Last December, I hinted that the World Bank was moving to adopt stronger new standards on Indigenous rights. After nearly three years of deliberation, the International Finance Corporation (IFC), the private lending arm of the World Bank, announced its revised Sustainability Framework last month. As the largest source of international financing for companies in the developing world, the IFC also tends to set the global standard on responsible banking (for better or worse).
The policy marks a step forward that’s long overdue. For projects proposed on Indigenous lands, IFC now recognizes the principle of “Free, Prior, and Informed Consent” (FPIC). That “consent” language improves upon the “consultation” requirement that has guided the IFC since 2006. The revision follows language ratified in the UN Declaration on the Rights of Indigenous People in 2007 and endorsed by Canada and the United States last year.
Now what? Two big questions stand out. First, how will this change the IFC’s role in financing the energy and agribusiness mega-projects that have historically been among the most disruptive threats to Indigenous land rights? Second, how will the private banks, which increasingly are moving into these sectors, respond?
The fight over a tar sands oil pipeline through Canada’s Great Bear Rainforest will be a landmark test of how private banks respond. On one side: Enbridge, one of North America’s biggest oil and gas developers. On the other: the Yinka Dene Alliance, the Coastal First Nations, and the Wet’suwet’en Hereditary Chiefs, Indigenous First Nations deeply opposed to the project whose territories comprise more than half of the proposed pipeline and tanker route. In the middle: Canada’s private banks and their yet untested policies on Indigenous rights.
Toronto Dominion was among the first to step forward on the issue in 2007, stating that “Aboriginal people should be able to provide free and informed consent on projects and activities affecting their community.” And while the bank has made no specific commitments about how its position will affect its financing to industrial activities on Indigenous lands, it has taken the lead on a number of national dialogues on the issue of Indigenous rights and development in Canada.
Then there’s RBC. Late last year, RBC announced a set of new environmental and social screens for its clients. And while the RBC policy limits the scope of its screen to “Free Prior and Informed Consultation,” it also guides bankers to document whether or not consent for client activities within Indigenous territories exists or not.
Canada’s other big banks — CIBC, Scotiabank and Bank of Montreal — each heard from Yinka Dene Representatives at their Spring Shareholder Meetings, but have yet to adopt policies per se.
Will these banks follow the lead of the IFC by strengthening their commitments to FPIC and opting out of financing for Enbridge? Or will they prove the skeptics right by falling back to business-as-usual? The world is watching.