Created in partnership with the Helpdesk on Business & Human Rights

Due Diligence Considerations

This section outlines due diligence steps that companies can take to respect indigenous peoples’ rights in their operations and supply chains. The described due diligence steps are aligned with the UN Guiding Principles on Business and Human Rights (UNGPs). Further information on UNGPs is provided in the ‘Key Human Rights Due Diligence Frameworks’ section below or in the Introduction.

While the below steps provide guidance on respecting indigenous peoples’ rights, in particular, it is generally more resource-efficient for companies to ‘streamline’ their human rights due diligence processes by also identifying and addressing other relevant human rights issues (e.g. child labour, forced labour, discrimination, freedom of association) at the same time.

Key Human Rights Due Diligence Frameworks

Several human rights frameworks describe the due diligence steps that businesses should ideally implement to address human rights issues, including indigenous peoples’ rights. The primary framework is the UN Guiding Principles on Business and Human Rights (UNGPs). Launched in 2011, the UNGPs offer guidance on how to implement the United Nations “Protect, Respect and Remedy” Framework, which establishes the respective responsibilities of Governments and businesses — and where they intersect.

The UNGPs set out how companies, in meeting their responsibility to respect human rights, should put in place due diligence and other related policies and processes, which include:

  • A publicly available policy setting out the company’s commitment to respect human rights
  • Assessment of any actual or potential adverse human rights impacts with which the company may be involved across its entire value chain
  • Integration of the findings from their impact assessments into relevant internal functions/processes — and the taking of effective action to manage the same
  • Tracking of the effectiveness of the company’s management actions
  • Reporting on how the company is addressing its actual or potential adverse impacts
  • Remediation of adverse impacts that the company has caused or contributed to

Additionally, the OECD Guidelines on Multinational Enterprises define the elements of responsible business conduct, including human and labour rights.

Another important reference document is the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration), which contains the most detailed guidance on due diligence as it pertains to labour rights. These instruments, articulating principles of responsible business conduct, draw on international standards enjoying widespread consensus.

The IFC’s Environmental and Social Performance Standards and their respective guidance notes are also a key resource for businesses. In particular, Performance Standard 7 on Indigenous Peoples establishes standards specific to indigenous peoples to ensure that business activities minimize negative impacts, foster respect for human rights, dignity and culture of indigenous populations, and promote development benefits in culturally appropriate ways.

Companies can seek specific guidance on this and other issues relating to international labour standards from the ILO Helpdesk for Business. This Helpdesk assists company managers and workers that want to align their policies and practices with principles of international labour standards and build good industrial relations.

The UN Global Compact Business Reference Guide on UNDRIP is a valuable resource for companies to understand, respect and support the rights of indigenous peoples, with advice specific to business activities. Businesses can use the UN Global Compact Business Guide on UNDRIP in conjunction with the UNGP framework to conduct human rights due diligence on indigenous peoples’ rights. The guide lays out key business actions to take, including developing policy commitments, conducting human rights due diligence, implementing FPIC, providing remediation and access to grievance mechanisms.

Additionally, the SME Compass offers guidance on the overall human rights due diligence process by taking businesses through five key due diligence phases. The SME Compass has been developed in particular to address the needs of SMEs but is freely available and can be used by other companies as well. The tool, available in English and German, is a joint project by the German Government’s Helpdesk on Business & Human Rights and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.

Develop a Policy Commitment on Indigenous Peoples’ Rights

UNGP Requirements

As per the UNGPs, a human rights policy should be:

  • “Approved at the most senior level” of the company
  • “Informed by relevant internal and/or external expertise”
  • Specific about company’s “human rights expectations of personnel, business partners and other parties directly linked to its operations, products or services”
  • “Publicly available and communicated internally and externally to all personnel, business partners and other relevant parties”
  • “Reflected in operational policies and procedures necessary to embed it throughout the business”

Companies should consider adopting a human rights policy that respects and protects indigenous peoples’ rights. Although some companies, particularly in the mining industry, have developed stand-alone policies on indigenous peoples (e.g. BHP), it is most common for businesses to integrate commitments to indigenous peoples rights in a human rights policy (Hess, Mitsui and Equinor) or another policy document governing the relationship between the company and indigenous and other local communities (Rio Tinto).

