Maximizing Partnerships between Indigenous Communities and the Extractive Sector

By Daniel F. Runde

Between now and 2050, global population growth and rapid urbanization are expected result in an additional 1.6 billion people in need of electricity. Traditional energy sources based on extractive industries – coal, oil, and gas – will continue to drive the market and satisfy the energy demands of burgeoning populations in the short to medium term. The emerging markets of China and India, for example, account for approximately one-third of the world’s population and will need to exponentially increase imports of cheap energy sources in order to produce electricity for their growing middle classes. Where will these resources be extracted and imported from? Largely from the lands inhabited by indigenous peoples, who live on top of the some of the most biodiverse and resource-rich regions on earth.

Indigenous peoples have suffered marginalization, intimidation, and even displacement at the hands of their national governments and multinational companies in the past. However, this has largely changed for the better as many companies have recognized that the ultimate success of extractive investments depends on local partnerships with indigenous communities. Forward-thinking companies that implement guidelines to include the input and build the capacity of indigenous populations have the opportunity to achieve successful, profitable outcomes that simultaneously meet end-user energy demands and benefit the local populations from where that energy is sourced.

Panelists at a recent event hosted here at CSIS discussing partnerships between extractive companies and indigenous communities.

Panelists at a recent event hosted here at CSIS discussing partnerships between extractive companies and indigenous communities.

There is undoubtedly a salient financial case for uniting the extractive industry’s objectives for powering the world with corporate practices that promote cultural awareness and local capacity building among indigenous community partners. A participant at a recent CSIS meeting noted that companies that mitigate social risk by partnering with indigenous populations have a 5-6% higher return on investment. Partnerships with these indigenous populations can drive profit, and social and economic development for underserved communities.  Failing to partner with indigenous communities, on the other hand, increases the risk that local opposition will impede a project’s success and hurt the company’s bottom line. Continue reading

Weekly Round-Up

 

UN Secretary General Ban Ki-moon speaks at the second UN Conference on Land Locked Developing Countries in Vienna this week. Photo courtesy of the Austrian Foreign Ministry flickr account used under a creative commons license.

UN Secretary General Ban Ki-moon speaks at the second UN Conference on Land Locked Developing Countries in Vienna this week. Photo courtesy of the Austrian Foreign Ministry flickr account used under a creative commons license.

Asia Pacific

  • India continues to block the implementation of the 2013 World Trade Organization trade-facilitation agreement, refusing to push forward with the deal until the WTO guarantees protection of India’s massive state food purchases. It is now doubtful that a compromise can be reached before the G20 summit next week. Critics see India’s food stockpiling measures as amounting to harmful subsidies, artificially encouraging farmers to grow more food which may eventually be dumped on world markets.
  • One year after the Typhoon Haiyan struck the Philippines, there is renewed attention on the affected areas. The UN estimates that 475,000 people are still living in unsafe or inadequate temporary shelters, some in areas considered dangerous. According to the mayor of hard-hit Tacloban, the city has only received about $5.5 million in aid from Manila despite international pledges of $1.6 billion for rebuilding in the Philippines.
  • The Australian Department of Foreign Affairs and Trade (DFAT) will formally launch its Development Innovation Hub in early 2015 as part of Australia’s new foreign aid paradigm. The project has been in the works since being unveiled in June of this year. Australia has allocated $122.2 million in funding to encourage innovative new ways to deliver aid programs, which may open the door for private sector partners to be more active in the planning and design phase of projects.

Africa

  • In response to the armed coup in Burkina Faso, Canadian Minister of International Development Christian Paradis announced that Canada will immediately suspend development assistance to Burkina Faso. International observers, including the African Union, have condemned the coup and are calling for a transition to civilian authority.
  • Moody’s Investors Service cut South Africa’s foreign debt rating on Thursday from Baa1 to Baa2, moving the country’s rating in line with countries like Brazil and Russia. The rating was revised down on concerns about labor instability and power shortages.
  • IFC launched a $450 million initiative to spur private sector trade and investment in Ebola-Affected countries. The initiative will include $250 million in rapid-response projects, and at least $200 million in investment projects to spur post-epidemic recovery.

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