Indigenous peoples around the world continue to call for respect of their rights, a call which is increasingly being heard and answered. In October 2022, global insurer AXIS Capital (AXIS) announced it would refuse to underwrite energy, mining and other projects undertaken by insureds on indigenous lands that did not respect and observe the right to free, prior and informed consent (FPIC) in accordance with the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP).

In Australia, a number of major projects are being challenged on the basis that First Nations Peoples'1 concerns have not been adequately addressed, and that FPIC has not been obtained.

Below, we explore the drivers behind the increasing expectation that project proponents and participants not only consult with, but obtain consent from indigenous communities whose lands, seas or resources may be impacted by projects that are planned or underway.

Self-determination, UNDRIP and FPIC: a primer

The right to self-determination is enshrined in a number of UN instruments, including the International Covenant on Civil and Political Rights (ICCPR), the International Covenant on Economic and Social Rights (ICESCR) and in the International Labour Organisation (ILO) Indigenous and Tribal Peoples Convention. For indigenous peoples, the right of self-determination is given further context and meaning in UNDRIP and is recognised as indispensable to the realisation of indigenous peoples' rights, including land rights (for a discussion of the key principles of UNDRIP, see Episode 6 of our Essential ESG podcast).

Of particular relevance for project proponents and participants, UNDRIP provides that:

Indigenous peoples have the right to determine and develop priorities and strategies for the development or use of their lands or territories and other resources. (Article 32(1))

UNDRIP is a declaration made by states and is not enforceable domestically against states or businesses until it is incorporated into domestic legislation. Notwithstanding, it is widely understood to be an expression of existing rights already binding on states under international law as they apply to indigenous peoples, and provides an internationally accepted standard for the realisation of indigenous peoples' rights. It is also a recognised international instrument such that the rights expressed in UNDRIP must be respected in order to achieve compliance with businesses obligations under the United Nations Guiding Principles on Business and Human Rights (UNGPs).

FPIC is an international human rights principle that provides for the operationalisation of the right to self-determination for indigenous people and the right to be free from racial discrimination. It is both procedural and substantive in its application (for further discussion on the different elements of FPIC, see Episode 7 of our Essential ESG podcast).

As a minimum, in order to achieve FPIC, consultation processes should be free, prior and informed, and consent should be obtained.

  1. Free. Participants should be free from coercion and manipulation, with sufficient time allowed for engagement in a culturally appropriate manner. Participants should be free to withhold consent.
  2. Prior. Participants must be identified and engaged before any impact on the right to self-determination.
  3. Informed. Participants should be given accurate, timely, and sufficiently detailed information (in a manner which can be easily understood) to enable them to understand the project and its impacts.
  4. Consent. Consent should be specific and obtained in accordance with culturally appropriate decision-making processes from the appropriate representative body. Consent must be ongoing, and modes of withdrawing consent should be built into the life of the engagement process.

UNDRIP requires each of the four elements of FPIC to be achieved:

    when relocating indigenous peoples from their land;
  • when cultural, intellectual, religious and spiritual property is impacted;
  • in relation to the storage or disposal of hazardous materials on customary lands or territories; and
  • prior to approval of any project affecting the lands or territories of indigenous peoples.

    • Implications of the AXIS announcement

    AXIS's confirmation that it will refuse to underwrite energy, mining and other projects undertaken by insureds on indigenous lands that do not respect and observe FPIC is significant in three respects.

    First, it underscores the pressure miners, energy producers and major project operators are facing from businesses within their own value chains to respect the specific rights of indigenous peoples as set out in UNDRIP. Second, it emphasises the need to ensure adequate environmental and human rights due diligence is conducted on projects, and not limited to customers, in order to be satisfied that potential adverse impacts on the human rights of indigenous peoples are identified. Third, it appears to eschew soft law and industry standards that focus on the quality of the consultation with indigenous peoples, but in many instances do not require that FPIC is actually achieved.

    Australian domestic law does not require project proponents and participants to achieve FPIC in accordance with UNDRIP. However, the AXIS example shows that a growing range of stakeholders, including Traditional Owners, investors and financial institutions, expect FPIC to be achieved in accordance with UNDRIP.

