Resource firms slowly embracing indigenous rights


Written by James Munson, Contributor –

Date of publication: 
13 December 2012

Twenty-eight of the world’s biggest oil, gas and mining companies get a report card on their community consent policies

The Achuar people of northern Peru came to Canada last April to have Talisman Energy’s drilling operations on their ancestral land stopped. The Calgary-based oil company failed to consult with them before drilling in the Amazonian rainforest, a delegation of Achuar leaders told politicians and journalists in Ottawa, a contention Talisman officials denied. Five months later, the firm announced it was pulling out of Peru for business reasons, while the Achuar and their advocates claimed local opposition made the oil prospect unviable.

Whether Achuar’s public outreach influenced Talisman to leave Peru or not, it comes at a time of increased visibility for indigenous peoples around the world who are opposing mining projects. And it’s being felt on the balance sheets of extractive companies.

The growing assertiveness of indigenous people – in an age of easy travel and even easier communication – has been made even more pervasive in the last decade by the industry’s entry into previously inaccessible regions for new resources, driven by historically high commodity prices.

The industry, sensing a problem that isn’t going away, has reacted. Sometimes in tandem with civil society and sometimes on their own, business leaders have put in place policies to measure and mitigate community opposition to projects that, as Talisman’s fruitless foray into the Amazon shows, can suck up valuable capital.

But the result has been a murky sea of feel-good concepts with little legal grounding or wide acceptance, leaving indigenous groups and their defenders with doubts about the industry’s sincerity.

One idea, however, is gaining ground as a future standard bearer for cooperation between companies and communities – an indigenous peoples’ right to free, prior and informed consent, or FPIC, over projects on their lands.

FPIC was entrenched in the United Nations Declaration on the Rights of Indigenous Peoples in 2007. And though that doesn’t make it legally binding for member countries, the concept has since popped up in decisions by human rights councils and in the policies of companies themselves.

Oxfam America also sees FPIC as a way forward. In an effort to accelerate its acceptance by the extractives industry, Oxfam published a report in September that indexes the community consent policies of the world’s biggest oil, gas and mining companies.

While the index – which compares the depth, availability and legal footing of each policy – reveals major discrepancies in the ways companies view their duty to consult with indigenous people, the fact that over two dozen of the planet’s petroleum and mineral behemoths even
have such policies can be considered a sea change for the industry.

“In the bad old days, for most mining and oil and gas companies, communities were, at most, maybe irrelevant to what the companies were doing, and perhaps just a nuisance,” said Chris Anderson, the communities and social performance director for the Americas at Rio Tinto, during a recent panel discussion hosted by Oxfam in Washington, D.C., to mark the index’s release.

For four months, the report’s authors, Emily Greenspan and Marianne Voss, read company websites, scoured online news stories and phoned up firms directly to determine the state of community consent policies in the extractives sector.

Greenspan and Voss cast a wide net and investigated nearly 40 firms. But only 28 ended up in the final 114-page report because they were the only ones to have publicly available policies. The authors also chose companies for their membership in industry groups with indigenous rights’ standards like the International Council on Mining and Metals (ICMM) and past collaboration with Oxfam. “This report is pretty much skewed,” said Anderson. “You haven’t looked at the worst actors in all of this and there are plenty around still.”

Greenspan, also speaking on the panel, admitted the index wasn’t exhaustive, but added that it wasn’t meant to be. It’s supposed to give a read on the quality of policies out there right now.

The index’s value lies in separating the wheat from the chaff among the policies by helping to sift out phony guidelines and toothless rhetoric. Among the FPIC-lite varieties, the Oxfam researchers identified terms like “social licence” and “broad community support.”

Even companies who support FPIC have caveats. Mining giant BHP Billiton commits to FPIC only “where local law requires,” the report says. Its peer, Anglo American, has a similar condition. Of the 28 firms in the report, eight have a stated aim of engaging locals, 15 said they seek a social licence when developing a project and only five had an explicit FPIC commitment.

The index also includes a comparison of implementation guidelines, which show how companies actually plan to exercise their standards. Many companies, like ConocoPhillips, are heavy on the policies but don’t share how they plan to enforce them.

Rio Tinto’s Anderson, who was the only industry rep participating on Oxfam’s panel, provided some practical reasons for why some firms might be dragging their heels. “You know when you don’t have consent, but how do you know when you have it?” asked Anderson, who studied and worked as an anthropologist before joining the mining industry. “In many countries, governments are hostile to indigenous rights concepts like FPIC,” he said. “They want all the revenues and the benefits. They couldn’t care less about communities in the rural areas.”

“And in the world’s far-flung forests and bush land, it’s not always clear which communities have a stake in a resource and who the leaders are,” he added. “In many of the places we all work in, there is no community or there are lots of communities.” Working with a chieftain and his peers can, in some cases, also mean propping up patriarchal power structures.

For an individual company, having to reassess consent through the many phases of an extractive project, from exploration to feasibility to construction, is a major hurdle. There is also pushback within industry groups like the ICMM, where Anderson once chaired the working group on indigenous peoples’ issues. “Some of the juniors and mid-tiers say, ‘You just do this to keep us out of the market – we can’t afford all this stuff,’” he said, referring to consultation standards.

Despite the fact the principles are not universal, companies can at least use the index to compare their policies to those of their peers. There’s also less wiggle room to invent weaker standards.

Outside of the extractives industry, the index provides a much-needed data set for ethical investors who have had little if nothing like it, said Paul Bugala, senior sustainability analyst for extractive industries at Calvert Investments, speaking on Oxfam’s panel. “We’re prohibited from making decisions with non-public information,” said Bugala. “Our life blood is based on what’s available.”

Oxfam is hoping to update the report every two years. Next time, researchers plan to include more Chinese and Latin American companies. But the index is not the holy grail that observers and people in the industry need to truly measure progress – an in-depth global evaluation on implementation, which Oxfam says is too costly at this time. Until such a report is created, it’s still impossible to say how seriously companies are taking social concerns.