The Australian Council of Superannuation Investors has released a research paper that includes guidance for companies on better engagement with First Nations people, to avert another Juukan Gorge disaster. The report follows extensive consultation between investors and First Nations peoples, companies, governments and community groups.
Titled Company Engagement with First Nations People, the research report provides companies with guidance on building and maintaining long-term and constructive relationships with First Nations groups and helps investors manage material financial and reputational risks.
The destruction of 46,000-year-old caves in the Juukan Gorge in 2020 demonstrated the consequences of poor company engagement with First Nations peoples. Given nearly half of extractive company operations globally are on land inhabited by First Nations people, ACSI conducted research to help investors and companies identify good practice in engagement, risk management and disclosure.
“Poor engagement comes at a cost to First Nations people and can adversely impact their land and cultural heritage,” ACSI CEO Louise Davidson said. “Building long-term constructive and mutually beneficial relationships not only leads to better outcomes for First Nations groups, but also represents a sound business case.
“Investors ultimately bear costs and financial risk when First Nations engagement is inadequate, misaligned with societal expectations or where there is a discrepancy between what a company says it will do and what actually transpires.”
Despite this risk, only 38% of ASX200 companies in FY20 disclosed information related to their interactions with First Nations people, whether in the communities that they impact or within their own workforces. Disclosure helps investors effectively assess material risk and make decisions that are in the best financial interests of their beneficiaries.
ACSI’s research and consultation identified a number of gaps in company practice, including: preventing First Nations groups from publicly objecting to projects due to confidentiality clauses; failing to engage at an early enough stage in a project; failing to maintain ongoing constructive engagement throughout the life of a project; and failing to mitigate power imbalances with resource-constrained First Nations communities.
“The potential for companies to impact First Nation lands, communities and cultural heritage presents an increasing investment risk,” Ms Davidson said. “The cost of poor engagement practices can include legal and reputational damage, project disruptions, increased regulatory risk, production disruptions and difficulties retaining employees. Ultimately, substandard engagement can undermine a company’s long-term success and ability to operate effectively.
“While legislative change is expected, companies don’t need to wait for change before implementing good practice. Leadership on effective First Nations engagement starts with the Board, which is accountable for setting expectations, applying standards and mitigating and managing risk.”
The research sets out elements that are required for good-faith, constructive engagement, including:
- Integrating risk assessments and policies across the company that align with the UN Declaration on the Rights of Indigenous Peoples and the UN Guiding Principles on Business and Human Rights;
- Engaging in good faith, and obtaining and maintaining free, prior and informed consent (FPIC) from First Nations groups before commencing operations that will impact them, and on an ongoing basis throughout the life of a project;
- Establishing with First Nations groups agreements that cover all phases of operations (including exploration, contain review clauses and be re-negotiated as necessary);
- Recognising and mitigating power imbalances and ensuring agreements support impacted communities over the long-term through reasonable benefit-sharing provisions;
- Building ongoing engagement into policies and risk management frameworks, including appropriate board oversight of policies and practices, and accountability mechanisms for the board, management and staff;
- Establishing dispute resolution and grievance mechanisms, and remedying any adverse impacts;
- Setting transparent targets and KPIs that reflect international standards, establishing accountability mechanisms, and incorporating First Nations peoples into the monitoring process.
- Disclosing the company’s risks and approach, how policies are implemented in practice, the nature and scope of agreements, timelines and challenges. Also disclosing any government approval or dispute resolution determinations that do not reflect the position of First Nations groups.
The research coincides with the release of ACSI’s new First Nations engagement policy that encourages companies to establish processes early in the life of a project and obtain free, prior and informed consent before commencing operations. You can find out more here.
You can download the research here: https://acsi.org.au/research-reports/company-engagement-with-first-nations-people/
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