples’ rights.254
Case Study: Nordea engagement with companies involved in the Dakota Access Pipeline
In 2017, representatives of Nordea visited the Standing Rock, where protests occurred against the Dakota Access Pipeline. After visiting, Nordea announced that if the companies involved in the Dakota Access Pipeline do not meet the demands of the Standing Rock Sioux Tribes, the Nordea Sustainable Finance team would recommend divestment from the companies.255
Engagement with banks
Where investors do not directly hold shares or bonds in companies that cause adverse impacts on Indigenous peoples, they can still be linked to impacts through their investments in banks, which may provide finance to projects or companies causing adverse impacts on Indigenous peoples. In such cases, investors should use their leverage to urge banks to strengthen their policies and due diligence processes with respect to Indigenous rights. This may include urging banks to:
- Adopt a policy commitment to respect internationally recognized rights of Indigenous peoples in accordance with the UNDRIP and the UN Guiding Principles on Business and Human Rights, covering own activities and business relationships.
- Adopt a policy not to provide any new financing to companies that cause, contribute to, and fail to prevent and remediate violations of Indigenous peoples’ rights, and that fail to uphold the right to Free, Prior, and Informed Consent.
- Ensure that the policy covers all business relationships, including corporate lending and not just project financing related to Equator Principles requirements.
- Specifically write Free, Prior, and Informed Consent requirements into contracts, to ensure that the bank can exit a project if consent is not obtained.
- Commit to cooperating to enable remedy when adverse human rights impacts occur in relation to companies or projects financed by the bank.
- Adopt human rights grievance mechanisms, which are accessible for affected communities, such as ANZ’s grievance mechanism.
- Require consent for disclosure of project and client names in standard contracts with clients. There is little, if any, evidence of legal constraint, as demonstrated by the decade-long existence of the Equator Principles reporting database, or Triodos Bank disclosure on every organization they lend money to.
Case Study: Shareholder resolution on Citigroup’s AGM
In 2022 at the annual general meeting of Citigroup, various shareholders requested that the board of directors at Citigroup provide a report outlining the effectiveness of Citigroup’s policies and practices and performance indicators in respecting internationally recognized human rights standards for Indigenous peoples’ rights in corporate and project financing. The shareholder proposal expressed concerns related to Enbridge Line 3, due to significant risks to the land, water, and cultural rights of several Anishinaabe peoples and violations of Free, Prior, and Informed Consent.256 It received the support of 34% of shareholders.257 The proposal was resubmitted in 2023.258
Asset owners: engagement with asset/investment managers
Asset owners should urge asset/investment managers to align their due diligence practices with international human rights standards, including the UN Guiding Principles, OECD Guidelines, Indigenous peoples’ rights as articulated in the UNDRIP, and in line with this Toolkit and emerging best practices.
An additional resource to negotiate investment mandates include the Model Mandate. This should explicitly recognize and require respect for the rights of Indigenous peoples as articulated in the UN Declaration on the Rights of Indigenous Peoples, and in line with this Toolkit.
Communicate due diligence and engagement (including exclusion)
Investors can increase their leverage by communicating their due diligence and engagement efforts, including where investors have excluded companies. Where investors engage or exclude companies from their investment universe, relevant communication to use as a way of exercising leverage include:
- Highlighting engagement over Indigenous rights, including the outcome of the engagement, e.g., in engagement reports, with references to international standards and jurisprudence on the rights of Indigenous peoples.
- Press releases with respect to individual cases, including the outcome of the engagement, with references to international standards and jurisprudence on the rights of Indigenous peoples.
- Public list of excluded companies, with Indigenous rights violations as a specific category. For example, Danica Pension has a public list of investment restrictions, with violations of Indigenous rights as a specific category. As of December 2022, Danica Pension’s investment restriction list included 18 companies that were excluded due to violations of Indigenous rights.259
Case Study: KLP exclusion of companies involved in the Dakota Access Pipeline
In 2017, KLP reported that it would exclude four companies involved in the Dakota Access Pipeline, due to “an unacceptable risk of contributing to serious or systematic human rights violations.” Excluded companies included Energy Transfer Partners, Phillips 66, Enbridge, and Marathon Petroleum Corporation. KLP’s publication includes a detailed description of why the companies were excluded, including an unacceptably high risk of contributing to serious human rights violations with references to KLP’s “fact-finding trip” to North Dakota, attempts to engage with the companies, and references to international standards, including the UN Guiding Principles on Business and Human Rights, the UNDRIP, and a statement of the Special Rapporteur on the Rights of Indigenous Peoples.260
8.3 Systemic leverage
Engagement with standard-setting bodies, industry associations, and investor alliances
Indigenous peoples have the right to participate in decision-making in matters that would affect their rights, through representatives chosen by themselves in accordance with their own procedures. Investors can use their leverage by urging standard-setting bodies, industry associations, and investor alliances to:
- Design standards in such a way that they recognize and protect the rights of Indigenous peoples. Avoid designing standards that undermine the rights of Indigenous peoples, including by omission.
