Why is company engagement with First Nations people important to investors?
The destruction by a mining company of significant sites at Juukan Gorge in Western Australia in 2020 was an irreversible loss of First Nations’ cultural heritage. It represented a failure to respect the rights of the local First Nations people to protect their sacred sites and enjoy a deep and spiritual connection to their land. Harm caused to the lands, culture and heritage of First Nations has a deep impact on communities and is a loss for the world’s heritage.
The potential for companies to impact First Nations people’s lands, communities and cultural heritage is an increasingly recognised investment risk. There is growing global scrutiny of companies’ interactions with First Nations people, and if company behaviour does not meet appropriate standards, the risk of significant investment loss is heightened.
Respecting the rights of First Nations people is intrinsically linked with managing a company’s long-term interests. Significant financial costs can arise from unconstructive relationships with First Nations people. These costs can stem from production implications, project cancellations or delays, legal fees, reputational damage, difficulties retaining employees, and even physical damage where conflict arises. Ultimately, a company’s long-term success and ability to operate can be undermined.
How do we engage on this issue?
ACSI engages with relevant companies that face a material risk to understand how they are working to effectively manage and mitigate that risk. ACSI has developed a policy which outlines expectations of companies that engage with First Nations people.
To better understand the investment risks involved in company engagement with First Nations people, ACSI and its members established a working group on rights and cultural heritage risk management. The group has worked closely with First Nations leaders and has engaged with experts in Australia and overseas.
As institutional investors, ACSI’s members want to see the risks of harm to cultural heritage and communities effectively mitigated and managed through principled and constructive engagement between companies and First Nations people. The working group builds on ACSI’s existing work program related to the financial risks associated with ESG issues.
In 2021, ACSI conducted research into current company practice in engagement with First Nations people to identify the investment risks of mismanagement of relationships with First Nations people and find examples of good practice in engagement with First Nations people.
You can read our policy here.