Ensuring Consideration of Indigenous Peoples’ Rights and Consent in Project Finance

Standard Setting

IIPWG has long advocated to improve consideration of Indigenous Peoples in due diligence and risk assessment guidelines such as the Equator Principles (EPs) – an environmental and social risk management framework used by over 100 high-level financial institutions in nearly 40 countries.

The EPs serve to protect banks and financial institutions from costly ESG mishandling. In their current form, however, the , especially the free, prior and informed consent (FPIC) of Native peoples on projects that may negatively impact them. Weak and noncommittal language in the EPs renders it obsolete for financial institutions that seek meaningful partnership with Indigenous Peoples to avoid social and environmental violence.

In 2019, letters were submitted to the Equator Principles Association (EPA) to address deeply flawed draft revisions to the EPs. These included a letter from  and another signed by 40 investment firms and Native organizations and advocates. IIPWG members attended public stakeholder meetings to voice concerns in London and Toronto, and a redline and outcomes documents were submitted to propose further improvements and detail challenges in the EPA's public stakeholder engagement process.

Why This Issue Matters

  • Ensuring a robust approach to FPIC at the moment of project finance is an important means to ensuring FPIC throughout the lifecycle of a project.
  • Consideration of Indigenous rights in economic, business and resource development is integral to addressing climate change.
  • Operationalizing Indigenous Peoples’ rights and wellbeing during project development both avoids potential losses from project failures and protects Indigenous Peoples from unnecessary and irreversible human rights and environmental harms.

Two Major Flaws in the Current Guidelines

1. No commitment to implementing FPIC as a right for Indigenous Peoples and in operationalizing protections for Indigenous Peoples in project development.
​2. Name-only references to the United Nations Guiding Principles and the United Nations Declaration on the Rights of Indigenous Peoples do not standardize commitments to these international instruments through the risk assessment framework.

Next Steps

  • Advocate further revisions to the Equator Principles to adequately consider Indigenous Peoples.
  • Build resources and offer consultation to financial institutions wishing to avoid costly ESG oversights.
  • At every step of project development and implementation, ensure the rights of Indigenous Peoples align with international standards such as the United Nations Declaration on the Rights of Indigenous Peoples and the United Nations Guiding Principles.