      Traditional Owners. Following the parliamentary inquiry into the destruction of 46,000 year old caves at the Juukan Gorge in the Pilbara region of Western Australia, Australia's First Nations Peoples continue to press for their rights to be respected. In July 2022, the Murujuga Traditional Owners addressed the United Nations seeking to prevent gas industry expansion on the Burrup Peninsula. Wangan and Jagalingou cultural custodians have continued camping on their ancestral lands adjacent to the Adani Carmichael coal mine, with Queensland police refusing to remove them from the site in recognition of their right to conduct ceremony under provisions of the Human Rights Act 2019 (Qld).
    • Investors. Both the Australian Council of Superannuation Investors (ACSI) and the Responsible Investment Association of Australasia have released separate guidance on engaging with Australian First Nations People, setting the expectation that investors and investee companies should commit to respecting First Nations Peoples' rights and cultural heritage in accordance with UNDRIP and the UNGPs. For example, ACSI has emphasised that companies have a responsibility to respect human rights and cultural heritage of the communities impacted by their operations, and that the increased costs from unconstructive relationships with First Nations Peoples represent a material investment risk.
    • Australian financial institutions. The Australian Sustainable Finance Institute, whose membership includes some of Australia's largest financial institutions, investors and insurers,2 has recommended that financial institutions work to codify the principle of FPIC in decisions made by financial institutions, including reconsidering projects or activities where that standard cannot be achieved.

      • Could legislative reform be on the horizon?

      Australia's much publicised State of the Environment Report found that while indigenous knowledge and sustainable cultural practices are key to environmental management, and that indigenous stewardship of land is recognised in national and international laws (including the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) and UNDRIP), practical application remains marginalised in mainstream environmental management. It found that indigenous self-determination is key to helping to restore Australia's environment and indigenous wellbeing.

      Both Canada and New Zealand have taken steps to implement UNDRIP into domestic law. In Australia, the Juukan Gorge Inquiry recommended legislative changes to address the gap between domestic law and the standard of FPIC under international law. These recommendations include:

        legislating a new framework for cultural heritage protection co-designed with Aboriginal and Torres Strait Islander peoples that would set a minimum standard for state and territory cultural heritage protections consistent with international law (including UNDRIP); and
      • a review of the Commonwealth Native Title Act, with a view to developing agreement negotiation standards that require proponents to adhere to the standard of FPIC as set out in UNDRIP.

        • The Australian senate is currently conducting an Inquiry into the Application of UNDRIP in Australia. Key stakeholder submissions have called for governments to audit and review existing legislation for consistency with UNDRIP.

        Positioning your business for the future of FPIC

        Businesses that undertake projects on lands with which indigenous people are connected should ensure FPIC is achieved and maintained throughout the life of the project. Businesses that fund, invest in or insure businesses undertaking those projects should ensure they conduct adequate human rights due diligence on the project (or verify the human rights due diligence done by the customer) to ensure FPIC has been achieved in accordance with UNDRIP.

        One of the challenges faced by business is translating the principle of FPIC to the specific context of a particular project and potentially affected indigenous communities. While the commercial and cultural context of each project, the communities impacted by it, and businesses involved will require different practices for facilitating indigenous peoples' participation in decision-making and obtaining FPIC, the UN Expert Mechanism on the Rights of Indigenous Peoples has emphasised that the most significant indicator of good practice is the extent to which indigenous peoples were involved in the design of the practice and their agreement to it.

        For businesses, this means early identification of, and engagement with, those who ought to be consulted, ensuring company policies, practices and procedures align with best practice frameworks including the UNGPs and UNDRIP and are effectively implemented, with ultimate accountability and appropriate oversight resting with the board.

        Footnotes

        1 Throughout this article we have adopted the term 'indigenous' when we are referring generally to the original inhabitants of other continents. In the Australian context, we have used the term 'First Nations Peoples' to refer to the collective of individual Aboriginal and Torres Strait Islander Nations, who are the Traditional Owners of the land which makes up the continent of Australia.

        2 Corrs Chambers Westgarth is a current member of the Australian Sustainable Finance Institute.

        The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Dr. Phoebe Wynn-Pope
Corrs Chambers Westgarth
Level 25
567 Collins Street
Melbourne
Victoria
3000
AUSTRALIA
Tel: 29210 6500
Fax: 29210 6611
E-mail: jeremy.bojman@corrs.com.au
URL: www.corrs.com.au/insights

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