Diversity has become a central theme in the investment industry. In 2018, SHARE (Shareholder Association for Research and Education) and NATOA (National Aboriginal Trust Officers Association) joined their efforts to create the Reconciliation and Responsible Investment Initiative (RRII) . The RRII has been spearheading the efforts to integrate reconciliation and responsible investment. In 2020, the Responsible Investment Association (RIA) of Canada, started an initiative to lead investors managing more than $4 trillion in assets to sign a statement to make commitments to promote Diversity & Inclusion across their organizations and portfolio companies.
Despite those recent initiatives, few Canadian RI policies or reports of institutional investors make references to Indigenous peoples. Beyond the recognition of Indigenous rights within due diligent processes linked to the Free, Prior, and Informed Consent (FPIC), Indigenous Peoples and their economic, social, and environmental well-being are relatively absent from the conversations in the Canadian Responsible Investment (RI) industry. [Editor’s Note: The recent Canadian Investor Statement on Climate Change signed by 36 investors managing $5.5 trillion in assets emphasizes the importance of Indigenous rights for investors.]
Faced with this observation, we decided to investigate further. As a research team at the Ivey Business School, Western University, we studied the practices of the industry for one year through interviews with stakeholders, observation of industry conferences, and documentary evidence. Our results are available in a new report that sheds light on the significant differences in the level of awareness of, and action on, Indigenous rights and reconciliation among the Canadian investment management firms.
This report aims to create a safe space to engage the Canadian responsible investment industry in the process of truth and reconciliation. It outlines the current relationships between Indigenous peoples and the RI industry in Canada and offers recommendations to build bridges and make progress towards reconciliation.
We examine how the Canadian RI industry specifically embraces six sub-themes deemed key to the process of economic reconciliation, to wit: 1) Recognition of Indigenous rights; 2) Diversity and inclusion (of Indigenous peoples); 3) Building a thriving Indigenous economy through partnership; 4) Fiduciary duty and Indigenous peoples; 5) Building an inclusive and just transition to a low-carbon economy through partnership; and 6) Indigenous environmental stewardship. We systematically analyze the inclusion of each theme in each step of the investment chain, from asset owners, asset managers to investee companies, and service providers.
Responsible investors usually assess Indigenous rights and concerns through the lens of risk management. While risk management is a critical component for investment decisions, it limits opportunities for the RI industry to contribute to reconciliation or the building of opportunities for all peoples to achieve their full potential and shared prosperity. The report recommends several steps that actors across the investment chain could implement to progress on the path of reconciliation. Possible actions include Investing in Indigenous-led (impact) investing products, Implementing comprehensive policies on Indigenous representation among employees and boards of directors, designing procurement policies for Indigenous businesses or educating and engaging Indigenous investors on proxy voting that relates to Indigenous rights, By engaging in reconciliation, the Canadian RI industry can lead the integration of ‘I’ in ESG and transition towards a climate-resilient and inclusive economy worldwide.
We believe that economic actors must address social inequalities and systemic racism to contribute to inclusive growth that creates opportunities for all. Including Indigenous peoples in the allocation, distribution, and valuation of capital is an essential step towards this endeavour. In addition, inclusive companies that manage ESG risks and improve outcomes for Indigenous peoples are also better investments.
The report is also an example of the current Canadian business schools’ efforts to respond to the Truth & Reconciliation Commission (TRC)’s Call to Action 92, which offers a roadmap for the business community to think about and practice reconciliation. Historically, Canadian universities played a central function in the processes of colonization. Indigenous peoples have had limited access to the universities and still, to this day, are underrepresented, under-resourced and neglected by researchers in the university system.
As business school scholars, we recognize there is much work to be done, and that the practice of reconciliation requires sustained commitment to not only actions, but also a sustained practice of confronting the places within current financial systems and sectors where Indigenous voices are absent. The following report not only maps out the spaces and places within the Canadian responsible investment industry where Indigenous voices are needed, but also offers a necessary roadmap for how this sector and its partners may begin to walk a path toward honouring truth and practicing reconciliation.
The report can be found at https://www.ivey.uwo.ca/sustainability/priorities/finance/