Aboriginal Trust Funds: Leveraging investment to engage corporate Canada

What are the strengths of Canada’s Indigenous economy and what can be done to build on them?

There are many Indigenous businesses that could be viable or appropriate partners for non-Indigenous companies, and this is an undiscovered opportunity for mainstream Canada. On the other side of the equation, Indigenous businesses need to do more to venture into the mainstream market. Indigenous businesses bring great products, services and skills to the table; it is just a matter of broadening our markets.

“There are many Indigenous businesses that could be viable or appropriate partners for non-Indigenous companies, and this is an undiscovered opportunity for mainstream Canada.”

Partnering with non-Indigenous businesses would be a great opportunity for Aboriginal businesses to access those markets that are currently outside our reach. But we have to do that by offering great products, services, skills and abilities that exist within the Indigenous communities but are looking for that opportunity to satisfy needs that are greater than within our own communities. Ultimately, I always go back to the simple business principles: a good business is a good business and if it happens to be an Indigenous business, all the better. It needs to be meeting the needs of its client group or its market in an effective way.

How should Indigenous communities view the power of their investments and how should corporate Canada and the “mainstream” companies Indigenous trusts invest in adjust to this approach?

Land claim settlements and other types of agreements provide certain Indigenous communities with funds, often valued at millions of dollars. So, communities decided to set these amounts aside in trust funds to protect them for future generations. A trust is the perfect vehicle to meet communities’ short-term, mid-term and long-term needs. 

However, until recently, the money in those trust funds was invested in mainstream markets. Aboriginal communities, their leadership and trust managers are now realizing that we have a tremendous opportunity as shareholders in corporate Canada, and we want to use it responsibly. Indigenous leadership and trust managers want to use our shareholder positions to influence how corporate Canada interacts with stakeholders, particularly with Indigenous communities. Specifically, we want to help companies find the right resources to create an Indigenous engagement policy. For example, the Canadian Council for Aboriginal Business (CCAB)’s Progressive Aboriginal Relations (PAR) framework is an effective way for corporate Canada to engage Indigenous businesses. We want to grow the Indigenous economy and mainstream Canada can also contribute towards that goal by working with Indigenous partners in the right way.

“Indigenous leadership and trust managers want to use our shareholder positions to influence how corporate Canada interacts with stakeholders, particularly with Indigenous communities.”

NATOA, specifically, has launched a project called the Reconciliation Responsible Investment Initiative (RRII) in partnership with SHARE Canada. SHARE works within the shareholder advocacy realm of pension funds and high net worth individuals. We are working with Indigenous communities to ensure that their investments reflect their cultural values and traditions.

When NATOA was founded, our communities were investing with whoever they had some sort of relationship with – whether it was a mutual fund salesman, a broker or their banker. So, our initial challenge was to get our communities to work with the right firms, instead of handing over investment decision-making to what essentially was a group of non-Indigenous individuals. The investments that a community’s investment manager makes on its behalf should be in organizations that share its values or, at the very least, do not damage them. Trusts could very well, through no fault of their own, be investing in a company that is doing harm within their community, poisoning their land or not respecting Indigenous rights. Basically, NATOA wants to help trusts with their investment policy so that they do not inadvertently fund their own detriment. We are trying to create awareness of the linkage between a community’s values and the money that is invested on its behalf.

“The investments that a community’s investment manager makes on its behalf should be in organizations that share its values or, at the very least, do not damage them.”

There are two sides to this relationship. Canadian corporates realize how much of their shares and stock is being held by Indigenous communities. And Indigenous communities see how much of our investment is in companies that we would like to engage and work with in our communities. Conversely, we also see which companies are not engaging with us on a corporate-to-nation basis to develop partnerships. When we have ownership in their stocks we want to use this to meet companies’ management at the shareholder table as opposed to any kind of negative confrontation. We would like to do this on a face-to-face basis and be very productive.

At a human capital level, what must be done to better equip Indigenous communities and the service providers they engage to manage their investments?

When it comes to trusts, education, information and communication are key. Our boards of trustees need to better educate, inform and communicate with the service providers we work with, including investment managers, investment advisory services,lawyers and accountants. We want to ensure that everyone is working on behalf of the Indigenous person living in that community.

“When it comes to trusts, our boards of trustees need to better educate, inform and communicate with the service providers we work with, including investment managers, lawyers and accountants.”

There is a misperception that we are not able to manage these types of things. In some cases, the pool to select trustees from is limited because of the size of the groups we represent. So, we need to educate the board for it to understand its role and responsibilities, as well as its expectations from service providers. Building the capacity of our boards to reach out to and be proactive with the service providers is bridging the knowledge gap. We are doing our best to ensure that our finances are managed and invested appropriately for the benefit of both Indigenous and non-Indigenous Canadians.

This is not something our investment managers are surprised at. In fact, in a lot of cases, they are saying it is about time. Other religious investors or ethnic group investors have already been using investment to reflect their values.

How can corporate Canada better engage Indigenous communities and what role should trusts play in this?

Trusts could be a perfect way for resource companies to engage with Indigenous communities. The Free, Prior and Informed Consent (FPIC) concept is part of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). Instead of just going into communities and pushing Indigenous voices aside, companies should engage with communities and form partnerships to create wealth together. A trust fund is one of the opportunities to safeguard that wealth for long-term use.

“Instead of just going into communities and pushing Indigenous voices aside, companies should engage with communities and form partnerships to create wealth together. A trust fund is one of the opportunities to safeguard that wealth for long-term use.”

Impact-benefit agreements are another way to conceptualize the effects of resource development on Indigenous communities. Companies use them when they recognize that resource extraction in a traditional area does come at a cost but also with an opportunity to benefit the local community. So, the revenue generated from that activity is partially used to positively impact the community, be it through a community center, a hockey arena, housing or infrastructure. Working with a community or an Indigenous group ahead of time will save corporate Canada money in the long run. When proposing a project on Aboriginal territories, having the community at the discussion table from the outset will create a sense of co-ownership between the community and the company.

You support the Indigenomics Institute’s goal of reaching a $100 billion Indigenous economy. Why is this timely and where do you see trusts fitting into that ambitious goal?

I think the Indigenomics initiative is very valuable because there is a lot of opportunity within the Indigenous economy that we have to create awareness about. Within that there are many opportunities for Indigenous and non-Indigenous businesses to partner for the benefit of all Canadians. Within those relationships, trusts are a vehicle for Indigenous communities to utilize the investment that we actually hold within corporate Canada to make an impact for ourselves. This is long overdue and I am convinced that through responsible investing and the opportunities being shareholders of non-Indigenous companies give, we can really push that along.

With the United Nations Declaration on the Rights of Indigenous Peoples, the Truth and Reconciliation Commission (TRC) recommendations, there is an opportunity for Indigenous and non-Indigenous Canadians to work together to move us all forward. In this vein, I would urge the youth leaders of Canada to not base their identity on a particular ethnicity but to work with each other to improve everyone’s lives together.

Part of the Indigenous Economic Development Series presented by: