New proxy voting guidelines introduced to promote Indigenous rights

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Pipeline repair © Shvadchak Vasyl /123RF Stock Photos The Coast Conservation Endowment Fund Foundation is implementing new shareholder proxy voting guidelines to advocate for the rights of Indigenous peoples, making it the first to its knowledge to do so in Canada.

The new guidelines by Indigenous-led Coast Funds, which has $118 million assets under management, will apply the new guidelines to its Canadian and global equity portfolios, managed by Fiera Capital Corporation.

Particularly, the guidelines aim to ensure that publicly traded boards recognize the rights of Indigenous peoples. “Efforts to extract or develop natural resources in Indigenous Peoples’ traditional territories often threaten their lives, cultures, and territories,” the guidelines said. “Indigenous communities are demonstrating an assertiveness when it comes to rejecting resource extraction projects. Coast Funds believes that to secure project access and ensure that invested assets eventually realize a return, leading companies must recognize the right to the free, prior and informed consent of affected Indigenous communities and deliver tangible benefits to them.”

And this goes above and beyond just complying with the letter of the law. The guidelines emphasize the importance of having the social license to operate, which means companies should obtain support of communities that may be impacted by projects. “We’re trying to speak to the boards of corporate Canada and the international equities we own to say,” ‘it’s good for you to have a social license where you work or else you’re going to have higher costs and a more difficult time getting your project through,’” says Brodie Guy, executive director of Coast Funds.

The guidelines also highlight that companies should recognize the United Nations’ Declaration on the Rights of Indigenous Peoples.

These guidelines will be considered when issues come up on the ballot that are related to free, prior and informed consent, Indigenous rights, board diversity and ensuring Indigenous heritage is considered, says Shannon Rohan, the chief strategy officer of the Shareholder Association for Research and Education, which worked with Coast Funds on finalizing the guidelines.

The idea to develop these guidelines came about in 2017, when Coast Funds and its board’s investment committee wanted to determine how their values were being applied to proxy voting. In 2018, Coast Funds engaged SHARE to audit fund managers, review the guidelines and provide implementation advice. The results found too much profit-seeking and not enough emphasis on values, says Guy.

There’s a clear case and strong legal argument that environmental, social and governance issues can have material impacts on company performance, says Rohan. “It’s aligned with fiduciary duties for investors like Coast Funds to be considering these issues and incorporating them into their stewardship activities and investment decision-making.”

Now that the guidelines have been published, the hope is that more Canadian institutional investors will start looking at these and incorporate them into their own proxy voting processes, says Rohan.

Further, Coast Funds is hopeful they can impact more fund managers by sharing their guidance template. “Even if one other firm adopts it, what’s that fund worth? Then we’d really start to see something happen. That would be our hope—creating a public good to help shift behaviour,” says Guy.

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