In 2021, the indigenous Kichwa community of Puerto Franco in the Andean region of Peru sued the Peruvian government for the creation of the Cordillera Azul National Park, alleging the country’s largest carbon deal violated their fundamental rights. Several multinational corporations – including Shell and TotalEnergies[1] – had spent more than $80 million buying credits in the park to counter their carbon emissions. The Kichwa community maintains that when the government established the park in 2001 and subsequently established a carbon offsetting project, it did so on their ancestral lands without their consent. The community alleges many families fell into poverty after they lost access to hunting, fishing, and farming on their lands, and community members say that they have not received any benefits from the lucrative carbon credit sales.

Cases like that of the Kichwa have led to a growing recognition of the need to integrate human rights considerations into the transition to a lower carbon and nature positive economy. The Kunming-Montreal Global Biodiversity Framework (GBF) adopted a human rights-based approach to conservation as a guiding principle and the rights of Indigenous Peoples received explicit recognition.

However, this is complicated by the fact that the journey to nature positive is highly dependent on market-led, voluntary action. The experience of the Kichwa is not unique. Indigenous communities globally are sounding the alarm over “carbon pirates” scrambling to secure deals for offsetting projects without consulting customary land owners or ensuring these deals create tangible benefits for their communities. The Amerindian People’s Association (APA) filed a formal complaint to ART (Architecture for REDD+ Transactions) in April 2023 over Guyana’s carbon credit scheme for lack of consultation. An initiative by TotalEnergies and Forêt Ressources Management to plant a 40,000-hectare forest on the Batéké Plateaux in Republic of Congo has allegedly physically and economically displaced local communities.

The Taskforce on Nature-related Financial Disclosures (TNFD) is at the center of the transition to nature positive. The TNFD is an international, multi-sector, market-driven initiative for corporate and financial organizations to frame how they identify and report impacts and dependencies on nature and associated material corporate risks and opportunities. The TNFD, which has parallels with the better-known Task Force on Climate-related Financial Disclosures (TCFD), focuses on nature, biodiversity, and ecosystems at the biome level.

Using a location or place-based lens immediately brings people, communities, and human rights into the equation. TNFD can – and should – be leveraged by companies to drive positive outcomes for both nature and people, focused on place-based impacts and dependencies, risks, and opportunities. Doing so requires companies to take a rights-based approach. A rights-based approach has two core components. First, any actions in nature must respect the rights of Indigenous Peoples and Local Communities (IPLCs) – or other stakeholders – impacted by the approach. This includes the universe of rights identified by the UN Guiding Principles on Business and Human Rights (UNGPs), namely those delineated in the International Bill of Human Rights and the eight ILO Core Labour Standards. Second, these actions should promote human rights in both their design and implementation, including through economic empowerment by generating and delivering socio-economic benefits. This is key to the realization of the right to self-determination and to economic, social, and cultural development as set out in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP).

It is critical to take a rights-based approach to TNFD that centers on meaningful engagement and consultation with IPLCs due to their unique connection and stewardship of biodiversity, as well as the intrinsic and anthropogenic value of biodiversity.

This blog builds on existing material – including the TNFD’s September 2023 Guidance on engagement with Indigenous Peoples, Local Communities and affected stakeholders - to provide practical guidance on how companies, especially those with significant value chain footprints, including agriculture, mining, energy, and infrastructure, can take and embed a rights-based approach across the TNFD’s LEAP (Locate, Evaluate, Assess, Prepare) process.

Locate: Commit to undertaking participatory ecosystem assessment with affected IPLCs  

To effectively align with and report against TNFD, companies will need to increase the quantity and granularity of nature data. An April 2023 report highlighting insights from the United Nations Environmental Program Finance Initiative (UNEP FI) TNFD Piloting Program found the ‘Locate’ phase to be among the more challenging of the four steps, noting corporate actors need to strengthen the level of granularity of their information. The March 2022 report “A Landscape Assessment of Nature-related Data and Analytics Availability” written by the TNFD similarly highlighted challenges around quality and availability of data.

Companies should build out local-level location data leveraging participatory ecosystem assessments with IPLCs to inform understanding of their nature interface. This must include consultation on prioritization. While culturally appropriate engagement and data collection techniques should be selected based on the local context, this consultation should leverage qualitative research interviews with affected IPLCs to inform understanding of high integrity ecosystems, areas of rapid decline in ecosystem integrity, areas of high biodiversity importance, and areas of water stress. This process should also ideally involve codesign of methodology to locate and quantify biodiversity and co-identification of natural capital and critical ecosystem services with IPLCs. A successful approach requires time and considerable investment in relationships.

In the shorter term, companies should undertake participatory ecosystem assessments to identify data gaps, especially in priority areas. This helps companies to identify both potential risks of adverse impacts on human rights and opportunities to create economic benefits. For example, understanding how IPLCs are using biodiversity resources mitigates the risk of economic displacement, while also identifying opportunities to enhance livelihoods. These assessments will inform later development of targets and metrics to monitor change over time in these ecosystems, a component of future reporting requirements. Companies with sophisticated, well-resourced stakeholder engagement and social performance functions will be well placed to engage and collaborate with IPLCs, while companies without these capabilities will need to rapidly build out their capacity and knowledge, including through detailed stakeholder mapping and relationship building.

In the longer term, companies should seek to embed participatory assessments into pre-existing project development stage gates, including baseline assessments and Environmental and Social Impact Assessments (ESIAs), to align with emerging best practice.

