The U.N. Global Compact recently released a Good Practice Note on Indigenous Peoples’ Rights and the Role of Free, Prior, and Informed Consent (“FPIC”) authored by Amy Lehr, an associate in Foley Hoag’s Corporate Social Responsibility practice. The Note complements the U.N. Global Compact’s release of a longer Business Reference Guide to the U.N. Declaration on the Rights of Indigenous Peoples.
The Good Practice Note identifies:
- the business case for obtaining FPIC;
- the challenges likely to arise in such a process;
- current good practice; and
- emerging practices.
The Good Practice Note builds on a longer report drafted by Ms. Lehr and Gare Smith, Chair of the firm’s Corporate Social Responsibility practice, that discusses corporate best practice with regard to the rights of indigenous peoples in more detail.
The Note describes the legal basis for the standard of FPIC, as well as the frequent conflicts between states’ international commitments and their national regulatory requirements. Conflicts between national laws and host states’ international obligations have, in some instances, led to court decisions finding that the award of concessions to private companies violated governmental obligations. As a result, in certain jurisdictions, companies face potential legal risk if they or the host government fail to conduct robust consultation with indigenous communities or do not obtain consent in the context of determining whether to move ahead with certain commercial activities.
At the end of the day, the reasons for obtaining consent for projects go beyond legal risk. In order to obtain funding from investors such as the International Finance Corporation or the Equator Principles Financial Institutions, companies are expected to obtain FPIC. Unfortunately, the process and minimum depth of documentation required to demonstrate consent are less than crystal clear to date, which has deterred a number of companies from making such a commitment.
Obtaining FPIC can provide other material benefits. Companies that obtain FPIC through a well-documented process that meets international standards can know and show, not merely believe, that they have a social license to operate. This provides critical capacity to engage critics effectively, as companies can demonstrate that they followed an international best practice leading to explicit agreement from the affected indigenous peoples, rather than arguing that they believe they have broad community support due to a lack of open opposition.
As set forth in the Good Practice Note, companies should be aware that international standards call for consent processes to be:
- Free: Companies should not place communities under duress, and should seek to prevent governments and local actors from doing so as well. They should seek to prevent the presence of public security in the vicinity of the indigenous peoples’ communities while a consent process is underway.
- Prior: The exact time at which a consent process should occur is not completely clear. The U.N. Declaration on the Rights of Indigenous Peoples is often understood to call for governments to obtain consent before concessions are awarded, and certainly before exploration begins. The Inter-American Court on Human Rights has used a more subjective test to identify when consent is required. It has called for consent for activities with “significant impact,” which it has ruled sometimes includes exploration. To be safe, companies that make a commitment to FPIC would be advised to obtain consent before exploration.
- Informed: Companies should share with indigenous peoples the potential positive and negative impacts of a project in a format that is culturally appropriate.
- Consent: Companies — or governments – should obtain consent in a written form, based on a process to which the indigenous peoples agreed and that incorporates traditional decision-making processes. For companies, an inherent challenge is that a consent process might vary depending on the indigenous peoples involved and their decision-making traditions.
A copy of the Good Practice Note is available here.