FPIC is here to stay: New Acorn Note by Chris Anderson

Acorn Ideas

Issue No. 41, December 2015

FPIC Is Here To Stay

There was a time, not so long ago, when the phrase ‘human rights’ elicited one of two reactions in the extractive industry:

  • Dismissiveness: People were often indifferent to the topic, saying that it was not relevant to their company’s work (‘We don’t employ children, nor do we abuse our workers.’ Or, if operating in the United States: ‘It does not apply given the high degree of industry regulation’).
  • Stirring the Pot: An assumption that the concept was merely a weapon with which to scrutinize and attack everything a company does.

There is some truth in each. Companies operating in highly regulated and developed economies don’t typically identify with the relevance of a human rights lens, and there are indeed opportunists who manipulate the human rights agenda in less than legitimate terms.

But the extractive industry has now by and large accepted human rights as a framework (one of many) within which to think about relationships at their project site or area of influence. While not perfect, there now exist both practical policy tools for assessing and operationalizing human rights – for example, the UN’s Guiding Principles on Business & Human Rights, and practically-oriented organizations that can tackle issues around due diligence and assurance.

We are now going through a similar trajectory with the notion of ‘Free, Prior & Informed Consent’ or FPIC. It is worth briefly examining the history of this concept, what it means and where we are going with it in the extractive sectors.

In the 1980s there was public and institutional debate and discussion around international norms focusing on the issue of peoples’ ‘right to self-determination.’ 1 In 1989, the International Labour Organization’s Indigenous & Tribal Peoples Convention 169 required signatory governments to undertake consultations with Indigenous and Tribal peoples with the objective of achieving agreement or ‘consent’ around activities that impacted them. Then in 2007, came the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). This document included three articles that mention the requirement for States to obtain FPIC with Indigenous peoples.

The developments received little attention in the private sector as the commitment frameworks referred exclusively to governments. Private sector reaction prior to the millennium change – and this, rarely – was policy level support for ‘indigenous rights to self-determination,’ as this was thought mostly to be up to governments. Prior to about 2000 within mining circles, information flow between communities and an operation or project was mostly ‘push communication’: company announcements, fact sheets, bulletin boards and perhaps advertising.

This all changed when the International Finance Corporation (IFC) – the division of the World Bank that provides finance to companies working in emerging markets – referred in 2006 in its Performance Standards to ‘free, prior and informed consultation’. This – though it was a compromise in itself as NGOs pushed for the harder notion of ‘consent’- caused considerable consternation in the mining sector as they saw this as the ‘thin edge of the wedge’. While we were just getting used to this, in 2012 the IFC revised its Performance Standard #7 about Indigenous Peoples, such that borrowing clients were required to obtain the free, prior and informed consent of project-impacted communities. The Equator Banks followed suit and also now require FPIC for projects affecting Indigenous communities.

Thus, a sizeable portion of the finance available for mining projects in areas where Indigenous peoples live now oblige companies to come to terms with their communities and seek and obtain their consent. This is not an easy task. There are issues around definitions of ‘indigeneity’; around processes and implementation of this policy; around representation (who does one obtain consent from in multi-ethnic communities?); around what constitutes consent? (Is FPIC the right of veto? What if it is coming from a minority of the community?) The role of government is also largely ignored in the IFC standard and this leaves companies in a quandary where those governments may not recognize the status of the Indigenous citizens. It also does not take account of a democratically elected government’s sovereign right to develop their natural resources. Nevertheless, while a robust consultation process is the cornerstone of what constitutes ‘consent’, the FPIC movement requires a final ‘yes’ or ‘no’, despite the quality of the consultation process.

Despite all these issues, FPIC is here to stay, and the new International Council on Mining & Metals ‘Good Practice Guide: Indigenous People and Mining’ is a good start to helping companies implement FPIC. It includes guidance on building knowledge bases of communities early on, having the right people to establish and nurture strong relationships, building capacity in the company on stakeholder engagement, the necessity for committed leadership, patience and a focus on process more than just outcomes, among other things.

Movement of some mining companies such as Rio Tinto and Newmont toward formal agreements with communities is also a strong indicator of where mining and extractives more broadly are going. These agreements are generally comprehensive statements on joint and separate roles and responsibilities, dispute settlement mechanisms, commitments on environmental mitigation and protection, cross-cultural awareness, employment & training, local supply chain, social investment, as well as financial benefit sharing. The development of these agreements can sometimes take years but just the process of engagement and the relationships that arise out of it are perhaps more important to the success of the ultimate operation than is an outcome of ‘consent’.

Helping our clients understand FPIC and related non-technical risk challenges is a critical part of what we do at Acorn International. We are delighted to welcome Chris Anderson, PhD to our team, as he brings internationally-respected FPIC and indigenous people’s expertise, along with a great sense of judgement and humor, to our work.

See more on Chris at http://www.acornintl.net/news/15Sep22news.html

Original source:  http://www.acornintl.net/news/notes41.html


1 For example, the United Nations Declaration on the Granting of Independence to Colonial Countries and Peoples (1960), and the International Covenant on Civil and Political Rights (1966) and International Covenant on Economic, Social and Cultural Rights (1966)



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