People, Profits, and Planet

Can Mutually Beneficial Corporate-Indigenous Partnerships Protect all Three?

By Gillian Meyers, SFS ‘23

Dotted along highways crisscrossing the country, scattered among towns and nestled into buzzing urban intersections, Shell’s cheerful yellow logo is a familiar sight for most Americans. Many even sought it out after BP’s disastrous 2010 oil spill.

Yet Shell’s record is equally stained: since the 1990s, it has relentlessly pushed into Ogoniland, a lush corner of the Niger Delta as rich in gnarled mangroves and teeming rainforests as it is in oil. Though Shell’s exploitation has faced unwavering pushback from the Indigenous Ogoni people since it began, Shell has continued extracting oil, paying Nigerian soldiers to torture, assault, and murder innocent Indigenous people who got in the way. 

Oil prospecting subdivided and contaminated native territory, forcing the Ogoni people into smaller and smaller pieces of land that are now overcrowded and underfunded. Though Shell has yet to atone for its long-standing mistreatment of people and environmental destruction, over a decade of relentless litigation finally pushed Shell to settle with the widows of murdered tribal leaders in 2009 for $15.5 million. However, no amount of funding can restore the land and the lives upended by Shell’s extraction, raising a fundamental question: how can businesses justify the cost-benefit analysis of a project when there are human lives in play?  

Settlement agreements–like that of Shell with the Ogoni people–are a result of Indigenous struggle for international recognition of the harm caused to their land and livelihood by natural resource exploitation. In recent years, the Indigenous rights movement has gained strength and scope. Contemporary Indigenous protests often aim to damage business’ reputations as easily accessed reserves run dry leaving remote tribal land the main target for exploitation. 

By widely sharing the impacts of corporate abuses, Indigenous peoples have enlarged the reputational and legal risks of exploiting Indigenous land. This was the case with the 2007 UN Declaration on the Rights of Indigenous Peoples which explicitly requires the Free, Prior, and Informed Consent (FPIC) of Indigenous groups before extraction can occur. Corporations have also become incentivized to build positive, healthy relationships with Indigenous communities resulting in use agreements between corporations and Indigenous tribes. 

Corporate interactions with Indigenous communities are usually evaluated by the environmental and social aspects of the ESG (environmental social governance) framework.

In the case of Shell’s impact on Ogoni land, both environmental and social factors are at play. There is both the environmental poisoning of Ogoni forest and waterways as well as the impact of Shell-funded murders of several tribal leaders who played significant roles in their communities.

In order to consider how Shell might move forward with creating an ESG agreement that would mitigate its harm to the Ogoni people, it is useful to examine other agreements reached between corporations and Indigenous peoples. 

The partnership between the Black River tribe and Tembec, a Canadian forestry company, is an example of one such positive relationship between an Indigenous community and a powerful corporation. Black River, a tribe of roughly 750 people living near Winnipeg, might seem outnumbered against Tembec, an industrial giant employing 10,000 people. Yet the two have founded a valuable partnership. The Black River tribe contribute sustainable forest management practices based on traditional knowledge, while Tembec provides courses on modern forestry to increase tribe members’ skills and employability.

Tembec succeeded because it achieved what other corporations overlook: inclusive communication. Its Regional Advisory Committees allow community members––including Indigenous people––to directly discuss their needs with Tembec representatives. In addition, Tembec works with Manitoba Model Forest, a nonprofit that brings together tribal communities, scientists and natural resource specialists, industry, and government to establish common values related to sustainable forest development.

By listening to (and acting on) Indigenous peoples’ needs, Tembec and the Black River tribe created a mutually beneficial relationship that improved the earning potential of both parties, while profiting from natural resources sustainably. Developing a positive relationship between the Indigenous tribe and the foestry company through ESG principles proved to help mitigate the reputational and legal risks to the company’s bottom line. 

Other companies can achieve similar partnerships by following three guiding practices: gaining Indigenous consent for exploitation, understanding the business case for ESG, and drawing on cross-sectoral knowledge. 

First, multinational corporations must obtain Free, Prior, and Informed Consent (FPIC) for any activities undertaken in Indigenous territory, characterized by inclusive dialogue, transparent goals, and accurate communications. Even though the right to consent is guaranteed by the UN, corporations must increase funding and support for internal departments that manage their social relationships with tribes. In addition, external ethics review boards, context-specific training, and shareholder engagement can all help avoid unethical behavior.

Companies should formalize processes for gaining consent wherever possible and draw on outside support–such as the First Peoples Worldwide, a coalition of North American tribes–to ensure their practices are beneficial for all parties involved. This organization facilitates FPIC by enabling dialogue between Indigenous people and representatives of extractive industries. In addition, FPW funds the translation of documents into native languages to ensure that Indigenous communities’ consent is always informed. 

Secondly, businesses must examine the financial case for ESG agreements. In actuality, businesses are measured predominantly using balance sheets rather than the ESG framework so business needs incentives to prioritize ESG initatives. The First Peoples Worldwide’s 2014 Indigenous Rights Risk Report found that companies with lower social risks had higher returns than those with exploitative community relationships. And a positive impact on the environment can also drive better performance: sustainability is now viewed as a core element of large corporations’ strategies, and multinationals have already lost millions from failing to address climate-related risks. 

Third, cross-sectoral research and collaboration should drive business decisions. While the Manitoba-Tembec partnership model of sustainable harvesting is an exciting indication of the the kinds of beneficial cross-sectoral work that can be done, research on the relationship between corporations and Indigenous groups is thin. This is due in large part to the way in which Indigenous knowledge has long been undervalued by Western science. If corporations can incorporate stewardship methods perfected by Indigenous groups over centuries, as well as cultural and spiritual practices that prohibit pollution and degradation, they can align with both the environmental and social criterion of the ESG framework, to the benefit of all parties involved. 

Until Shell and similar companies change their behaviors, ESG principles remain a thin veneer for a continued pattern of exploitation. Yet, companies can drive real change by backing their words with genuine action: they can establish relationships with Indigenous communities built on trust, consent, and clear communication. In doing so, they may just unlock the ability to simultaneously safeguard people, profits, and the planet.