Corporations can affect the welfare of indigenous people in various ways, ranging from community displacement and land rights to the use of negative images and stereotypes.
Failing to address indigenous relations issues when they arise can pose reputational, regulatory and financial risks to corporations. Pax World believes a company’s effectiveness in managing indigenous relations is an indicator of management quality. Pax favors companies that develop policies to appropriately manage indigenous relations issues and that have programs in place that govern engagement with indigenous groups. In response to indigenous relations controversies or conflicts, Pax expects companies to be transparent and to develop and disclose policies and programs that appropriately address concerns.
Different industries have different potential risks and impacts related to indigenous relations. For consumer-facing companies, the inappropriate use of images or stereotypes offensive to indigenous groups may pose significant brand risk. Materials companies and utilities can face land use and displacement issues. Some energy companies in the United States have faced lawsuits for failing to consult with or pay royalties to Native American governments through whose land their pipelines pass. Pax generally avoids investing in companies involved in controversies of this nature when those companies have displayed a pattern of disregard for or are in continued conflict with indigenous communities, especially if they lack any policies or disclosure related to indigenous peoples’ welfare.
Pax favors companies that demonstrate a commitment to respect and support the indigenous communities with which they interact. In the case of materials companies operating in regions where indigenous displacement is a risk, Pax favors companies with policies and programs in place that address traditional land use and rights of indigenous populations. For companies engaged in the development of pharmaceuticals that conduct clinical trials on indigenous groups, best practices include policies to ensure prior informed consent on terms that are understandable to the test subjects.
Evaluating a company’s indigenous relations programs, policies and performance helps Pax identify better-managed companies which, it believes, make for better long-term investments.
The issues highlighted above are illustrative and do not necessarily reflect the full range of indigenous relations issues Pax World may consider in analyzing a particular security for investment.