Canadian investors must proactively encourage industry policies and practices that deepen historical understanding, honour Indigenous rights and ensure equitable distribution of economic gains. The risks of not doing so: human rights abuses, project litigation, delays and cancellations.
Access to a stable supply of sustainably sourced critical minerals to support this transition and power our future economies is a tall order and a material concern for investors. Given our abundant resources, Canada has an immense opportunity to meet both domestic and global demand. Despite this, Canadian capital is not flowing where it is needed.4 In their 2023 business risks and opportunities outlook, Ernst & Young consultants cite the lack of investment as the second biggest risk for the metals and mining sector after ESG concerns.5
Institutional investors not only have a responsibility to a growing base of Indigenous clients to invest in a way that is aligned with their socio-economic interests, but more broadly are required to understand and manage risks, including a stable supply of clean energy. Being proactive on integrating respect for Indigenous rights through advocacy and supporting innovative investment structures can help create greater certainty in reaching Net Zero goals by reducing litigation risk, project delays and cancellations.
Below we review:
- How Canada’s ability to lead the energy transition depends on reconciliation action
- How recent court decisions show why governments and industry must be proactive in demonstrating respect for Indigenous rights
- What institutional investors can do to manage risk and advance faster progress towards reconciliation and Net Zero goals
The Energy Transition & Reconciliation
Critical minerals are the building blocks of the energy transition. They are defined as being essential to the economy and national security, but in many cases are in unstable or questionable supply.
Accessing Net Zero Minerals Relies on Reconciliation
- Wind turbines require manganese, platinum, and rare earth magnets.
- Solar panels use indium and tellurium.
- EV battery parts consist of lithium, cobalt, nickel and magnets.
- Nuclear power generators run on uranium.
- Copper wiring is the primary means through which electricity will be transmitted wherever it is needed.
Recent Court Decisions Show Need for Proactivity
The Robinson Huron and Robinson Superior Treaties Cases
B.C. Supreme Court Ruling on B.C. Mineral Tenures Act
Blueberry River First Nation Ruling on Cumulative Impacts
What Investors Can Do
Close the education gap
Understanding treaty history and Indigenous rights will enable more sophisticated risk insight and assessment of investee company and sector practices for asset allocation decisions. It can also support more effective advocacy with investee companies to adopt best practices in respecting Indigenous rights in the context of their operations, including through engagements that encourage company fulfillment of Call to Action #92.
- Indigenous Canada, a 12-lesson open course by the University of Alberta covering Canada’s early history with Indigenous peoples, land claims and environmental impacts, Indigenous legal rights, and contemporary Indigenous cultural practices across Canada.
- Nisitohtamowin ᓂᓯᑐᐦᑕᒧᐃᐧᐣ, An Introduction to Understanding Indigenous Perspectives in Canada developed by First Nations University of Canada, Reconciliation Education and BMO Financial Group
Integrate FPIC at the exploration stage
- United Nations Declaration on the Rights of Indigenous Peoples (Article 32)
- Advancing Reconciliation in Canada: A Guide for Investors
- Lands and Minerals Sector – Indigenous Mining Agreements, Exploration projects and producing mines, and the types of agreements negotiated.
- The Initiative for Responsible Mining Assurance standard for Free Prior and Informed Consent
Track the success of pioneering agreements
Advocate for wider access to capital
Due to Indian Act restrictions, First Nations’ can’t use reserve lands as collateral to secure affordable loans thereby making purchased equity stakes in projects far less economically achievable. Provincial Indigenous loan guarantee programs in Ontario, Alberta and Saskatchewan help address this barrier. But Indigenous and non-Indigenous business leaders say there still is not enough capital available for Indigenous participation in critical minerals projects and related infrastructure, and are calling for a federal loan guarantee program to address this gap.19
Canada has a historic opportunity to be a global leader in the clean energy transition while simultaneously advancing beneficial socio-economic outcomes for Indigenous peoples. Through more proactive partnerships with Indigenous rights holders, we can reduce litigation risks, delays and project cancellations as we strive together for Net Zero. Investors can support all the above through asset allocation decisions and advocacy for corporate and government policies that reflect understanding of and respect for Indigenous rights and ensure the economic benefits are equitably shared.
4 Niall McGee, “While domestic companies flounder, foreign behemoths have built a dominant position in the Canadian critical minerals sector – and few have benefited more than Australia,” The Globe and Mail, October 13, 2023.↩
10 Government of Canada: Crown-Indigenous Relations and Northern Affairs Canada, “Robinson Huron Treaty Leadership, Ontario and Canada announce proposed settlement and next steps in Treaty annuities court case,” June 17, 2023.↩
12 Sarah Law, “First Nation calls mining stakes ‘unlawful, invalid’ as it challenges Ontario’s free-entry system,” CBC, August 3, 2023; Sarah Law, “First Nations leaders back at Queen’s Park to push Ontario Premier Ford to end mining activity on their land,” CBC, September 26, 2023.↩
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