Evaluate: Recognize and treat areas of high biodiversity value as areas with potential human rights risks

Companies need to ensure analysis of nature impacts and dependencies are aligned and integrated with assessments of social impacts, particularly in terms of adverse impacts on human rights. The UNGPs established that business has a responsibility to respect human rights, including by undertaking human rights impact assessments to identify, prevent, mitigate, and account for how businesses address their impacts on human rights. Commitments to this effect are also included in the most recently updated Equator Principles (EP4) and the OECD Guidelines for Multinational Enterprises.

Because of the risks of adverse impacts and opportunities for benefits, engagement with affected stakeholders has been integrated into each phase of the LEAP approach for the TNFD framework.

There is a compelling case for business to consider high-risk biodiversity contexts as high-risk human rights contexts. High risks contexts are typically defined as those with major social, economic, or political challenges, including armed conflict or mass violence, weak governance or rule of law, endemic corruption, previous violations of international human rights or humanitarian law, and significant instability. Existing international standards and guidance recognize that businesses in high-risk contexts face increased possibility of involvement in serious human rights violations.

Recognizing high value biodiversity areas as high-risk biodiversity contexts will help facilitate positive outcomes for both nature and people on the road to nature positive. Crucially, this will facilitate deeper integration of nature-related and human rights-related risks. Adverse impacts on nature are likely to impact the human rights of those dependent on nature, particularly in areas facing rapid declines in ecosystem integrity and areas of water stress. Moreover, this recognizes the ways in which nature is intertwined with rights of Indigenous Peoples specifically, especially given estimates that they steward as much as 80 percent of the Earth's biodiversity.

Assess: Align shared value initiatives with nature-related risks and opportunities

Affected Indigenous Peoples and Local Communities should not only be involved in identifying nature-related impacts and dependencies but also risks and opportunities, including the ways in which affected stakeholders are or can be engaged in stewarding these ecosystems and resources. There is an emerging tendency for corporates to engage with IPLCs around risk and opportunities as part of siloed “partnership” streams of work, often separate from the LEAP process – which focuses more on opportunity than risk management – rather than integrating this into core strategy.

In practice, this means moving towards a model that aligns management of nature-related risks and opportunities with broader approaches to shared value, or how a company is managing its impacts and creating benefits for affected IPLCs. This includes:

  • Ongoing, meaningful consultation with IPLCs rooted in informed consultation and participation (ICP) and Free, Prior, and Informed Consent (FPIC). Where the lands, rights, or cultures of Indigenous Peoples are impacted, companies should actively seek to achieve and maintain their FPIC for any interventions, such as offsetting projects or ecosystem restoration initiatives.
  • Identification of opportunities, not just risks, in areas of high biodiversity value. This allows corporate and financial entities to focus on and develop nature positive and human rights positive strategies.
  • Codesign of integrated social and nature risk and opportunity management approaches where affected IPLCs are receptive to this, particularly in the context of risks and opportunities that arise because of impacts on society. To achieve this, companies must ask IPLCs how they would like risks and opportunities managed, then meaningfully integrate this feedback into company plans. Management approaches should incorporate traditional knowledge, innovations, and practices, protect customary sustainable land use, and consider how to create tangible benefits for IPLCs. Management approaches should also make use of ongoing dialogue and informed feedback, giving IPLCs the opportunity to provide feedback and using it to make changes as appropriate.
  • While financial benefits are part of the equation, they should not be the sole focus. The term “benefits” refers to the various types of capital – financial, social, human, and natural – that opportunity management can create or enhance.
  • Use of UNGP-aligned grievance mechanisms to identify and address adverse nature-related impacts. Companies that already have this in place may want to ensure that they have a way to identify and track nature-specific grievances, while companies without grievance mechanisms, particularly in areas of high biodiversity value, should urgently seek to develop and implement these.

Prepare: Jointly establish metrics with affected stakeholders that can be tracked and reported following the TNFD framework

A leading approach to responding and reporting should be rooted in recognition that positive outcomes for nature should also be positive outcomes for people. In practice, this means two things. First, in terms of performance management, companies should set targets and define and measure progress in consultation with IPLCs. These should be tied to outcomes of greatest significance to affected stakeholders’ interests and wellbeing. Second, the presentation of disclosures should be accessible to affected stakeholders considering any barriers in the local context, including language, literacy, and digital literacy. The presentation of disclosures should facilitate ongoing, two-way dialogue between a company and affected IPLCs, allowing for performance and tracking to be refined over time based on feedback.

Conclusion

Companies must recognize the need to have a human-rights-based approach to TNFD. Businesses that act with the interests of Indigenous Peoples and Local Communities top of mind will undoubtedly be more resilient in the rapidly evolving sustainability landscape. In line with the TNFD’s LEAP, it is critical that companies:

  • Commit to undertaking participatory ecosystem assessments with affected IPLCs.
  • Recognize and treat areas of high biodiversity value as high-risk human rights contexts.
  • Align shared value initiatives with nature-related risks and opportunities.
  • Jointly establish metrics with affected stakeholders that can be tracked and reported following the TNFD framework.

[1] TotalEnergies Sustainability & Climate team responded to these allegations in a July 2023 letter to representatives of the Kichwa. TotalEnergies Nature Based Solutions (TENBS) noted that it is continuously working with the project’s operator, CIMA (a Peruvian conservation NGO), to improve the transparency of the project, the level of stakeholder engagement and the fair value sharing to drive positive outcomes for IPLCs, in alignment with the UNGPs. It further noted that community interviews undertaken as part of the VERRA Verified Carbon Standard (VCS), and Climate, Community and Biodiversity (CCB) standard verification process supported assertions of the project’s positive impacts, including job creation, improved access to education, and improved access to water and sanitation.