ESG RISK 7: Indigenous Peoples
Overview
ESG Risk 7 - Indigenous Peoples (IP) assesses risks related to the rights and interests of Indigenous communities, including land, cultural, and self-determination rights. Projects must align with Free, Prior, and Informed Consent (FPIC), a recognised international principle that ensures meaningful consultation and consent proportional to the project’s impact. Projects led or supported by Indigenous Peoples typically carry lower risks. An Extreme Risk score may result in strong opposition, reputational damage, and difficulty securing financing, making early engagement with Indigenous communities essential for project viability.
Additional Guidance
In the Hydropower Sustainability Tools, Indigenous Peoples (IPs) are defined as a distinct social and cultural group possessing the following characteristics in varying degrees:
Self-identification as members of a distinct indigenous cultural group and recognition of this identity by others;
Collective attachment to geographically distinct habitats or ancestral territories in the project area and to the natural resources in these habitats and territories;
Customary cultural, economic, social or political institutions that are separate from those of the dominant society or culture; and
An indigenous language, often different from the official language of the country or region within which they reside.
A number of standards and instruments have been developed to recognise and safeguard the unique rights of IPs. The most prominent recognition is the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), adopted by the UN General Assembly in 2007.
Examples of ways a hydropower development can impact some of the most relevant rights include:
The right to IP lands, territories and resources can be at risk due to the project’s physical and economic displacement impacts addressed under ESG Risk 5;
IP economic, social and cultural rights can be at risk also due to the project’s economic displacement impacts addressed under ESG Risk 5, and also cultural rights as addressed under ESG Risk 8;
The IP right to equality and non-discrimination can be at risk due to the project’s approaches to a range of matters such as engagement, disproportionate vulnerability to project impacts, non-proportional or poorly targeted project benefits, and fair compensation;
The IP right to environment can be at risk due to project environmental impacts (e.g. ESG Risk 3, ESG Risk 6, ESG Risk 11) and the project not recognising or enabling the IPs to continue to act as custodians and stewards of natural resources and habitats;
The IP right to self-determination can be at risk if the project does not seek to achieve Free, Prior and Informed Consent (FPIC) from IPs.
Sources of information that can help inform ratings for ESG Risk 7 Indigenous Peoples include:
Some government agencies publish reports and information on IP demographics, rights, and policies. These sources may provide official statistics, surveys, and legal documents related to indigenous issues in specific countries or regions;
Local demographic information on the ethnicities present, drawing on census and other administrative data and local knowledge;
Interviews to inform an assessment of the willingness of the developer and the government to recognise IP rights and the need for FPIC.
In the situation of little to no sources of information relevant to the area of the project option, users of HydroSelect can review:
International Work Group for Indigenous Affairs (IWGIA) for information on indigenous issues, publications and country profiles;
United Nations Permanent Forum on Indigenous Issues (UNPFII) for information on IP rights, issues, and events worldwide.
Opportunities for early stage actions that could reduce the risk for a project option might include:
Seek at an early stage to identify IP rights that could potentially be at risk due to the project, and build on this through forward processes involving mutual sharing of information;
As early as possible, establish an understanding with IPs on how they should be engaged with, and what would be necessary to achieve their FPIC; a first step could be seeking a process agreement that could eventually lead to FPIC;
Employ staff from the IP groups to help build the relationship and help set up and maintain a dialogue process;
Explore alternative locations and designs so the project can avoid or minimise any impacts on the rights of IPs, including impacts to critical habitat and fisheries.
A key opportunity with a hydropower development that does potentially impact on IP rights is to consider formal partnerships with indigenous communities in the development and ongoing operation of the hydropower project. There are some good examples of where this has been done successfully that can be found in the How-to Guide for Hydropower and Indigenous Peoples.
