Canada’s consistent success in attracting investors demonstrates the strength of its value proposition. In 2023, it emerged as the top destination for foreign direct investment (FDI), securing $26.7 billion, nearly tripling the five-year average of $9.7 billion, as highlighted in the Invest Canada FDI Report 2023. According to Statistics Canada, when compared globally, Canada’s net direct investment position grew by $86.4 billion in 2023, reaching a total of $811.0 billion.
Sustainable Projects As A % of Total FDI
Source: https://www.investcanada.ca/FDIReport2023
Recent successes in the Indigenous investment illustrate the transformative potential of these investments and highlight the increasing involvement of Indigenous peoples in the economy. Significant milestones in 2024 indicate a notable enhancement in economic participation among Indigenous communities, marking a shift towards greater self-determination and resilience.
A standout development is the final investment decision for Cedar LNG, a major US$4-billion liquefied natural gas terminal being built off the coast of British Columbia. Owned by the Haisla Nation, this project is the largest Indigenous-owned infrastructure initiative in Canada and sets a powerful example for future Indigenous-led ventures in the energy sector. It not only signals the potential for success in this competitive sector but also opens doors for additional investments through accessible investment funds that can drive economic growth and benefit local communities.
Another key agreement is the $1-billion deal between TC Energy Corp and a consortium of Indigenous communities, which involves selling a minority stake in its Western Canadian natural gas transmission network. This collaboration empowers Indigenous groups economically while promoting partnerships that can lead to more sustainable resource management.
What is Indigenous Investment?
Indigenous investment involves the flow of financial resources toward businesses or entities that are Indigenous-owned or operated. These investments can span a variety of sectors, including resources, infrastructure, and local enterprise, aimed at promoting growth, development, and sustainability. The focus is on providing financial support through avenues like equity, loans, and strategic partnerships to help these businesses expand, innovate, or achieve their long-term goals.
The purpose of Indigenous investment is to empower Indigenous businesses by offering the capital needed for growth while respecting the unique needs and values of the entities involved. It helps these organisations gain access to markets, pursue new opportunities, and create economic impact, both within their operations and in the wider economic landscape.
Financial returns and the long-term viability of the projects drive Indigenous investment. These ventures often have access to natural resource and land, providing unique opportunities for investors.
The Investment Canada Act
When investing in Canada, it’s important to understand the legal framework that governs foreign investment. The Investment Canada Act (ICA) plays a central role in regulating this process.
The ICA allows the federal government to review significant foreign investments to ensure they benefit the Canadian economy. Innovation, Science, and Economic Development Canada (ISED) manages the ICA. It makes sure that investments support Canada’s national interests. At the same time, it promotes a positive environment for foreign investment.
Analysts evaluate foreign investments to determine if they offer a "net benefit" to Canada. This includes looking at job creation, economic growth, and technological progress. This review process ensures that investments align with Canada's policies, which increasingly focus on Indigenous economic development.
For investors wanting to work with Indigenous communities, the ICA offers a clear framework. This framework helps ensure that investments are legally compliant and support the wider economy.
United Nations Declaration on the Rights of Indigenous Peoples Act
The United Nations Declaration on the Rights of Indigenous Peoples Act (UNDRIP), which came into effect on 21st June 2021, marks a significant step towards renewing the Government of Canada's relationship with Indigenous peoples. The Act's action plan is centred on addressing past injustices and eliminating racism, discrimination, and violence against Indigenous communities. It also emphasises the importance of mutual respect and understanding, ensuring that human rights education remains a priority.
The legislation aims to establish a lasting, action-oriented framework to support the implementation of UNDRIP. It was developed in collaboration with a diverse range of stakeholders, including representatives from National Indigenous Organisations, self-governing nations, Indigenous youth, Indigenous women, modern treaty partners, and many others. This inclusive approach ensures that the Act reflects the diverse voices and perspectives within Indigenous communities, building a foundation for meaningful and sustained change.
Free, Prior and Informed Consent
The concept of Free, Prior, and Informed Consent (FPIC) is central to upholding the rights of Indigenous peoples, ensuring that their consent is obtained for any actions, initiatives, or projects that may affect their rights, territories, or lands.
- Free: Consent must be given voluntarily, without any form of coercion, intimidation, or pressure. Indigenous communities must feel empowered to make decisions without external interference.