The UN Global Compact Business Reference Guide on UNDRIP advises that in circumstances where specific provisions are required on the company’s relationships with indigenous peoples, indigenous representatives and human rights experts should be involved in the development of the policy. Once a company has an indigenous peoples’ rights policy, it would be good practice to require business partners, such as sub-contractors and joint venture partners, to adhere to the policy and support them in developing their own policies. Some of the actions recommended by the UN Global Compact Business Reference Guide on developing an indigenous peoples’ rights policy include:

  • Assign senior management responsibility to drive, implement and review existing or any new policies
  • Map and study existing policies to identify existing coverage of indigenous peoples’ rights and gaps
  • Involve all relevant parts of the business, including the core business as well as human resources, corporate affairs, legal, procurement and security, in the process of developing, implementing and reviewing the policy
  • Involve internal and external stakeholders in the process, in particular, local indigenous communities that the business interacts and works with
Helpful Resources
  • United Nations Global Compact, A Business Reference Guide: United Nations Declaration on the Rights of Indigenous Peoples: This guide has a specific section on key recommendations when developing an indigenous peoples’ rights policy.
  • United Nations Global Compact-OHCHR, A Guide for Business: How to Develop a Human Rights Policy: This guidance provides recommendations on how to develop a human rights policy and includes extracts from companies’ policies referencing indigenous peoples’ rights.
  • SME Compass: Provides advice on how to develop a human rights strategy and formulate a policy statement.

Assess Actual and Potential Impacts on Indigenous Peoples’ Rights

UNGP Requirements

The UNGPs note that impact assessments:

  • Will vary in complexity depending on “the size of the business enterprise, the risk of severe human rights impacts, and the nature and context of its operations”
  • Should cover impacts that the company may “cause or contribute to through its own activities, or which may be directly linked to its operations, products or services by its business relationships”
  • Should involve “meaningful consultation with potentially affected groups and other relevant stakeholders” in addition to other sources of information such as audits
  • Should be ongoing

Impact assessments should look at both actual and potential impacts, i.e. impacts that have already manifested or could manifest. This compares to risk assessment that would only look at potential impacts and may not satisfy all of the above criteria.

Companies should undertake an assessment of their actual and potential impacts on the rights of indigenous peoples focused on their own business activities and their relationships with third parties, including business partners. The UNGPs emphasize that appropriate action will vary according to (i) whether the business enterprise causes or contributes to an adverse impact, or whether it is involved solely because the impact is directly linked to its operations, products or services by a business relationship; and (ii) the extent of its leverage in addressing the adverse impact. As such, these two elements must be considered when conducting impact assessments.

Companies can refer to the UN Global Compact Business Reference Guide on UNDRIP for key recommendations on conducting impact assessments. The guide specifies that impact assessments should continue throughout the duration of the business project and thereafter, as necessary, to ensure that all project impacts are documented.

Impact assessments can range from a high-level desk-based assessment to a much more in-depth exercise based on on-the-ground reconnaissance, direct consultation of indigenous communities, a search of government documents (including, for example, land registry records), engagement with local civil society stakeholders and, if relevant, other businesses operating in the area.

Companies can assess indigenous peoples’ rights in countries where they operate and source from by consulting country risk profiles. Two credible civil society resources regarding indigenous peoples’ rights are ‘The Indigenous World’ — annual publications by the International Work Group for Indigenous Affairs (IWGIA) — and Minority Rights Group’s ‘World Directory of Minorities and Indigenous Peoples.’ These resources give insight into where the highest risk regions and countries are, and outline trends with respect to indigenous peoples’ rights.

