What Is Indigenous Equity Participation?
Equity participation gives Indigenous groups whole or part ownership in a company or project, unlocking new levels of control over the development of their territories.
Indigenous groups negotiate these ownership rights with project proponents, and typically purchase their equity stake using a combination of their own capital and debt financing.
February 7, 2022
Long-term stable revenue streams
Decision-making powers over major economic projects in their territory
Capacity and skills development opportunities in business and management
By taking equity positions in major projects, Indigenous communities expect more than the usual employment, training, and procurement opportunities that come with impact and benefit agreements (IBAs).
They also want:
Beyond the Status Quo
A growing number of leaders in Indigenous economic development see it as a priority to increase equity-based participation.
Push for more inclusive, robust, and substantive Indigenous engagement in projects.
Equity-based agreements help:
Major project agreements are evolving in Canada.
Support Indigenous rights, interests, self-determination, and community development.
Contribute to Canada’s Truth and Reconciliation final report’s Call to Action 92, by supporting economic reconciliation and reducing socioeconomic barriers.
Indigenous groups are increasingly seeking equity agreements over other
types of arrangements.
East Main Tank Farm
Fort McKay and Mikisew Cree First Nation have a
49 per cent stake (valued at $500 million) in Suncor’s
East Tank Farm Development, part of its oil sands operations. The two First Nations independently financed
the acquisition through RBC Capital Markets. A key
long-term objective is to create financial independence
in support of self-determination.
Lower Mattagami River Project
This $2.6 billion hydroelectric project is a partnership between Ontario Power Generation and Moose Cree
First Nation. Through the Amisk-oo-Skow Agreement,
Moose Cree First Nation received 25 per cent equity.
The partnership also includes Indigenous training, employment, and procurement opportunities.
Innavik Hydro Project
The Inuit community of Inukjuak initiated this run-of-the-river hydroelectric project to access cheaper, cleaner energy than the diesel they currently use. The project is a 50/50 partnership between the community’s Pituvik Landholding Corporation and Innergex, a renewable energy company. Revenue will support local entrepreneurship as well as the community’s educational, social, and traditional lifestyle needs.
Note: Location of example projects are for illustration purposes only.
Access to capital
Indigenous groups often lack necessary capital to secure an equity position in a major project. In these instances, they must find other sources of capital such as lending institutions or public sector funds. But institutional barriers, such as the Indian Act, can limit financing options. And ineffective—even racist—policies unfairly pigeonhole Indigenous groups as suboptimal or high-risk borrowers and partners.
Access to capital
Indigenous groups don’t always have the in-house expertise needed to take on equity positions in major projects. These include business, finance, and management skills—all critical to successful
Align business and government with the principles of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP)—and Canada’s new UNDRIP legislation.
Reflect the evolving legal landscape surrounding major projects and
Advance environmental, social, and governance (ESG) standards.
Move economic development forward in Canada.
What’s Holding Us Back?
Why are equity-based corporate–Indigenous arrangements still relatively uncommon?
Generally, relationships and agreements between corporations and Indigenous groups have come a long way over the past few decades. But companies don’t always know how to work effectively, equitably, and meaningfully. Some worry about the ability of Indigenous groups to take on equity positions. And mistrust, bias, and differing values can sometimes undermine productive agreements.
The sheer complexity of some projects can work against equity-based partnerships. In addition, partnerships can be affected by jurisdictional complexity. Responsibilities, roles, and interests on the part of public, Indigenous, and private sector organizations sometimes overlap or conflict, which makes the development of corporate-Indigenous agreements challenging.
Equity stake agreements come with risks for all involved. For Indigenous groups, investing in major projects that either fail or don’t deliver as expected can weaken credit standings, jeopardize key community assets such as trusts and sovereign wealth funds, and result in financial loss. Risks also affect projects and undermine agreements when a partner lacks capacity, resources, or expertise. Relationships and reputation are also at risk if projects and associated equity stake agreements don’t unfold as planned.
What We Want to Find Out
What do Indigenous groups need to participate as strong equity-based partners in major projects?
What are the leading practices and policies of industry proponents, governments, and lending institutions to ensure success? And what challenges and gaps remain?
What is the relationship between equity participation and Indigenous self-determination?
We Are The Conference Board of Canada’s Indigenous and Northern Communities Team
Over the next few months, we'll engage with individuals and organizations from across Canada on equity-based project agreements. We’re seeking perspectives from Indigenous groups, industry groups, lenders, and governments—from different regions, different industries, and across First Nations, Inuit, and Métis groups.
What We’ll Look At
This research initiative considers projects within Natural Resources Canada’s definition for a major project:
$50 million for energy and mining projects
$20 million for electricity and forestry projects
$10 million for clean energy and clean technology projects
To be part of our research, major projects must involve some form of Indigenous equity participation—at a minimum, a 20 per cent ownership stake on the part of the Indigenous group or organization. We will also broaden our view and understanding of capital.
While standard understandings of capital (i.e., as financial capital being put to work for productive or investment purposes) will be essential to the research, there are also different ways of looking at capital. For instance, can we better recognize and acknowledge the natural capital of Indigenous groups, such as the value associated with their Indigenous lands?
We want this research to guide successful equity-based partnerships between Indigenous groups and industry proponents. Have your voice heard.
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For more information and ways to get involved, contact:
613-526-3090 ext. 234
The responsibility for the findings and conclusions of this research rests entirely with The Conference Board of Canada.
A New Economic Era