sharing in governance of extractive industries

Indigenous peoples and the extractive industries: evaluating ethical standards

International standards have evolved since the 1960s to protect the rights of indigenous peoples facing major energy and mining activities on their lands.  Businesses and investors are increasingly aware of the risks of failing to respect indigenous rights.  In a recent example, when the city of Seattle ended its contract with Wells Fargo in February 2017 in protest at the bank’s financing of the Dakota Access Pipeline, the bank lost around 3 billion USD/year of business.

While energy and mining companies have made improvements in their environmental performance since the 1990s, they continue to struggle with social challenges, protests and conflict.  Often this is due to a lack of adequate understanding of social issues and a lack of involvement of affected communities in impact assessments and decision-making.  These gaps are particularly evident in relation to indigenous peoples.

The project Indigenous Peoples and Resource Extraction in the Arctic: Evaluating Ethical Guidelines, led by the Árran Lule Sami Centre, Ájluokta/Drag, Norway, sought to explore international ethical standards for indigenous rights protection in the context of extractive industry development, and how they are implemented in practice in the Russian and Norwegian Arctic.

The paper Evaluating international ethical standards and instruments for indi... – an output from the project – provides an overview of key international standards and instruments, including the ILO Convention 169 on Indigenous and Tribal Peoples (1989) and the UN Declaration on the Rights of Indigenous Peoples (2007), along with several of the commentaries and guidance documents produced to help clarify these instruments.  Of particular relevance are the commentaries of the former UN Special Rapporteur on the rights of Indigenous Peoples, James Anaya, relating to extractive industries, with reference to the UN Guiding Principles on Business and Human Rights (2011), given that indigenous peoples’ rights are barely mentioned in that important human rights instrument. 

Key themes

The paper highlights five themes, organised around the procedural aspects of international standards:

  • Due diligence: Ongoing assessment and monitoring should be carried out, in consultation or preferably in collaboration, with the local community, from the earliest stages of project planning.  It needs to be repeated when necessary, and should take cumulative impacts into account.  It should identify affected communities and their rights, vulnerabilities and needs, including the specific cultural and livelihoods concerns of indigenous peoples.  The findings feed into the ongoing management of environmental and social risks throughout life of the project.  Due diligence is a responsibility of government as much as business and also covers companies’ direct business relationships (including contractors), while also taking into account the risks posed by third parties.
  • Consultation and engagement: The terms ‘consultation’ and ‘engagement’ have evolved greatly over recent years within international standards, while increasing volumes of guidance have been prepared on ‘meaningful stakeholder engagement’.  Good practice involves engagement that is: early, timely, ongoing, inclusive, in good faith, fair, representative, non-discriminatory and culturally appropriate.  Engagement with indigenous peoples requires special considerations, such as their governance institutions, relations to the land, and historical discrimination, while engagement processes should be consistent with indigenous peoples’ own traditions.  Good practice involves community participation in resource-use assessments, monitoring and planning; and prior mutual agreement on the rules of the engagement. 
  • Free, prior and informed consent: According to international standards, it is primarily a government responsibility to elicit the free and informed consent of indigenous communities, prior to allowing industrial activity to take place on their lands, but company-oriented standards also increasingly require FPIC in certain circumstances.  For companies, FPIC may or may not be a requirement of national law, but international good practice is that companies have an FPIC policy in place if they are working in regions inhabited by indigenous peoples.  An FPIC process needs to be agreed in advance, including what constitutes consent and who is responsible for giving or withholding that consent.  The FPIC process should be conducted in good faith, free from coercion, intimidation or manipulation; in advance of relevant decisions being made; and consistent with indigenous peoples’ own institutions and customs.  Adequate and timely information should be shared in accessible formats and appropriate languages.  FPIC is an ongoing, iterative process, not a one-off event.  All commitments need to be mutually agreed and documented, including procedures to follow if commitments are not met.
  • Access to remedy: Governments are required to ensure judicial and non-judicial access to remedy, while companies need to establish their own grievance mechanisms.  Several standards have mechanisms (such as an ombudsman) by which the public and local communities can raise concerns.  The work of ombudsmen often revolves around mediation and facilitating dialogue between the parties to a conflict.  Issues raised by indigenous peoples often relate to the failure of governments or companies to consult adequately on development activities that affect their lands.  In addressing complaints, companies and governments must respect the customs, traditions, rules and legal systems of the indigenous peoples concerned.  A grievance mechanism should be culturally appropriate, accessible, free to use, and should not hamper access to alternative judicial or administrative mechanisms.  Communities should have full information about all forms of remedy related to a particular development.
  • Benefit sharing: Indigenous peoples’ have the right to benefit from natural resource development at least on an equal footing with the rest of the population, while governments are expected to prioritise their wellbeing in development planning. Yet James Anaya has recognized inequities in the ‘prevailing model’ of resource development, whereby external companies lead resource projects, supported by the state and then ‘share the benefits’ with local communities.  His ‘preferred model’ of development, if resource extraction is to go ahead, is for indigenous peoples to have greater control over the actual developments (through FPIC) and how the benefits are shared.  This reflects the spirit of international standards which refer to indigenous peoples’ right to determine priorities and strategies for the development or use of their lands and territories.  Within the ‘prevailing model’, good practice in benefit sharing includes: the negotiation of benefit-sharing agreements; revenue transparency at national and sub-national level; royalty/profit-sharing and equity stakes; independent foundations and trusts; and support for livelihoods development, over and above project-related job creation.


The paper highlights four areas requiring further attention:

  • Clarify government vs industry responsibilities: Under international law, states are ultimately responsible for ensuring compliance with human rights norms within their jurisdictions, including the rights of indigenous peoples.  Governments should take responsibility for early engagement with indigenous peoples, for instance prior to granting exploration licences.  Effective coordination between international instruments and national legal and regulatory regimes is essential.  Companies also need to be prepared to go beyond legal compliance in order to respect internationally recognised indigenous rights, and to engage meaningfully with local indigenous communities.
  • Scrutinise both policies and practice:  Companies should be assessed not only on the basis of their policies and self-reporting, but on field visits and third-party audit or assurance processes, to ensure that they are indeed implementing their commitments.  At the same time, too few extractive companies currently have indigenous peoples’ policies at all, and they should be encouraged to put policies in place as a first step.  Company rankings, such as the ranking developed by this project are one way to provide this encouragement.
  • Enhance community control:  Despite advances in consultation, participation and consent, the question of indigenous control over the processes of decision-making relating to extractive industry development is still under debate.  Indigenous people’s interests are frequently not recognised in decision-making, and increasingly they are seeking greater involvement, in order to determine outcomes, not simply to be consulted on them. 
  • Ensure transparency and support lesson sharing:  Overall, greater transparency is needed in regard to the implementation of international standards and the negotiation of agreements.  There is a need for more lesson sharing and case studies.  To reach relevant audiences, this needs to be in appropriate formats, from community radio programmes, to public meetings, to social media formats, such as Facebook, to academic research papers and policy briefings.

The full paper can be found here: Evaluating international ethical standards and instruments for indi....

A short policy summary can be found here: Evaluating international standards and instruments: Policy summary

We welcome feedback and responses from readers. Please contact sven.roald.nysto@arran.no or emma.wilson@ecwenergy.com


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