MEMORANDUM

To: Reider Kvam
Environment and Social Development Department
Policy and Quality Assurance

cc: Chad Dobson
Bank Information Center

From: S. James Anaya
United Nations Special Rapporteur on the rights of indigenous peoples

Date: 2 March 2011

Re: Draft Performance Standard 7 on Indigenous Peoples

I am writing in my capacity as UN Special Rapporteur on the rights of indigenous peoples to convey a few thoughts on the latest draft of the IFC Performance Standard 7 (draft as of 1 December 2010) in light of the related draft Guidance Note 7-V2 (7 January 2011). First of all, let me congratulate you and others at the IFC for the significant improvements to the performance standard that have been incorporated into the latest draft. I am hopeful that the final result will be one that will provide significant protection and benefits for indigenous peoples affected by IFC-funded projects, and set a good example for other international institutions as well as business enterprises.

It should be noted that these comments are not intended to be comprehensive or exhaustive, but rather build upon my previous input into the revision process and may be supplemented at a later time. My main observations for now, which I would be happy to discuss further with you or other IFC staff at an appropriate time, are as follows.

Involvement of indigenous peoples as partners in project design and development

Related to an issue I raised in earlier conversations with the IFC, the current draft of the performance standard (PS) still does not provide a sufficiently clear prescription that, at the outset of a client initiative, indigenous peoples must be consulted and their consent sought in relation to the actual design and development of the project. Although there is language about the need to consult in early stages of project development, the description of the actual steps to be taken in proceeding with consultations reads as though the indigenous communities are principally consulted about the negative impacts of the project, after the project is already in an advanced stage of its development. For example, the first situation requiring consultation to which the draft standard refers is in the context of “Avoidance of Adverse Impacts” (paras. 8 and 9). Here, the draft notes that the client’s actions to minimize any adverse impacts “will be developed with the informed consultation and participation of affected Indigenous Peoples” (para. 9). However, in my view, the performance standard should, prior to referring to issues that arise after the project is developed and its potential adverse impacts are to be considered, clearly provide that the client is to consult with indigenous communities and involve them in the design and development of a project during the earliest stages of decision-making regarding that project.

It is in a subsequent section, entitled “Inform [sic] Consultation and Participation,” that the draft performance standard indicates that indigenous peoples should be involved in the project design and development. In this connection, paragraph 10 states that “[t]he client will establish a relationship of informed consultation and participation with the Affected Communities of Indigenous Peoples from as early as possible in the project planning and maintain it throughout the project life cycle.” However, even here, the draft standard does not make clear that indigenous peoples must have the opportunity to actually influence the project planning, and not merely be informed of the plans that the client is developing. Thus, this section should be amended to stress that indigenous peoples should be consulted with an opportunity to influence and build consensus around the design of the project, at the earliest stages of the project development.

In this regard, the draft performance standard should genuinely seek to promote a new development model consistent with the UN Declaration on the Rights of Indigenous Peoples and other international instruments, one that sees affected indigenous peoples as equal partners in the development process. Real partnership requires that indigenous peoples be able to genuinely influence decisions concerning the development activities, fully participate in their design and implementation, and directly benefit from any economic or other benefits that are derived from them. While the introduction to the performance standard states that “Indigenous Peoples may play a role in sustainable development by promoting and managing activities and enterprises as partners in development,” this point needs to be more than hortatory and made operational within the performance standard.

In keeping with a new, partnership-based model of development, in all cases and stages of decision making in which indigenous peoples’ particular interests are affected by a proposed measure, obtaining their consent should, in some degree, be an objective of the consultations, as I have emphasized in the past. In this regard, the Declaration on the Rights of Indigenous Peoples refers to consultation “with the objective of obtaining their free, prior and informed consent” and ILO Convetion169 on Indigenous and Tribal Peoples similarly requires that “consultations carried out … with the objective of achieving agreement or consent.” It would be useful for the guidelines to expressly note early on that even in the cases when obtaining the free, prior and informed consent of the indigenous peoples concerned is not strictly required, obtaining consent should still be the objective of the consultations carried out. The point here is to stress a consensus-building model of consultation for all projects affecting indigenous peoples, not just those projects affecting indigenous peoples in such a way that consent is an essential precondition.

Free, prior and informed consent standards

I am pleased that the principle of free, prior and informed consent has been included in some way in the latest draft of the performance standard on indigenous peoples. The enumerated circumstances in which the client must not only consult with, but also obtain the free, prior and informed consent of, affected indigenous communities is useful as well as, in my opinion, largely in line with relevant standards of the United Nations Declaration on the Rights of Indigenous Peoples and ILO Convention 169 on Indigenous and Tribal Peoples. There are a couple of issues I wish to raise in this regard, however.

