In no other region of the world have as many countries ratified International Labor Organization Convention 169 – requiring that governments consult Indigenous communities before approving projects that may detrimentally impact them – as Latin America, but human rights due diligence standards adopted by companies involved in investment projects are proving much more effective in guaranteeing adequate and effective consultations rather than government action. This is true even though ILO 169 requires that governments consult with local communities before giving the green light to investment or development projects that affect Indigenous lands, natural resources, and water supplies. 

• Neither Canada nor the United States has ratified ILO 169, and they were among only four countries that voted against the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) when it came up for a vote in the UN General Assembly in 2007, which endorsed the “free, prior, and informed consent” principle. Colombia was the only Latin American country not to fully embrace the UNDRIP.

Despite widespread ratification of ILO 169 and endorsement of the UNDRIP, Latin America is plagued by social conflicts involving Indigenous peoples who feel they were never adequately consulted. The most infamous example was in 2009 at Bagua in Amazonian Peru, when the administration of President Alan García used lethal force to counter protests by Indigenous peoples opposed to legal changes that facilitated energy, mining, and agricultural concessions on their lands. The violence resulted in the deaths of 34 people (mostly policemen) and hundreds of injured. Many of these social conflicts have delayed the completion of major energy and mining projects throughout Latin America for years, sometimes forcing their abandonment or the revocation by governments of previously granted concessions. The direct financial losses incurred by businesses have been huge, not to mention the damage to corporate branding image.  

• One reason for persistent conflicts throughout Latin America is that ILO 169 offers no definitive answer as to what happens if an Indigenous community vetoes a proposed project. Presumably that wouldn’t occur if the consultation were effective. But ILO 169 is vague on the precise consultation process a government must follow, leading to wide national variations as to who must be consulted and how. Although the UNDRIP implies that Indigenous peoples have the right to reject a project, its provisions are not considered legally binding by most governments unless specifically incorporated into domestic law. Even in Bolivia, one of the few countries where “free, prior and informed consent” is the law of the land, this did not prevent the administration of President Evo Morales from going ahead with a highway through the TIPNIS reserve in eastern Bolivia over the objections of its Indigenous inhabitants.

The growing importance of Environmental, Social and Governance (ESG) criteria in corporate decision-making, including the adoption of internal human rights due diligence policies and practices, may finally lead to effective consultation mechanisms that accept the notion that Indigenous peoples have the final say in either approving or rejecting a project that threatens their way of life or will permanently displace them from ancestral lands. For one thing, good faith consultation with Indigenous peoples is now a recognized international human right. More importantly, businesses are not absolved by a government’s failure to fulfill the obligation to consult Indigenous peoples on projects affecting them.

• Multilateral lending agencies such as the Inter-American Development Bank have developed performance standards that include a consent requirement that must be adhered to by any company seeking their financing for investment projects that may impact Indigenous people. In addition, equity investors with investment risk management concerns are emerging as important guarantors of corporate consultation and consent with Indigenous communities, particularly in the natural resource extraction industry.
• If the ESG criteria weren’t a big enough stick for private sector compliance, there is also an emerging trend in Europe and at the UN to make human rights due diligence principles mandatory for businesses. For example, France passed a law in 2017 that requires companies with a substantial presence in the country to adopt reasonable vigilance measures to allow for risk identification and for the prevention of severe violations of human rights directly or indirectly from the operations of the companies and their subsidiaries.  Businesses that do not meet their vigilance obligations are liable for damages incurred by victims. These emerging legal obligations encompass not only the foreign operations of corporations but increasingly extend to the entire production and supply chain.