Ignoring Indigenous consent poses real financial risk to investors, securities regulators warned

By: By Aaron Walker, Local Journalism Initiative Reporter, Windspeaker.com

The Anishnawbe Business Professional Association (ABPA) is calling on the Ontario Securities Commission (OSC) to take stronger action against “redwashing” — the corporate misuse of reconciliation language.

ABPA warned that redwashing could expose investors, pension funds, and taxpayers to major financial losses.

In a position paper titled From Reconciliation to Regulation, the association argued that many companies use positive imagery and community sponsorships to project reconciliation while continuing large-scale projects on Indigenous lands without securing free, prior, and informed consent (FPIC).

“Redwashing is the gap between a company’s marketing and its reality,” said ABPA president Jason Rasevych. “A company cannot ‘redwash’ its operations by sponsoring a community festival while simultaneously ignoring its duty to obtain consent on a project. It’s a corporate social responsibility tactic that masks catastrophic risk and fundamentally misleads investors.”

ABPA argues that the financial risks of ignoring Indigenous consent are not theoretical, but have real, measurable costs.

“The failure to secure FPIC from Indigenous Nations is a foreseeable and material financial risk,” he noted in the paper. “When investors are not informed of this risk, they are exposed to catastrophic losses, and the OSC has a duty to protect them.”

Coastal GasLink, for example, proceeded without the consent of Wet’suwet’en hereditary leadership, resulting in accumulated years of conflict, escalating from 2019 to 2022, and “over $25 million in policing costs,” Rasevych said. “Trans Mountain (TMX) was abandoned by its private proponent, Kinder Morgan, as ‘too risky’ for its shareholders (in 2018). This forced a $4.5-billion public buyout.

“These disruptions are not small; they can cost a single large-scale operation $20 million to $30 million per week,” he said.

Companies rarely disclose whether they have consent from affected Indigenous Nations in their filings to investors, reads a Sept. 13, 2022 submission to the Canadian Securities Administrators (CSA) by the Justice and Corporate Accountability Project; as well as in a 2022 study by the Centre for International Governance Innovation, and in a shareholder report by the Shareholder Association for Research and Education (SHARE), which analyzed 173 TSX-listed companies.

ABPA vice-president and lawyer Rachael Paquette said that omission now represents a serious legal and financial risk.

“From a legal perspective, the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and the principle of FPIC have moved from abstract social policy to being enacted in legislation and must be considered by directors of corporations as an integral part of their duty of care,” she explained in the From Reconciliation to Regulation paper. The UNDRIP standard, passed federally through Bill C-15 in 2021, is being gradually enacted in each province over time, according to the Department of Justice Canada.

The tools exist, but are not being enforced

Rasevych told Windspeaker.com that ABPA leaders first raised concerns with regulators in December 2024. The group asked OSC to use its existing powers to require companies to disclose Indigenous-specific relationships, including whether FPIC had been obtained, and that OSC penalize firms that misrepresented those relationships in investor filings. Rasevych said the answers they received from OSC engagement sessions earlier this year prompted ABPA to escalate the matter.

“When we were talking to the OSC in Thunder Bay we had two engagement sessions, and the (feedback on) what we were asking for was that we cannot do that (under) Canadian securities law. We felt like that wasn’t the best answer for us. We didn’t feel like it was in the spirit of reconciliation, and we didn’t believe it,” he said.

Rather than accept what Rasevych described as a “boilerplate” and “predetermined” answer, ABPA widened its audience, sending From Reconciliation to Regulation to federal and provincial ministers, the Bank of Canada, national First Nations organizations, and major Indigenous financial institutions.

“What we’re indicating in this position paper is that it be done. It is highly feasible, even within the existing setting,” Rasevych said.

“It’s not the legal framework (that limits) these organizations; it’s the institutional will to do these things. We’re hopeful that by broadening the target audience, there will be more leaders who will realize that.”

Rasevych said many Canadian companies still lack basic understanding of treaty rights, colonial history, and reconciliation, noting that education remains the key to meaningful progress.

“That goes back to Murray Sinclair’s comments on the (Truth and Reconciliation) commission, that education got us into this issue, and education will get us out. I think that needs to see a big commitment across the board,” said Rasevych.

A market risk hiding in plain sight

He said when companies misrepresent their relationships with Indigenous communities, they damage both investor confidence and public trust.

From Reconciliation to Regulation argues that regulators already have the authority to act, pointing to powers the OSC and Canadian Securities Administrators possess but seldom use.

As a “powerful” and “directly analogous” precedent, Rasevych cited the ongoing 2025 case OSC v. Purpose Investments, filed Sept. 12 to the Capital Markets Tribunal, which seeks to fine a company for misleading environmental claims.

“If you can fine a company for lying about its environmental claims, you can and must use those exact same anti-misrepresentation powers against a company that lies about its Indigenous partnerships,” he said.

ABPA argues that Indigenous consent is a matter of financial disclosure.

“This is not social policy; it is a core mandate issue,” he said. “Legal analysis confirms directors have an existing fiduciary duty and duty of care to manage ‘nature-related risks,’ and that analysis explicitly includes Indigenous rights as a component of that risk.”

Rasevych added that if corporate directors are legally responsible for managing these risks, then the OSC has a corresponding duty to ensure those risks are disclosed.

The East–West corridor: A cautionary example

In what he called “an example of what not to do,” Rasevych said Ontario’s recently announced East–West energy corridor feasibility study is a real-time demonstration of the very risk regulators must address.

He said leaders with the Mushkegowuk Council — representing seven First Nations along the James Bay coast — learned about the project from media reports.

“There was no prior engagement, no discussion, and no partnership,” he said. “This isn’t consultation; it is lip service and the very definition of a high-risk, un-investable project.”

ABPA emphasized that Indigenous communities remain open to collaboration with industry, provided that consent is sought early and partnerships are developed on equitable terms.

Authentic consent, he cautioned, must be embedded “at the earliest stages of project conception,” adding that “the right to give consent necessarily includes the right to withhold it.”

ABPA has now formally requested a meeting with OSC and CSA leadership to establish timelines for reform.

“The time for ‘tokenism’ and ‘passive commitments’ is over. The legal authority for regulators to act is already there … (and) the cost of regulatory inaction is demonstrably higher than the cost of compliance,” Rasevych said. “The only thing missing is the institutional will to act.”

Capital markets not built for First Nations investment models

ABPA also raises concerns that current investment models and capital-market rules exclude Indigenous equity ownership in major projects. They need to be modernized to remove long-standing structural barriers, the group said.

One of the biggest problems, Rasevych noted, is that current investment rules are based on individual wealth rather than the collective economic systems that most First Nations use. For that reason, current rules simply do not fit the way Nations organize and raise money.

To fix this, ABPA is advocating what it calls a new “Indigenous Community Investment Prospectus Exemption.” This would let First Nations raise capital from their own members and from other Indigenous governments, establishing a fairer path to ownership that aligns with the OSC’s role in supporting capital formation.

Rasevych warned that without modernizing these rules, companies risk confusing reconciliation with charity.