Helpful Resources
  • United Nations Global Compact, A Business Reference Guide: United Nations Declaration on the Rights of Indigenous Peoples: This guide has a specific section on key recommendations on conducting impact assessments.
  • UNDP, Standard 6: Indigenous Peoples: This guidance note provides actionable recommendations on how to assess potential risks and impacts to indigenous peoples.
  • OHCHR, UN Special Rapporteur on the Rights of Indigenous Peoples: The UN mandate has valuable resources for companies to use to assess actual and potential risks to indigenous peoples’ rights including country reports and annual thematic reports.
  • ILO, Convention No. 169 Toolbox: A set of tools and resources to promote understanding of the meaning and scope of ILO Convention No. 169, including a document containing excerpts from reports and comments of ILO Supervisory bodies relating to the Convention.
  • Global Compact Network Australia (GCNA), The Australian Business Guide to Implementing the UN Declaration on the Rights of Indigenous Peoples: This guide is specifically targeted to Australian businesses with the GCNA having collaborated with the Indigenous Australian community. It provides practical advice about how executives and companies can understand, respect and embed the rights of Indigenous Australians into their daily operations.
  • Danish Institute for Human Rights, Respecting the Rights of Indigenous Peoples: A Due Diligence Checklist for Companies: This guide seeks to provide companies with operational guidance on how to ensure due diligence when operating in areas where projects may affect indigenous peoples.
  • IWGIA, The Indigenous World: This resource provides companies with information on indigenous groups across the globe, with extensive reports according to region and country.
  • Minority Rights Group, World Directory of Minorities and Indigenous Peoples: This publication provides a good overview of the different indigenous groups in each country and the human rights and governance challenges they face.
  • CSR Risk Check: A tool allowing companies to check which international CSR risks (including those related to indigenous peoples’ rights) businesses are exposed to and what can be done to manage them. The tool provides tailor-made information on the local human rights situation as well as environmental, social and governance issues. It allows users to filter by product/raw material and country of origin. The tool was developed by MVO Netherland; the German version is funded and implemented by the German Government’s Helpdesk on Business & Human Rights and UPJ.
  • SME Compass: The Risk Assessment Tool provides practical guidance when rating and prioritizing risks after they have been identified.

Integrate and Take Action on Indigenous Peoples’ Rights

UNGP Requirements

As per the UNGPs, effective integration requires that:

  • “Responsibility for addressing [human rights] impacts is assigned to the appropriate level and function within the business enterprise” (e.g. senior leadership, executive and board level)
  • “Internal decision-making, budget allocations and oversight processes enable effective responses to such impacts”

The guide on indigenous peoples developed by the Danish Institute for Human Rights (DIHR) has actionable and step-by-step recommendations on how companies can exercise due diligence and develop and implement action plans. Ensuring adequate consultation is an essential first step that will decisively inform a company’s action plan on indigenous peoples. Indigenous peoples should be consulted with a view to obtaining an agreement or consent, and consultation should be undertaken in accordance with international standards prior to definite decision-making regarding project feasibility.

Companies can refer to the UN Global Compact Business Reference Guide on UNDRIP for key recommendations on understanding and implementing consultation processes to secure FPIC. The guide recommends the following business actions in relation to FPIC:

  • Consider engaging an independent and culturally sensitive facilitator, for example, local non-governmental organizations (NGOs) and/or independent experts, chosen by or acceptable to the indigenous peoples concerned, to assist with negotiations or consultation processes. This should be done in a manner that does not influence who they choose to involve, nor influences the views of the provider of these services.
  • Consider providing support (e.g. financial, logistical, etc.) to strengthen the capacity of a community’s decision-making processes, being mindful that doing so does not create undue pressure to give consent.
  • Consider making arrangements for independent monitoring of the FPIC process and its outcomes, by engaging an independent expert chosen in consultation with the indigenous peoples concerned.

A useful checklist for appraising whether an activity requires an FPIC process is included in the UNDP guide.

Helpful Resources
  • United Nations Global Compact, A Business Reference Guide: United Nations Declaration on the Rights of Indigenous Peoples: This guide has a specific section on key recommendations on integrating findings and taking action on indigenous peoples’ rights.
  • UNDP, Standard 6: Indigenous Peoples: This guidance note provides actionable recommendations on stakeholder engagement.
  • Danish Institute for Human Rights, Respecting the Rights of Indigenous Peoples: A Due Diligence Checklist for Companies: This guide seeks to provide companies with operational guidance on how to ensure due diligence when operating in areas where projects may affect indigenous peoples.
  • UN-FAO, Free Prior and Informed Consent: An Indigenous Peoples’ Right and a Good Practice for Local Communities: This resource provides suggestions on implementing FPIC.
  • SME Compass: Provides advice on how to take action on human rights by embedding them in your company, creating and implementing an action plan, and conducting a supplier review and capacity building.

