The Sustainability-Indigenous Nexus: does your sustainability strategy consider it?
December 13, 2022
Sustainability is, and will continue to be, viewed increasingly through an investor’s quantitative lens. Increasingly, businesses are being required to measure and disclose their sustainability performance. They are required to show, through data that are complete, credible, consistent, and comparable, that they are analyzing and improving the environmental, social, and governance elements of their business. Specifically, they must demonstrate that they have addressed the risks of climate change, including both physical risks to their assets and energy transition risks as we move to a lower carbon economy.
Sometimes, however, Indigenous issues can be overlooked or lost in the noise and clamor of sustainability discussions and reporting. What do sustainability and environmental, social, and governance (“ESG”) metrics have to do with Indigenous issues? In short, “a lot.”
The environment we share
Canada is arguably endowed with a unique competitive advantage when it comes to the environment – we are gifted with vast tracts of undeveloped land ripe with oil, gas, forests, minerals, metals, biodiversity, and agriculture, with pristine lakes, rivers, and oceans, not to mention great feedstock for renewables, including solar, wind, hydro, and nuclear.
When it comes to the land, water, and air and the resources they contain, we share them as non-Indigenous and Indigenous people alike. Indigenous peoples have been living on and from the land for thousands of years, hunting, trapping, fishing, and harvesting. They are keenly aware of the effects climate change brings to the environment as it impacts their ability to continue their traditional ways of life. They are equally aware of the energy transition, and how energy development impacts their traditional ways of life and well-being.
Indigenous communities maintain their own Indigenous Knowledge, which they pass down from generation to generation. At the heart of that knowledge is a worldview that the universe, its people, and the environment are interconnected. Sustainability is viewed from a reciprocity concept between people and the planet. Indigenous peoples have a deep respect for nature and its conservation as well as a community-based management approach to lands and natural resources:
“Traditional Knowledge has today become a highly valued source of information for archaeologists, ecologists, biologists, ethnobotanists, climatologists and others. This information ranges from medicinal properties of plants and insights into the value of biological diversity to caribou migration patterns and the effects of intentional burning of the landscape to manage particular resources. For example, some climatology studies have incorporated Qaujimajatuqangit (Inuit traditional knowledge) to explain changes in sea ice conditions observed over many generations.” (George Nicholas, “How Western science is finally catching up to Indigenous knowledge,” Macleans, February 15, 2018, link).
This Indigenous knowledge is increasingly being combined with Western science in both understanding and addressing climate change as well as in project development.
A recent example of Indigenous-led initiatives to address climate change
Last week, the 15th Conference of the Parties (“COP 15”) to the United Nations Convention of Biological Diversity kicked off in Montreal. The meeting focuses countries’ attention on protecting the environment and halting biodiversity loss caused by climate change. Given that lands inhabited by Indigenous peoples contain 80% of the world’s remaining biodiversity, their inclusion is critical, according to the International Institute for Sustainable Development (link). This is even more apparent when we consider that Canada is warming twice as fast as the rest of the planet, and three times as fast in its most northern regions where many Indigenous people reside and depend on the land and water for their livelihood (see Isabella O’Malley, “Canada is warming twice as fast as the rest of the world,” The Weather Network, 2019, link).
As the conference kicked off, the Liberal government highlighted the “Sustainability-Indigenous Nexus by announcing that it will spend up to $800 million to support four major Indigenous-led conservation projects covering nearly one million square kilometers across the country. The projects include:
These projects were announced during the kick off last week of the COP 15 UN Biodiversity Conference being held in Montreal.
Resource project development
In Canada, if project development impacts the rights, title, interests, and rights of Indigenous communities, the Crown (federal and provincial governments) have a legal obligation to consult, and if necessary, accommodate Indigenous communities for impacts. From a resource project development perspective, this “Crown consultation and engagement” has largely been addressed through the formal mechanisms of multiple energy and resource regulators. While that continues to occur, we are also seeing more proactive and creative ways for Indigenous communities’ involvement in such projects.
A recent example is the landmark Enbridge Indigenous partnership in the Athabasca region of Alberta. In that deal, 23 Indigenous communities via the Athabasca Indigenous Investments entity acquired an 11.57 percent interest in seven Enbridge-operated pipelines. The investment is valued at $1.12 billion. Such investment allows Indigenous communities to have direct input into how resource projects are developed, operated, and expanded. They also have the added benefit of providing economic and social benefits to the communities involved.
There are, and will continue to be, many more such joint resource projects. From an investor’s perspective, these joint projects have multiple benefits. Firstly, they de-risk projects by ensuring that the Indigenous environmental and other concerns are considered at the outset of the project, thus reducing execution risk. Secondly, they provide a source of opportunities available
to benefit from sustainable resource projects and to build and enhance long-term corporate value for project developers.
Social impact and Indigenous reconciliation
In 2015, the Truth and Reconciliation Commissions’ final report set out a call to action for Canadian businesses. The report called on the corporate sector to apply a reconciliation framework to its corporate policies and operational activities involving Indigenous peoples, lands, and resources. It made 92 recommendations, with three concepts at the heart of those recommendations:
Businesses have a great opportunity to work with Indigenous communities on and around their operations to incorporate Indigenous knowledge into environmental approaches, as well as improving engagement in relation to the “S” in ESG. However, as reported in PwC’s … “Fewer than one in five (19%) of the companies on our analysis discloses a reconciliation action plan.” Those companies, particularly in the extractive industries can utilize their materiality assessments and sustainability reporting to demonstrate they are doing more on the reconciliation front.
Sustainability in Canada is intricately linked with Indigenous consultation and engagement. Tackling climate change and the transition to a low carbon economy present monumental risks and opportunities for Canadian businesses. Those risks are diminished, and the opportunities maximized, when non-Indigenous and Indigenous people work together toward a common goal. Indigenous peoples describe that goal broadly as “if we take care of the land, it will take care of us.” Investors might describe that goal as transparent, credible, consistent, comparable quantitative metrics illustrating improved ESG performance that will allow businesses to be sustainable in the long run. Regardless of what you call it, the result of working together for a more prosperous sustainable Canadian economy that maximizes the benefits and reduces the risks for all only occurs if we understand and respect the Sustainability-Indigenous Nexus.
Sustrio ESG Advisors is a trusted advisor that helps organizations identify climate related-risks and opportunities to enhance corporate value through the energy transition. That means addressing changing regulatory regimes, investor demands, and stakeholder and Indigenous concerns. We do this by providing a full suite of sustainability/ESG services, Indigenous relations and engagement services, permitting and regulatory services, and legal services. Connect with us to see how we can help your company navigate the energy transition, optimize your ESG strategy and programming, and report on all your ESG matters.