What is the Special Representative’s position with regard to the UN Declaration on the Rights of Indigenous Peoples and how this relates to the CRtR? Article 32, paragraph 2 states, “States shall consult and cooperate in good faith with the indigenous peoples concerned through their own representative institutions in order to obtain their free and informed consent prior to the approval of any project affecting their lands or territories and other resources, particularly in connection with the development, utilization or exploitation of mineral, water or other resources.” I doubt that there’s enough time remaining to get much clarity on this under the terms of the existing mandate, however it would be good to acknowledge the issue (which is a hot topic), define how the Declaration relates to Professor Ruggie’s work (is it covered alongside the UNDHR?), and perhaps recommend some avenues to explore in the future to clarify the whole FPIC thing. Companies (especially extractives, of which mine is one), IPs, civil society and states would, I think, be grateful if the same level of clarity could be achieved in relation to this issue as is emerging through the Protect, Respect and Remedy framework.

I would add that this is not only a question of FPIC, but of UNDRIP in general.  Unlike the individuals’ rights in UNDHR, UNDRIP declares communal rights of indigenous people to mineral, land, and water resources and the consent process to use or develop those resources: because these are communal rights, this creates conflict within the sovereign authority of the states. And while UNDRIP specifically demurs to states’ sovereignty, it most definitely creates the expectation within the indigenous community of a right to veto minerals projects on traditional territories.

Extractives industry thus sees their legal mineral rights now subject to an additional consent process, without definition or arbiter, and subject to manipulation by external advisors and interests.  The case in Guatemala where a company did more consultation than was required under national law, including radio broadcasts in native languages, almost 50 formal public meetings, and obtaining written endorsements from indigenous communities – is now being denounced by international courts as a violation of indigenous rights.

This uncertainty makes it difficult for an extractives company to “respect” the rights envisioned under FPIC, or UNDRIP; even ICMM and IFC are unable to go on record saying a company should not proceed until and unless it has “consent” from indigenous peoples. Who defines “consent”: the community, its advisors, or the courts?

If this were simply a matter of consultation tactics – how many meetings, what language, good documentation of what was said, an acceptable grievance mechanism – it would be manageable within the P+R+R framework. The ICMM position paper on indigenous peoples is a practical expression of how this can work.  However, increasingly FPIC is used as an up-front roadblock: indigenous communities demand extractive companies to agree to a formal FPIC process with veto rights

But where there appears to be a fundamental issue of sovereignty over land, mineral, and water resources this is not something business can address.  Not unexpectedly, many states (including those who endorsed UNDRIP as well as many that have ratified ILO 169) are not willing to give up that sovereignty.

Until the fundamental issues are resolved, extractive industries will be in an untenable position of being accused of violating indigenous rights if they proceed with projects within the established legal framework wherever that framework does not give indigenous peoples title to the land and resources, even if they engage the communities in good faith.

The 2007 UNDRIP has created tremendous momentum for broader acceptance of the rights of indigenous peoples to their traditional lands and ways of life. But these rights are not new. Indigenous peoples’ collective rights to traditional property and self-determination, for example, are already well recognized under international law.

The problem is that these rights are often not respected by governments and companies.  Violations of indigenous peoples’ rights have occurred for years and even centuries, eroding trust and making it a challenge for governments and companies to undo long legacies of wrong-doing.  Frequently, companies are offered concessions, only to learn that the land was obtained without adequate consent of affected indigenous peoples.  In other instances, companies buy a stake in a project, only to discover that they have inherited a legacy of expropriation or project development without the agreement of affected peoples.

These situations create genuine operational, legal, and reputational risks for companies.

The UN Framework on Business and Human Rights provides a way to help address this dilemma. Yes, a company must comply with local law. But according to the corporate responsibility to respect, the company also must take measures not to contribute to the violation of rights. According to many indigenous rights advocates, a government’s past failure to seek consent from indigenous peoples is an ongoing human rights violation until the situation is remedied. In some cases this may lead to legal liability for companies that find themselves complicit in harm that occurs as a result of continued development on indigenous lands without consent. In other cases, even where there is no legal liability, the public perception that companies are contributing to and benefiting from an ongoing human rights violation can damage the company’s reputation, close access to new markets and customers, and lead to conflict.

On the other hand, if the company is able to work with the government and indigenous peoples to obtain FPIC, in a manner that remedies any past human rights violations, then the project can proceed with reduced risk. From the perspective of the UN Framework, free, prior, and informed consent is an enabler, not a roadblock, for extractive companies.  It can reduce conflict, and thus increase respect for human rights.

