Overcoming capital barriers for Indigenous communities w/ Mark Podlasly

Geoff Capelle:

Picture this: you’re an ambitious contractor with big ideas for transforming your community. You’ve got a skilled local labour pool to draw from, a realistic project plan, and enthusiastic support from the community.

Except there’s one big problem: you can’t move forward. Because no one is interested in fronting you the capital. It’s not because of your track record; it’s not because you won’t be able to pay it back.

Instead, it all boils down to contracts that were drafted and signed a hundred years before you were even born.

This is the reality for hundreds of indigenous communities across the country.

Mark Podlasly:

It’s ironic, in some ways, that this is a group of people—the original inhabitants of this country—who have to go through such hoops to try and raise their standard-of-living to the same level as the average Canadian.

Geoff Capelle:

This is Mark Podlasly.

Mark Podlasly:

I’m a member of the Nlaka'pamux Nation in south central British Columbia. And I’m the Chief Sustainability Officer at the First Nations Major Projects Coalition.

Geoff Capelle:

And he’s going to give us a bit of a history primer.

Mark Podlasly:

Treaties, when they were signed by the Canadian government back in the 1800s, in some cases the 1900s, were seen by them, at times, as land cession treaties. They were getting the land; it didn’t matter what it would take, and then they’d move on.

So, across the country, treaties were signed—not in every area. But the treaties that were signed in some cases had provisions saying that revenue would be shared with the Nations on a certain basis.

So those promises sometimes were about cash. Sometimes they were about land that was to be set aside for the First Nations.

Nations went into these contracts—treaties—with the federal government under the assumption that it would be fair and honoured. But in many cases, the federal government, and the provincial government in some cases, ignored those treaties.

So, that is now coming forward in these discussions in modern times. Nations now understand the value of the land, of the revenues, and the access that their ancestors had provided to Canada. And in many cases now, these Nations are not asking for anything more than what was promised in the original treaty.

You’re starting to see news stories now of court settlements by Nations who are saying, “Wait a minute. This promise was never kept.” And that’s quite expensive now, after hundreds of years of compound interest and—and raising inflation.

For First Nations, they saw these as friendship agreements that were meant to be relationship-based for all time. That difference of opinion starts to clash as you start to see Canada ignore what they promised, what they agreed to. But the Nations have never forgotten.

Geoff Capelle:

That’s where First Nations Major Projects Coalition comes in.

Mark Podlasly:

The Coalition has been in existence for about 10 years now. It is a non-profit indigenous-led organization of about 170 First Nations across Canada. These are Nations who are, in some cases, close to urban centres, others not. Each of them has a unique situation, an asset base, and cultural base that they’re looking to leverage to have better outcomes for their communities.

In some cases, these are mining-based communities; other times they’re petroleum-based. Others are looking for ways to invest in projects that will provide returns for them and ensure that their environmental and cultural values are maintained.

Geoff Capelle:

I’m Geoff Capelle. And today on Building Good, our producer Katie sits down with Mark. They’re talking about how FNMPC is helping empower indigenous communities to become co-producers in the development projects happening in their territories.

Mark Podlasly:

The Coalition started 10 years ago, when 16 First Nations in northern British Columbia had a 30 per cent equity option in a natural gas pipeline, but they could not exercise the option because First Nations in Canada do not have access to capital.

And the reason for that is the Indian Act, which legislates a lot of the daily life of First Nations, has a clause that says all assets of indigenous people are held In Trust by the government. So you can’t go to a financial institution and leverage your assets, because we don’t have any. They’re all held by the government.

So the Coalition works with industry and First Nations to come up with a workaround for that, to ensure that First Nations are participants in these projects, and not bystanders or passive hosts.

Katie Jensen:

Mm-hmm, not afterthoughts.

Mark Podlasly:

Yeah, exactly.

I’d like to point out one thing here. These are not equity grants; these are options. The Nations will need to invest in these projects so they become full co-partners. That’s different than what has happened in the past.

These are Nations who have come together to negotiate better outcomes for major projects proposed in their territories. This includes projects over $100 million in capital expenditure and run the gamut, now, from clean energy, to mining, to transmission corridors for energy or natural gas, in some cases transportation corridors.

