“RBC is lagging behind other banks in disclosing how it considers the free, prior and informed Consent procedures of its business clients,” write Stewart Phillip and Paul Finch.
“RBC is lagging behind other banks in disclosing how it considers the free, prior and informed Consent procedures of its business clients,” write Stewart Phillip and Paul Finch.
“Reconciliation is not an Aboriginal problem — it is a Canadian problem. It involves all of us.”— Justice Murray Sinclair
This spring, Canadian banks are facing questions at their annual shareholder meetings about their roles in financing fossil fuel expansion and violations of Indigenous rights, both of which contribute to the climate crisis and the increased risks we all face.
Banks play a critical, yet fragile role in the economy by pricing, balancing, and managing risk. The recent failure of Silicon Valley Bank is a stark reminder about the importance of prudent risk management and effective regulation.
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Next week, at Royal Bank of Canada’s annual shareholder meeting in Saskatoon, investors will vote on a shareholder proposal filed by the B.C. General Employees’ Union (BCGEU) in partnership with the Union of B.C. Indian Chiefs (UBCIC). The proposal encourages RBC to take action on its commitments to truth and reconciliation by starting to operationalize free, prior and informed consent (FPIC) into their business practices.
This modest first step is aligned with international industry good practices, the UN Guiding Principles on Business and Human Rights, and the Truth and Reconciliation Commission’s call to action No. 92.
We joined forces — a labour union and a First Nations political advocacy organization — to advance the critical work of reconciliation within corporate Canada. BCGEU, as a long-term investor, believes that companies that engage in reconciliation are the best governed companies and that this work enhances shareholder value.
Truth and reconciliation require more than platitudes and symbolic acts. What matters is how we grapple with the hard truths of colonialism and turn those into action. For UBCIC, that means embedding and operationalizing free, prior and informed consent as a minimum standard as set out in the United Nations Declaration on the Rights of Indigenous People.
Together, we engaged with several Canadian banks for the simple reason that financial institutions are the gatekeepers and backbone of the Canadian economy. When banks begin to put their commitments to truth and reconciliation into action by operationalizing FPIC, it will ripple throughout the economy.
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Businesses like RBC have an important role to play in fulfilling the promise of reconciliation. While economic reconciliation and equity, diversity, and inclusion are important, true reconciliation cannot occur if companies like RBC continue to heavily fund projects and companies that do not obtain FPIC from the proper title holders.
RBC’s failure to adequately consider FPIC as a material risk has already caused the bank reputational harm, not to mention significant delays, cost overruns, conflict, and legal risk. One need look no further than the Indigenous protests and resulting operational delays for Coastal GasLink as a prime example of the cost of accepting a lower standard than FPIC.
Shareholders should not be persuaded by the banks’ reliance on the Equator Principles (EP4). EP4 falls short of the minimum standard set out in UNDRIP and will not mitigate the material risks associated with ignoring Indigenous rights.
The EP4 is reactive instead of proactive: Rather than implementing the “identify, protect, mitigate and address” framework within the UNGPs as a way to create proactive risk assessment processes, EP4 remains reactionary by setting forth language to “minimize, mitigate, and compensate” once impacts have already occurred.
FPIC will soon also be a compliance issue, with legislation mandating human rights due diligence gaining steam around the world and federal legislation such as the Bank Act being reviewed for consistency with UNDRIP. FPIC is a fundamental standard, and companies can’t land acknowledge their way around it.
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RBC is lagging behind other banks in disclosing how it considers the free, prior and informed Consent procedures of its business clients. Aiming for Canada’s current legal minimum standards is not enough. If RBC is serious about reconciliation, it needs to aim higher than the floor.
Grand Chief Stewart Phillip is the president of the Union of B.C. Indian Chiefs and Paul Finch is the Treasurer of BCGEU.