Track Performance on Indigenous Peoples’ Rights

UNGP Requirements

As per the UNGPs, tracking should:

  • “Be based on appropriate qualitative and quantitative indicators”
  • “Draw on feedback from both internal and external sources, including affected stakeholders” (e.g. through grievance mechanisms)

Businesses should regularly review their approach to indigenous peoples’ rights to see if it continues to serve the indigenous communities and stakeholders involved. The guide on indigenous peoples developed by DIHR provides an actionable checklist that companies can refer to when tracking performance on indigenous peoples’ rights, including considerations such as:

  • Has a specific plan for engagement with indigenous peoples been developed and agreed upon with concerned indigenous peoples/communities?
  • Has a participatory monitoring strategy been put in place to track performance against key risks or potential impacts identified?

Participatory monitoring of environmental and social commitments can increase transparency and promote trust between a company and local community members. It can help defuse external criticism, quash unfounded rumours within the community and ensure higher levels of ‘buy-in’ from local people. Participatory monitoring may include:

  • The participation of indigenous representatives in scientific sampling and analysis, alongside a company’s own environmental team. In many cases, the company will need to ensure that capacity building is carried out by an independent third party to ensure such representatives are able to participate in this process fully and effectively.
  • Validation of initial impact assessment by indigenous community members and a joint analysis of the company’s management and mitigation efforts based on the records on impacts on affected community members
  • Assessing company/project-related changes to the local environment and socio-economic context over time with the input from indigenous community members
Helpful Resources
  • Danish Institute for Human Rights, Respecting the Rights of Indigenous Peoples: A Due Diligence Checklist for Companies: This guide seeks to provide companies with operational guidance on how to ensure due diligence when operating in areas where projects may affect indigenous peoples.
  • IWGIA, Interpreting the UN Guiding Principles for Indigenous Peoples: This guide contains information for companies on how to track company performance on indigenous peoples.
  • Institute for Human Rights and Business, Putting Respect for Human Rights into Practice: This guidance details the steps companies should take in tracking performance, including building a systematic approach to tracking, developing indicators, incorporating stakeholder perspectives and tracking through business relationships.
  • SME Compass: Provides advice on how to measure human rights performance.

Communicate Performance on Indigenous Peoples’ Rights

UNGP Requirements

As per the UNGPs, regular communications of performance should:

  • “Be of a form and frequency that reflect an enterprise’s human rights impacts and that are accessible to its intended audiences”
  • “Provide information that is sufficient to evaluate the adequacy of an enterprise’s response to the particular human rights impact involved”
  • “Not pose risks to affected stakeholders, personnel or to legitimate requirements of commercial confidentiality”

Companies are expected to communicate their performance on indigenous peoples’ rights in a formal public report, which can be achieved via companies’ broader sustainability or human rights reporting (e.g. Shell’s Sustainability Report), or in their annual Communication on Progress (CoP) in implementing the Ten Principles of the UN Global Compact. Additionally, other forms of communication may include in-person meetings, online dialogues and consultation with affected stakeholders.

Helpful Resources
  • Global Reporting Initiative, GRI 411: Rights of Indigenous Peoples: This Global Reporting Initiative (GRI) standard provides detailed guidance on how organizations can report their management approach on indigenous peoples’ rights.
  • Danish Institute for Human Rights, Respecting the Rights of Indigenous Peoples: A Due Diligence Checklist for Companies: This guide points at the need to develop and agree on a transparent communication strategy with indigenous peoples, including the definition of adequate communication channels.
  • UNGP Reporting Framework: A short series of smart questions (‘Reporting Framework’), implementation guidance for companies that are reporting, and assurance guidance for internal auditors and external assurance providers.
  • United Nations Global Compact, Communication on Progress (CoP): The CoP ensures further strengthening of corporate transparency and accountability, allowing companies to better track progress, inspire leadership, foster goal-setting and provide learning opportunities across the Ten Principles and SDGs.
  • The Sustainability Code: A framework for reporting on non-financial performance that includes 20 criteria, including on human rights.
  • SME Compass: The Practical Guide on Target Group-Oriented Communication helps to identify stakeholders and find suitable communication formats and channels.