- Consult and cooperate with Indigenous peoples to enable their participation in decisions and the development of standards that may affect them. Indigenous peoples’ right to participation entitles them to influence the outcome of decision-making that affects them, not merely be involved in such processes.261
- From the outset, design processes structured to enable the equal and full participation of Indigenous peoples.
- Recognize that Indigenous peoples often face many, multiple competing pressures on their time, energy, and focus – often by having to respond to competing threats, obligations, and responsibilities at the same time.
Case study: Investor submission to Equator Principles Association
In August 2019, a coalition of investors representing $2.9 trillion sent a letter to the Equator Principles Association, urging it to strengthen the standards to avoid community conflict. In particular, the letter urged the Equator Principles to recognize the rights of Indigenous peoples to FPIC regardless of jurisdiction, and to align with the UN Guiding Principles, including by establishing effective grievance mechanisms.262
Engagement with government agencies
Investors can use their leverage to address human rights risks by engaging with government agencies, urging them to implement human rights due diligence legislation, strengthen the recognition and protection of Indigenous peoples’ rights, and adopt legislative measures that enable rights-respecting FPIC processes.
In addition, under the UN Guiding Principles, the business responsibility to respect human rights also applies to political engagement.263 Thus, when carrying out lobbying activities, e.g., regarding climate and environmental matters, investors should ensure that they avoid contributing to adverse impacts on Indigenous rights, including by omission.
Case study: Investor Policy Dialogue on Deforestation to engage with public agencies and industry associations in selected countries on the issue of deforestation
In 2020, various investors led by Storebrand initiated the Investor Policy Dialogue on Deforestation (IPDD) aimed at tackling deforestation. One of the concerns of the investors were Indigenous rights violations caused by deforestation. As part of the initiative, working groups have been formed for Brazil, Indonesia, and consumer countries, where the working groups have engaged with relevant government authorities, industry associations and other stakeholders.264
Engagement with sustainability data and index providers
Sustainability data, ratings, and indexes have typically excluded information necessary to understand if companies are involved in adverse impacts of Indigenous peoples’ rights.265 Investors can engage with sustainability data and index providers, requesting them to make available data regarding companies’ Indigenous rights due diligence, and companies’ actual or potential human rights impacts, such as:
- Companies’ human rights risks and human rights impacts in their own operations and value chain, as reported by Indigenous peoples, media, NGOs, etc.
- Indigenous peoples’ own demands in relation to company activities that affect their rights, lands, territories, and resources.
- Their due diligence and remediation processes with respect to Indigenous peoples’ rights.
- Inclusion of Indigenous rights criteria in stock indexes, including sustainability indexes.
The examples below provide some ideas of how Indigenous peoples’ rights have previously been addressed or are being addressed by various actors.
- First Peoples Worldwide developed a method to quantify Indigenous rights risks, based on factors such as country risk, reputation risk, community risk, legal risk, and risk management.266
- Forest Peoples Programme has called for Ground Truthing, a concept referring to “the use of information about the actual situation on the ground, gathered from primary or secondary sources that are independent of companies in the supply chain, as opposed to paper-based compliance indicators and company self-reporting."267
- Global Canopy, with ZSL SPOTT and Trase, created Forest IQ, a database that brings together the partners’ data on deforestation and associated human rights issues, connected to other relevant datasets.
- First Peoples Worldwide and Adasina Social Capital developed Bridge, a sustainability data platform that contains an Indigenous rights screen.
- The data platform Sigwatch tracks NGO campaigns related to companies and investors, with campaigns related to impacts on Indigenous peoples being its own category.
- Kumacaya allows businesses and investors to fund independent monitoring by communities and civil society organizations.
- Timby allows communities to monitor and report concerns, anonymously or publicly.