RBC sticks its neck out on consultation

The Royal Bank of Canada has made some changes to its corporate social/environmental policy. Perhaps the most impressive change includes the free, prior and informed consultation (FPIC) clause to ensure that big business clients in the mining and energy sectors are socially responsible by meaningfully consulting and accommodating Indigenous communities affected by their operations.

The policy change was a pleasant surprise for Terry Teegee, vice-tribal chief of the Carrier Sekani Tribal Council.

“First Nation groups, the Rainforest Action Network and other environmental groups have been lobbying the Royal Bank of Canada to adopt the FPIC into its social/environmental policy.”

The FPIC is laid out in the United Nations Declaration on the Rights of Indigenous People. While most countries in the world have adopted the declaration, only a handful have implemented FPIC into their domestic legal framework. Canada is not one of them.

The bank is certainly pleased with its inclusion of the FPIC reference in its policy on Environmental and Social Risk Management for Capital Markets.

“One of the important things in the CEO’s statement, of the new policy, is that we kind of codify the consultation we require our clients to do with First Nations,” said RBC spokesperson Geoff Owens, “because obviously, many natural resource companies are on First Nations land, so it’s important to properly consult with them.”

But, the wording in RBCs policy differs from the UN’s FPIC reference. The last word in the official term is Consent, and in the bank’s policy, the ‘C’ stands for ‘consultation.’ Owens says “the bank will continue to monitor Canada’s position on FPIC and if it chooses to implement FPIC into domestic law.”

So for now, Owens says, “The policy refers to FPIC, but does not require clients to be consistent with it, but if or when it becomes law, we will re-evaluate the policy.”

Tony Andrews, the executive director of the Prospectors and Developers Association of Canada (PDAC) says RBCs policy is par for the course as the global social conscience grows.

“It makes sense to me that a bank of that stature would occasionally be evolving its corporate approach to corporate responsibility, because the whole field of (corporate social responsibility) is evolving and public expectations are evolving. It’s a highly complex area and there’s no standard or international standard of the definition of it, let alone how you deliver on its expectations.”

As far as Aboriginal consultation goes, Andrews says, most companies have policies of their own to address consultation and promote partnerships in the industry.
Andrews thinks RBCs policy exceeds other similar corporate policies.

“It’s a commitment and they have set standards that they’ll expect their clients to meet, if not exceed.” He said the policy is in line with IFC (International Finance Corporation) standards which everyone looks at when developing policies for their operations.

There are many mining/gas and oil projects operating in Canada right now, including Enbridge’s proposed Northern Gateway Pipeline project.

The Carrier Sekani Tribal Council has been opposed to that project for nearly six years. It will be keeping an eye on RBC when Enbridge will be looking for financial backing for its project.

Enbridge has proposed a $5.5 billion project to build 1,172 km of twin pipelines from a location northeast of Edmonton to Kitimat in British Columbia. The proposed pipeline is to pump 525,000 barrels of oil a day, while importing 193,000 barrels of oil a day. There are 61 First Nations that have voiced their opposition to the project.

Teegee thinks RBC’s policy will help give First Nation opposition to the Northern Gateway Pipelines proposal some leverage because, “RBC will have to take a second look at Enbridge Northern Gateway pipeline and see that they have consent with local First Nations and also the social risk, whether the municipalities and peoples of British Columbia want the pipeline. And if there’s a lot of opposition, I don’t think RBC would want to invest in the Northern Gateway Pipeline.”

According to Andrews, RBC’s new policy won’t have much of an impact on the industry. He says, “the mining industry is already affected by IFC standards. Companies follow those standards as well as many other international agreements...The mining industry itself has guidelines in terms of corporate social responsibility. PDAC has developed a very comprehensive international guideline for exploration and development.”

“A policy evolution from a bank doesn’t have a huge impact on our industry and probably not on many other industries that the bank lends to because basically that policy has existed for a while, and really it’s just a refinement and an enhancement,” Andrews said.

Impact on the industry or not, Teegee said the Carrier Sekani Tribal Council will be watching to see if RBC will adhere to its own policy when it comes time to help finance the Enbridge Northern Gateway Pipeline Project.

“If RBC approves and gives the green light to hold the bonds for this project, then we’ll have to either make them more liable about their own policies and make them live up to it by doing a media strategy or just boycotting their services and let the international community know RBC is not living up to its own polices.”