Remedy and Grievance Mechanisms

UNGP Requirements

As per the UNGPs, remedy and grievance mechanisms should include the following considerations:

  • “Where business enterprises identify that they have caused or contributed to adverse impacts, they should provide for or cooperate in their remediation through legitimate processes”.
  • “Operational-level grievance mechanisms for those potentially impacted by the business enterprise’s activities can be one effective means of enabling remediation when they meet certain core criteria.”

To ensure their effectiveness, grievance mechanisms should be:

  • Legitimate: “enabling trust from the stakeholder groups for whose use they are intended, and being accountable for the fair conduct of grievance processes”
  • Accessible: “being known to all stakeholder groups for whose use they are intended, and providing adequate assistance for those who may face particular barriers to access”
  • Predictable: “providing a clear and known procedure with an indicative time frame for each stage, and clarity on the types of process and outcome available and means of monitoring implementation”
  • Equitable: “seeking to ensure that aggrieved parties have reasonable access to sources of information, advice and expertise necessary to engage in a grievance process on fair, informed and respectful terms”
  • Transparent: “keeping parties to a grievance informed about its progress, and providing sufficient information about the mechanism’s performance to build confidence in its effectiveness and meet any public interest at stake”
  • Rights-compatible: “ensuring that outcomes and remedies accord with internationally recognized human rights”
  • A source of continuous learning: “drawing on relevant measures to identify lessons for improving the mechanism and preventing future grievances and harms”
  • Based on engagement and dialogue: “consulting the stakeholder groups for whose use they are intended on their design and performance, and focusing on dialogue as the means to address and resolve grievances”

Grievance mechanisms help build trust and understanding of issues between companies and indigenous peoples. They provide an early point of recourse to identify and address the concerns of impacted indigenous communities before the point of escalation. These channels also help develop stronger relationships with indigenous communities. It is a good practice for companies to involve local communities and respected third parties in the design and implementation of the grievance mechanism, and to consider establishing a grievance process that is run by a respected, independent body. Another best practice is to ensure that grievance mechanisms are accessible to all indigenous peoples, including women, youth, elders and other potentially vulnerable groups.

Grievance mechanisms will vary depending on whether a company has caused, contributed or is directly linked to the adverse impact on indigenous peoples. Global Compact Australia’s guide has a helpful visual (p. 9) explaining the “cause, contribute and directly linked” continuum and specifying appropriate remediation strategies in each case. Companies can also refer to the UN Global Compact Business Reference Guide on UNDRIP for key recommendations on how to establish culturally appropriate and effective grievance mechanisms for indigenous communities.

Grievance mechanisms are crucial to ensure effective remediation of negative impacts on indigenous peoples. The inclusion of indigenous peoples in the remediation process and the enhancement of local ownership of the process ensures the acceptance and legitimacy of a remediation plan. Indigenous involvement in the remediation process can also help businesses develop remediation plans that best suit the needs of a particular indigenous community.

Helpful Resources
  • United Nations Global Compact, A Business Reference Guide: United Nations Declaration on the Rights of Indigenous Peoples: This guide has a specific section on key recommendations on establishing grievance mechanisms that are effective and culturally appropriate.
  • Global Compact Network Australia (GCNA), The Australian Business Guide to Implementing the UN Declaration on the Rights of Indigenous Peoples: This guide details different considerations when establishing grievance mechanisms and providing for (or cooperating) in remediation for any adverse impacts on indigenous peoples’ rights, including the benefits to business and how to do it.
  • Forest Peoples Programme, Non-judicial Grievance Mechanisms as a Route to Remedy: An Unfulfilled Opportunity: This briefing note sets out key actionable recommendations for companies to ensure that non-judicial remedy procedures become compliant with the UNGPs.
  • SME Compass: The Practical Guide on Grievance Management outlines how to design grievance mechanisms following eight effectiveness criteria and includes examples from companies.
  • Global Compact Network Germany, Worth Listening: Understanding and Implementing Human Rights Grievance Management: A business guide intended to assist companies in designing effective human rights grievance mechanisms, including practical advice and case studies. Also available in German.