The first concern relates to what may simply be a drafting error. I note that the third situation listed in paragraph 16 requiring free, prior and informed consent (cases involving “commercial use of Indigenous Peoples’ cultural resources”) should be amended to also include situations involving non-commercial use of indigenous peoples’ cultural resources, as rightly reflected in paragraph 20, which elaborates upon paragraph 16(iii). I would recommend that paragraph 16(iii) be revised to require free prior and informed consent in situations, using the language of paragraph 20, involving “impact upon cultural resources that are central to the identity and/or cultural, ceremonial, or spiritual aspects of indigenous peoples’ lives.”

In addition, although I believe it is useful to list situations in which consent is required (beyond just being an objective of consultations), it should be made clear that the three enumerated circumstances are not exclusive. As I have highlighted previously in my thematic report on the duty of States to consult with indigenous peoples (U.N. Doc. A/HRC/12/34), the specific characteristics of the consultation procedure required will necessarily vary depending upon the nature of the proposed measure and the scope of its impact on indigenous peoples. A significant, direct impact on indigenous peoples’ lives or territories establishes a strong presumption that the proposed measure should not go forward without indigenous peoples’ consent. In certain contexts, that presumption may harden into a prohibition of the measure or project in the absence of indigenous consent. While the current enumeration of circumstances is useful, and rightly identify situations that are likely to have a significant, direct impact on the affected indigenous communities, there may be situations beyond those enumerated in which the impacts of the project are significant and direct enough to require the consent before the project may move forward. I therefore recommend that paragraph 16 be amended to state the general underlying principle and indicate that the enumerated circumstances exemplary and are not exclusive of other situations of substantial impact on indigenous peoples requiring consent.

Also, as noted above it should be made clear early on in the performance standard that obtaining consent should be an objective of all consultations carried out, beyond those specifically enumerated circumstances in which consent as a precondition for moving forward with an initiative. In this connection, it is important to not feed into the notion that consultation and free, prior and informed consent are two independent procedures, as the performance standard rightly indicates when it says that the free, prior and informed consent process “builds on and expands the process of informed consultation and participation” (para. 15).

Balancing bargaining powers

Another concern with the current draft of the performance standard is that it does not include an acknowledgement of or way of dealing with the unequal power relationship that will typically exist between IFC clients and the affected indigenous communities. Indigenous peoples are characteristically disadvantaged in terms of political influence, financial resources, access to information, and relevant education in comparison to the State institutions or private parties that are their counterparts in the consultations. In order to establish a climate of trust and confidence necessary for the consultations to succeed, it is necessary to address the imbalance of power by ensuring that indigenous peoples have the financial, technical and other assistance they need. Thus, the performance standard should make note that mechanisms should be in place to level the bargaining power between the client and the indigenous peoples concerned, and that the State can and should place a role in this process. Furthermore, it should be clear that this assistance must be provided without it being used to leverage or influence indigenous peoples positions in the consultations.

The obligations of States

Finally, the performance standard should clearly reflect that, under international law, it is States that are responsible for ensuring consultations and consent with indigenous communities. While the private sector may be delegated consultation duties by States, ultimately the State is responsible for ensuring that consultation and consent procedures are carried out. As I have noted in the past, the delegation of a State’s human rights obligations to a private company may not be desirable, and can even be problematic, given that the interests of the private company, generally speaking, are principally lucrative and thus cannot be in complete alignment with the public interest or the best interests of the indigenous peoples concerned (U.N. Doc. A/HRC/12/34, para. 55). That is not, however, to discount the possibility of substantial convergence of these interests in a way that allows for consensus through negotiations in which imbalances of power are overcome.

Nevertheless, consultations carried out by the client should not entirely replace procedures carried out by States and do not absolve States of their obligations in this regard. The performance standard should therefore be amended to include a specific reference to the obligations that States have under international law to ensure consultation/consent and expressly note that the client involved should encourage and facilitate the involvement of States in this connection. I note that the draft does mention cooperation with State agencies, but only “[w]here the government has a defined role in the management of Indigenous Peoples issues in relation to the project” and “to the extent feasible and permitted by the agency” (para. 22). In my view, these circumstances requiring coordination are too limited and should be expanded to conform to the international standard of State responsibility in this regard. The performance standard should explicitly state that the clients’ activities should not try to replace or undermine the responsibility of States, and should instead be conducive to strengthening State consultation mechanisms and their coordination with client activities. Indeed, it should be stated at the outset that the consultations required by the performance standard are within the framework of the ultimate legal responsibility of States to ensure adequate consultation with indigenous peoples.

I hope that the foregoing observations are of use to the IFC as it continues to revise and improve its performance standard on indigenous peoples, and I would like to express my willingness to review subsequent drafts of the performance standard. I also emphasize the need to continue to consult with indigenous peoples over the next several months, during the process of finalizing the document. Should you have any questions about these comments, please do not hesitate to contact me.