Canada can boost its economic prosperity, including the building of new clean energy infrastructure to meet its Paris Agreement commitments, by enhancing the deliberate economic inclusion of Indigenous nations in all aspects of economic development. However, many of the same systemic barriers that have largely excluded First Nations from meaningful economic participation in the economic activities and industries that have made the rest of Canada prosperous are still in place. Recently available mechanisms begin to address these challenges and support Indigenous access to capital that promotes economic participation by Indigenous nations in major projects, including via equity participation.
Bonds
Valued at over US$120 trillion, the bond market is the biggest capital market in the world. Specifically, green bonds hold a strong potential for reliable financing for Indigenous nations. The Indigenous-financed Deshkan Ziibi Conservation Impact Bond, a bond that uses evaluation metrics based on Indigenous values, is a frontrunner in the Indigenous bond market. Sustainability or green bonds such as these can attract an increasing market of ESG investors, and, generally speaking, the more sustainable the bond, the better the price.
Industry Partnerships
Indigenous partnerships with a private company to invest in a major project can also be another avenue towards financing Indigenous project investments. In 2019, 23 First Nations partnered with Enbridge and the Alberta Indigenous Opportunities Corporation to purchase equity stakes in seven Enbridge pipelines. The deal totaled $1.12 billion and was structured to allow revenue to reach the First Nations immediately.
Watch a post-conference interview with JP Gladu and Kim Brenneis, Director, Community and Indigenous Engagement, Enbridge:
With the growth in Indigenous leadership in major projects, Indigenous-industry partnerships like these may become commonplace across varying sectors, each with arrangements that suit the First Nation(s) and circumstances of the investment/asset.
Government Loan Guarantees
The Government of Canada’s committed last month to establish a national Indigenous loan guarantee program. This program commitment creates a multitude of opportunities for First Nations to develop major projects in line with their own values and priorities. The FNMPC recognizes this significant step aligns with the coalition’s long-standing advocacy efforts on behalf of its member First Nations, aiming to facilitate First Nations’ access to competitive capital for equity ownership in major projects. South of the 49th parallel, The United States has a Tribal Energy Loan Guarantee program, initially offering US$20 Billion in loan guarantees, increasing to US$20 Billion after the Inflation Reduction Act. Both government initiatives are ways in which Indigenous nations can finance equity stakes in major projects.