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Indigenous Economic Reconciliation

What is Economic Reconciliation? How does it apply to Indigenous communities and all Canadians across our land? And importantly, what can we do about it?

The purpose of this Primer is three-fold:

  1. To continue that conversation with the goal of educating different stakeholders about these issues, from the perspective of inclusivity and sustainability.
  2. Present a high-level picture of how historical developments take us to where we are today.
  3. Lastly, but very importantly, focus on how we can move from discussion to action: What can Canadians do to help with these reconciliation efforts? We believe Economic Reconciliation would be one of the answers and a very impactful one; however, it requires all stakeholders to recognize its importance and the need to collaborate in these efforts.

ISF Primer Video Series

On the path to Indigenous Economic Reconciliation, with Clint Davis

Renewable energy development “has to involve … the engagement of Indigenous communities.” ISF Executive Director Sara Alvarado interviews Clint Davis, President and CEO of Nunasi Corp., about how Canada is progressing on Indigenous economic reconciliation, what we need to do better, and what it means for Canada and Indigenous peoples as we transition to a Net Zero economy.

Taking a Seat at the Table

The recognition of Indigenous1 reconciliation began in earnest with the release of the summary Truth and Reconciliation Commission report and the 94 Calls to Action on June 2, 2015, almost seven years ago. Since this historic day, there has been widespread activity throughout the country where Canadians have contributed in their own way toward achieving reconciliation. September 30, 2021 marked the first National Day for Truth and Reconciliation, a recognized federal holiday. This day honours the lost children and Survivors of residential schools, their families and communities, and is a vital component of the reconciliation process.

Indigenous reconciliation will lead to an appreciation and understanding of the Indigenous reality, historically and today. It is a commitment to make space for the Indigenous way of life where values, practices and sovereignty are respected. It is the inclusion of Indigenous people, communities and business in all aspects of economic activity, or simply “Economic Reconciliation”. Indigenous communities continue to face multiple barriers to fully participating in the economy, despite successes in court that recognise rights and title to their lands. Lack of access to capital and the hurdles to generating own-source revenue are two well-known barriers.

Industry is starting to realize that focusing on economic reconciliation and the inclusion of Indigenous people, communities, and values in project development leads to better project outcomes. Moody’s has commented on the increasing participation of Indigenous communities in infrastructure projects, and their more active role, including investing in equity: “Many Indigenous communities view economic development as a path to self-sufficiency for their populations, and growing business acumen will likely bring greater involvement in larger projects.”2 The report also mentioned potential overruns and delays if Indigenous communities are not engaged early and often.

Why is Economic Reconciliation Necessary?

Prior to and at the time of contact, Indigenous communities had their own systems of governance, reflecting their values and societal norms. Communities developed their own economic systems and at times were involved in trade with other Indigenous communities. Indigenous communities were politically and economically independent. This changed dramatically once Canada became a country.

According to a 2019 report by the National Indigenous Economic Development Board3 , “Indigenous populations face deeply rooted systemic barriers embedded in the Canadian economic landscape, notably the Indian Act and its restrictive land regime, inadequate implementation of the treaties, and systematic exclusion of Indigenous peoples from economic systems. This has resulted in Indigenous overrepresentation in low paying jobs, higher unemployment rates, and lower educational attainment than their non-Indigenous counterparts.” Some of the more insidious restrictions that were placed on First Nations people under the Indian Act included First Nations people or communities being prohibited from hiring a lawyer until 1951. The Canadian government had a policy until 1940 that required all First Nation people living on reserve to get written permission from an Indian Agent when they needed to leave their community. If they were caught without a pass, they were either incarcerated or returned to the reserve.

Resilience and vision enabled communities to bring their claims of Indigenous rights to the courts, where they experienced unprecedented success. The recognition of Indigenous rights and title at the highest court is the catalyst for the inclusion of Indigenous people during the early stages of development. Such inclusion often results in preferential training and employment, procurement and a financial contribution from the project proponent. In addition, more communities are settling outstanding claims and grievances with the federal government resulting in comprehensive agreements that have a financial component. Other land claim agreements, like those in northern Indigenous communities, have self-governance provisions which lay out the rules for engagement of Indigenous communities and business for any development activity in their region.

These activities, along with the growing number of Indigenous people completing high school and going on to college or university, has led to the rise of the Indigenous market. In 2011, TD Economics did a report on the size of the Indigenous Market, which calculated the buying power of Indigenous people, business and communities and determined that it was $24-billion and was expected to grow to $32-billion over the next five years.

Similarly to how the World Bank, the Inter-American Development Bank and other International Financial Institutions (IFIs) have development programs in place to help improve access to clean water, education, health and communications in less-developed communities around the world, we need to apply a development lens in some cases, given poor access by Indigenous communities in Canada to this very basic infrastructure. Better access to communications and Internet, for example, will enable access to education, better health, and ultimately, a closer economic level to that of the rest of Canada. This takes time and a coordinated approach.

Economic Reconciliation and Environmental, Social and Governance (ESG) Considerations

When Indigenous communities partner with the private sector, projects can benefit from multiple ESG considerations. The value placed on the Environment and balancing economic returns with the impact of a project to the land, air and water (externalities) is a key consideration for Indigenous communities as they contemplate partnerships. As partners in project development, Indigenous communities will place great importance on the Social impacts that a project will have on their community. How many members of their community will receive training, get jobs and have their small business supported through procurement and investment opportunities? Is the private sector partner committed to upholding and respecting the communities’ values? And has the private sector partner taken the time and made the effort to understand the unique historical circumstances and culture of the Indigenous community partner?

Strong Governance will matter for Indigenous communities to collaborate on project development. Indigenous partners will often seek a seat at the table and a voice on the board. They will seek confirmation that their partners have undertaken cultural awareness/competency training. They will seek diversity at the board level and in the executive and management of the partner. They will want to know what the relationship will look like as the project winds down operations.

As Canada strives to reach net-zero targets by 2050, it will need to consider how to obtain the social licence from Indigenous communities whose lands may be impacted by project development. This will require policy makers to create space and support for economic reconciliation through programming and services. It will require coordination across Canada, by the federal government, to develop a myriad of tools to support Indigenous communities’ access to capital for them to be meaningful partners in this time of transition, to achieve “a just transition.” Private sector will need to be open to real and meaningful partnerships based on trust, respect and reciprocity. Education of Indigenous culture and history will result in better understanding and will help improve these relationships. Project development will be smoother and the transition to Net Zero will be more seamless when collaboration, recognition and relationship building become a foundation for project development.

This series explores the foundations of sustainable finance, one of the most important emerging fields of our time. Sustainable finance aligns financial systems and services to promote long-term environmental sustainability and economic prosperity.