Extractive industries explore the benefits of acquiring consent for their projects.
For years, indigenous communities have demanded the opportunity to grant or withhold permission for projects that affect their traditional lands and culture. Private companies, however, have been much slower to acknowledge the importance of “free, prior, and informed consent” (FPIC). But that may be changing. As a new report commissioned by Canadian oil and gas company Talisman indicates, companies can learn how to transform past mistakes into a corporate culture of responsibility.
Avoiding conflict by gaining consent
Indigenous peoples are communities that have lived on the same land for hundreds or even thousands of years, such that their ways of life, traditions, and knowledge about sustaining a living are closely tied to particular bodies of land and water. Development projects—such as oil pipelines and mines—can change the local environment, causing irreparable damage to indigenous communities' ways of life. This has led to conflict between companies and indigenous peoples, as we saw on a large scale in Peru in 2009.
Free, prior and informed consent has emerged as an effective way to prevent conflict, empower indigenous peoples, and reduce the harmful impacts of development projects in poor areas. FPIC provides an indigenous community with the opportunity to collectively grant or withhold its support for a proposed project, through a process that the community determines (such as a village consensus, election, or negotiated agreement).
The evolving views of governments on free, prior and informed consent
According to many companies and governments cited in the report, granting communities a formal right to grant or withhold consent would effectively give a community veto power over projects that are in the broader public interest. Many also argue that FPIC is too difficult to implement in practice. For example, who speaks on behalf of a community that has several different leaders and subgroups with conflicting interests?
Despite these ongoing challenges, momentum has grown around the need for FPIC. The concept played a prominent role in the 2007 UN Declaration on the Rights of Indigenous Peoples, which considers FPIC to be an essential way to respect indigenous peoples’ rights. As of this year, the UN Declaration has been endorsed by 147 countries. Recently, the remaining two major governments to oppose the declaration -— the United States and Canada -— indicated that their positions may change. In March, the Canadian government announced its intention to adopt the Declaration, and in April the U.S. government agreed to review its position.
A new outlook for extractive industries
Talisman Energy, the Canadian oil and gas company, is not without its share of controversy. It drew international media attention and lawsuits between 1998 and 2005 for operating in Sudan during the genocide. Recently, the U.S.-based NGO Amazon Watch has criticized Talisman for operating in Peru on land used by the indigenous Achuar people without their consent.
In May, Talisman released the report it commissioned on the feasibility of adopting an FPIC policy. The report, written by law firm Foley Hoag LLP, concludes that “in the long-term, the benefits for oil and gas companies of obtaining community agreement based on FPIC principles, and thereby both supporting their social license to operate and reducing legal and reputational risks, are likely to outweigh the substantial challenges of securing consent.” The report is an important milestone for the extractive industry and provides a snapshot of companies’ efforts so far to implement FPIC. Talisman should take the next step and adopt the report’s recommendations.
At the request of Bâtirente and RRSE, the two Canadian pension funds whose shareholder proposal led to the report, WRI agreed to provide a third party commentary on the study on a pro bono basis. The commentary identifies issues of FPIC implementation that require further discussion, and makes recommendations to Talisman on how to move forward with the report.
Integrating FPIC into development
Over the next several months, the International Finance Corporation (the private sector lending arm of the World Bank Group) is considering ways to integrate FPIC into its environmental and social policies, even if it is hidden in policy language such as “broad community support” and “good faith negotiations.” Its new policy will take effect at the end of 2010, and will likely be used by banks and companies across the world. WRI has also been actively engaged in this process.
Indigenous leaders have advocated for decades in the international community for greater recognition of their reliance on a healthy environment, careful management of natural resources, and respect for their traditional ways of life. FPIC has been a critical part of this movement. Now, understanding is growing among companies and governments that there is also a strong business case for FPIC. With these mutual benefits, we expect momentum and understanding of FPIC to continue to grow.