The business case for FPIC is strong, and growing. In May 2010, Canadian company Talisman Energy released a report it commissioned on the feasibility of adopting an FPIC policy. The report, written by law firm Foley Hoag LLP, concludes that “in the long-term, the benefits for oil and gas companies of obtaining community agreement based on FPIC principles, and thereby both supporting their social license to operate and reducing legal and reputational risks, are likely to outweigh the substantial challenges of securing consent.” [See http://www.foleyhoag.com/NewsCenter/Publications/eBooks/Implementing_Informed_Consent_Policy.aspx?ref=1]

The report is an important milestone for the extractive industry and provides a snapshot of companies’ efforts so far to implement FPIC. The report also contains numerous examples of best practices and benefits of FPIC, while also acknowledging the many complexities of the process.

Meanwhile, on the public sector side, there is also substantial momentum towards greater recognition of indigenous peoples’ rights and FPIC. As of 2010, the UNDRIP is endorsed by 147 countries. Recently, the remaining two major governments to oppose the declaration—the United States and Canada—indicated that their positions may change. In March, the Canadian government announced its intention to adopt the declaration, and in April the U.S. government began to formally review its position.

Over the next several months, the International Finance Corporation (the private sector lending arm of the World Bank Group) is considering ways to integrate FPIC into its environmental and social policies, even if it is hidden in policy language such as “broad community support” and “good faith negotiations.” Two other multilateral development banks—the European Bank for Reconstruction and Development, and the Asian Development Bank—have already incorporated FPIC into their policies. In July, IFC invited indigenous rights experts to a workshop on FPIC, where IFC senior management expressed support for FPIC, while recognizing the challenges of translating FPIC into policy language. IFC will continue consultations over the next several months. Its new policy will take effect in early 2011, and will likely be used by banks and companies across the world. Extractive companies that are early movers on this emerging industry standard will be better placed to integrate FPIC rapidly and effectively into their operations.  Companies may also be able to enhance their public reputations by demonstrating that they are leaders among their peers in promoting FPIC.

Indigenous leaders have advocated for decades in the international community for greater recognition of their reliance on a healthy environment, careful management of natural resources, and respect for their traditional ways of life. FPIC has been a critical part of this movement. Now, understanding is growing among companies and governments that there is also a strong business case for FPIC. With these mutual benefits, we expect momentum and understanding of FPIC to continue to grow.

Although international law focuses on the role of governments in protecting human rights, the U.N. Special Representative’s Framework for Business and Human Rights states that companies have a responsibility to respect human rights.  This includes those of indigenous peoples.  

A number of individuals commenting on this site have raised the issue of free, prior, informed consent (“FPIC”) of indigenous peoples.  Although this is only one of a number of key indigenous issues, it is certainly one of the liveliest areas of debate in the business and human rights field at the moment. 

I offer a few thoughts on FPIC below.  In addition, I suggest what the U.N. Special Representative’s framework may imply for companies’ due diligence regarding the rights of indigenous peoples.

FPIC: 

International law, as well as the standards of multilateral lenders and multi-stakeholder initiatives, has, for a number of years, referenced the requirement for governments to consult with indigenous peoples before commencing development projects.  Clearly, meaningful engagement or consultation with indigenous communities affected by development initiatives is a key element of respecting human rights.  Recently, the U.N. Declaration on the Rights of Indigenous Peoples, the lending requirements of several international financial institutions, and court decisions -- including those of the Inter-American Court of Human Rights, Belize, and Colombia -- note that significant development projects should only proceed with the consent of affected indigenous peoples.  Notably, although meaningful consultation is necessary to obtain consent, the two concepts are distinct, as the latter demands that affected indigenous peoples explicitly agree to development projects.  

FPIC is still an evolving norm in international law, but it has gathered substantial momentum in recent years.  Although governments that support the U.N. Declaration have committed to obtaining FPIC -- albeit through a non-binding international legal instrument -- they do not always do so.  In such instances, companies find themselves caught between a rock and a hard place when it comes to indigenous peoples’ rights because governments have not met their international commitments.  When governments assign indigenous lands for commercial development, the affected communities, angered by years of neglect and exploitation, may direct their frustration at companies. 

Foley Hoag recently published a report commissioned by Talisman Energy at the request of two socially responsible investors that details how a company could devise a FPIC policy and implementation protocol [available at http://www.foleyhoag.com/NewsCenter/Publications/eBooks/Implementing_Informed_Consent_Policy.aspx?ref=1].  The report also details the likely benefits and challenges that may arise from seeking FPIC.  Both are potentially significant.