- Prior: Indigenous peoples must have access to all relevant information well in advance of any proposed activity. This allows them adequate time to review and consider the details before any project or initiative begins.
- Informed: Complete transparency is essential. Information must be shared openly, including both the potential positive and negative impacts of the proposed activity. This information should be presented in a language and format that the community can easily understand, ensuring they have a clear and comprehensive understanding of what is being proposed.
- Consent: Indigenous communities have the right to grant or withhold their approval for the proposed project, not only before it begins but also at any point during its execution. This consent is an ongoing process, reflecting the community’s right to participate actively in decisions affecting their lands and well-being.
FPIC is not just a procedural requirement but a fundamental principle that recognises and respects the sovereignty and autonomy of Indigenous peoples over their ancestral lands and resources.
Important Laws Governing Indigenous Investments
Investing in Indigenous-led projects in Canada requires understanding the specific legal landscape that governs these investments. Several important laws provide the legal foundation for Indigenous investment, ensuring that projects promote economic reconciliation and respect Indigenous rights and protections.
First Nations in Northern Ontario
Source: https://afn.bynder.com/m/367574a3a5cb5abe/original/1-AFN-Closing-the-Infrastructure-Gap-by-2030-National-Cost-Estimate-English-report-1.pdf
Section 35 of the Constitution Act, 1982
Section 35 of the Constitution Act protects the rights of Indigenous peoples. This is especially true for land and resource management.
Investors need to know that Indigenous communities have important legal rights over land and resources. Every project must respect these rights. This means that investment projects must consider Indigenous land claims, rights, and treaties. This helps ensure legal compliance and supports communities.
The Duty to Consult and Accommodate
The Duty to Consult and Accommodate requires that Indigenous communities be consulted when projects impact their lands or rights. This legal obligation applies to both private companies and government agencies. For investors, this duty is a key step in getting project approval. It also helps build strong relationships with Indigenous communities.
Not meeting this requirement can cause legal issues and delays in the project. Therefore, it is important for investors to connect with Indigenous communities early in the planning stages. Investors must conduct assessments, such as environmental assessments, whether they pursue infrastructure projects, energy projects, or any projects within the indigenous sector.
Fulfilling this duty helps investors follow the law. It also increases the chances of successful and sustainable projects. Gaining the trust and cooperation of Indigenous communities accomplishes this.
Indigenous Land Rights
Indigenous land rights are governed by treaties and agreements, including the First Nations Land Management Act. This Act allows First Nations to manage their lands independently, without the oversight of the federal government.
For investors, this offers a clearer way to secure land use for projects. However, it also needs careful attention to the legal rules of each Indigenous community. Understanding these treaties and agreements is key to ensuring that investments proceed smoothly and legally.
Securing land for investment projects in Indigenous territories requires careful negotiation and respect for Indigenous governance and laws. Following these guidelines allows investors to create successful, long-term projects that help both the community and themselves.
Environmental and Social Governance (ESG) Standards
While Indigenous investments often align with Environmental, Social, and Governance (ESG) principles, the focus for investors remains on financial return. Indigenous-led projects in renewable energy and infrastructure offer a great chance for investors. They can meet ESG requirements and earn strong financial returns.
Projects with Indigenous communities often focus on good governance. This makes them appealing to investors who want to meet global ESG standards.
These investments help improve the environment and social outcomes, and they also offer good returns. This makes them a great choice for today’s investors who care about sustainability and profit.
Discover More About Indigenous Investment Opportunities
Drumbeats is the must-listen podcast for investors interested in Indigenous investment in Canada. Born from the Canadian Indigenous Investment Summit, the show focuses on the nexus of Indigenous economic strategies and investment opportunities. Hosts Mark Magnacca and Rob Brant, co-chairs of the Summit, lead engaging interviews and expert analyses that explore how these crucial conversations impact economic development within Indigenous communities and beyond.
Transitioning from these enlightening conversations, the Canadian Indigenous Investment Summit is committed to fostering sustainable and inclusive investment practices that incorporate and respect the perspectives and rights of Indigenous communities, aiming to benefit all involved stakeholders.
At the summit, attendees will have the chance to explore a diverse range of investment opportunities in Indigenous-led projects, spanning sectors such as renewable energy, infrastructure, and technology. Insightful discussions led by Indigenous leaders and expert panels will highlight the latest project developments, providing valuable perspectives for participants. Register your interest and save a spot at the summit.