Companies that seek FPIC may obtain a more secure social license to operate.  Indigenous communities are becoming increasingly organized and effective at advocating for FPIC.  They may believe that companies have a responsibility to seek FPIC, and may not be satisfied with an engagement process.  Particularly in regions where indigenous groups are well-organized and have been negatively affected by large-scale development projects, companies may be wise to seek consent.  Otherwise, companies may face operational stoppages or loss of access to concessions that cost millions of dollars per day in lost revenue.

In addition, obtaining FPIC may provide protection from adverse court decisions that incorporate FPIC.  The U.N. Declaration calls strongly for redress and restitution where land was taken from indigenous peoples without their FPIC.   Companies are likely to bear some of that burden as countries start to implement the Declaration unless they can demonstrate that they obtained the consent of affected indigenous peoples.  A number of national courts have ruled that, because concessions were awarded by governments without indigenous peoples’ consent, contracts should be cancelled or significant compensation should be provided. Companies are already addressing this problem proactively.  For instance, Rio Tinto’s Argyle Diamonds sought the consent of an Australian indigenous community partly due to what it viewed as inevitable changes in the law recognizing aboriginal rights that might threaten its concession.

Seeking consent could strengthen a company’s access to concessions if the company argues that its social license to operate, and thus the government’s revenue stream, will be more effectively protected.  On the other hand, a government may be willing to use force against its indigenous peoples and believe that a social license to operate is not needed.  Such an attitude creates a risk of legally cognizable human rights abuses against indigenous communities and should raise a red flag for companies.

Consent policies and practices are likely to provide increasing future benefits because responsible investors are highly focused on indigenous rights, including FPIC.  Responsible investors are developing criteria that reward companies that have FPIC policies and that can provide evidence that they effectively manage their relations with indigenous peoples.  

When a company seeks FPIC after it receives a concession, this can raise thorny sovereignty issues, as it may seem to question the government’s power to award the concession.  Nevertheless, it is in the company’s long-term interests to ensure that the concession was given after a process that, at a minimum, accords with national law.  In addition, and especially if the host country has signed ILO Convention 169 or supported the U.N. Declaration, the company may need to protect itself against future rescission of its concession by seeking consent for the project.  Whether the government feels that the company has threatened its sovereignty depends in part on how the company discusses the topic with the government.  If the company presents the process to the government as the company’s typical means of securing a social license to operate and of maintaining a positive and peaceful presence in the country, it is less likely that the government will be opposed. 

Some aspects of FPIC principles are and probably always will be difficult to implement. Whether engaging with indigenous communities or seeking consent, companies must identify indigenous land usage, which often is not documented.  Identifying “legitimate” representative organizations is a continuous and fundamental challenge.  In addition, because international guidelines posit that consent should be attained via traditional decision-making structures -- which vary by community -- there is no one-size-fits-all process for obtaining consent.  Rather, the process should be agreed upon with each community.

Finally, companies cannot obtain consent that is truly “prior.”  Ideally, if consent is sought, this should occur before a concession is awarded.  Only governments can seek consent at that point in time.  It is therefore strongly in the interest of companies for governments to fully implement their international commitments to indigenous rights.  

Applying the U.N. Special Representative’s Framework to Indigenous Rights:

As was noted above, there are practical reasons for companies to consider seeking FPIC for development projects.  Moving beyond the FPIC debate, and regardless of whether FPIC is an “internationally recognized right,” in applying the U.N. Special Representative’s framework, companies need to consider a number of human rights that are firmly established and pertain to indigenous peoples.  These include the right to cultural life, right to health, and right to life.  All of these can be affected if a company does not undertake appropriate due diligence and community engagement from the very start of a project.  Early engagement can help establish the company as a good partner in places where the corporate sector has a historically poor record.  Seeking FPIC is likely to further deter a breakdown of positive relationships. 

First, as part of their responsibility to respect human rights, companies should conduct human rights due diligence before they accept a concession from the government.  This due diligence should encompass indigenous rights.  Is there reason to believe that the concession is on indigenous peoples’ lands, whether or not they have legal title?  What are the national laws regarding indigenous peoples’ right to be consulted or to provide consent?  How do they compare with international standards?  Are other human rights of indigenous peoples likely to be affected, including the right to a cultural life?  How effectively has the government historically addressed indigenous concerns, and is there a history of conflict?

If companies are acquiring an interest in a project from another company, they should identify legacy issues pertaining to indigenous peoples.

If companies then obtain concessions that potentially affect indigenous people, they should take a number of steps to identify and mitigate those impacts.  A robust engagement process is essential to identify such impacts and address them in a culturally appropriate manner that accords with the community’s expectations.  A consent process might even more effectively mitigate the risks of future negative human rights impacts.  In accordance with the U.N. Special Representative’s framework, companies should also address the human rights of indigenous peoples in their policies and implementation protocols, and establish effective grievance mechanisms.