And all of these projects will require the consent of indigenous people to proceed. The Nations are not against projects but they want to see a different outcome than what has happened in the past where Nations were bypassed or regulated to the side.

Katie Jensen:

What are the risks with going ahead, bulldozing through without having indigenous parties at the table?

Mark Podlasly:

The risk in doing a project, or attempting to bypass the First Nation—and we’ve seen this happen more recently, in news stories across the country—is a Nation will go to court. They will exercise their rights to ensure that their principles and values are reflected in their own lands.

So you could end up in a situation, as a proponent, facing a 20-, 25-year court battle. Now, does a company have 25 years to wait on capital that it’s invested in a project? No.

The same with international buyers. Will they wait 25 years while a company that has tried to bypass indigenous rights forces a project through to the market? No.

Increasingly, you’re starting to see investors—who want to see sustainable outcomes happen with the capital that they’re providing either to capital firms or directly to companies—are also starting to ask questions. Has this project been done in a way that is beneficial and supportive of the investors’ interests in either sustainability, or in better social outcomes, or environmental practices?

So. It’s no longer a question of just ramming through a project. It’s now layered in complexity. And First Nations understand that they have a large part to play in that.

Katie Jensen:

It makes so much sense to me that you would have all interested parties at the table and the way you generate interest is money. Like it’s—it’s so simple, to me, that of course indigenous people would be an asset because if they’re going to get something remunerated out of it, then of course they’re not going to stand in the way.

Mark Podlasly:

At the Coalition we’ve taken the following perspective. That if you have an indigenous co-investor in your project—and it can be a minor investment—that essentially turns the First Nation into a co-proponent. And no co-proponent is going to go against their own interests. So it does make sense from our perspective.

You’d be surprised, though, at how many companies don’t see it that way. A lot of companies in this country will still have the perspective that they’ve had for the past 20, 30, 40 years, that the First Nation is a risk that has to be removed.

Our perspective is, yes, we can be a risk factor but we can also be a benefit.

Canada—fairly or unfairly—has started to pick up a reputation, internationally, of being unable to deliver on major capital projects, especially around export markets. That would go for, most recently, natural gas—there were a number LNG proposals in the west which never happened—and increasingly around mineral export and development.

We realize as indigenous people that we have a large part to play in that, and that this is a—an attempt by First Nations to be contributors to the economy and at the same time helping to build our own economies and communities.

So Canada, itself, now has to engage indigenous people to meet its international obligations around exports, or at least accessing export markets.

I think one thing Canadians forget is that First Nations have always been part of a global economy. If you think back to the origins of this country, it was about the fur trade, it was about fishing. And where were those furs going? Where was those lumber and timber going? Where were the salmon going? They were being shipped to international markets. First Nations provided international markets with the goods that were required. And it’s no different now.

Katie Jensen:

I want to segue into talking around the Indian Act and the barriers that are inherent in it, just in terms of, you know, barriers for raising capital, for leveraging assets when they’re not owned by indigenous people. Because I think a lot of Canadians would be shocked about all of the inherent barriers that are put on indigenous people to just even being considered equal players.

Mark Podlasly:

The Indian Act was one of the first legislative acts out of the United Provinces of Canada. It was put in place in the 1800s. And it has a provision in it that all assets which were at that time owned by indigenous people—First Nations citizens—were to be transferred to the Crown and they are now Crown assets.

So you have a situation where you can have a reserve of land, you can have equipment, housing, building facilities, companies on that land. But all of them are not owned by the First Nation; they’re held In Trust by the federal government.

So the problem for Nations, now, is that when they go to access capital—like any other Canadian would—either to do a business expansion, or build a house, or construct a school, we don’t own anything. It’s all In Trust by the federal government.

So imagine if you went to the bank and you wanted to get a mortgage, and they asked you what your assets are, but you pledged federal government assets. The bank wouldn’t accept that.

So what happens is First Nations are considered “high-risk” in every category. We have to borrow money at credit card rates: 25, 30, 40 per cent. Which for business does not work.

So that is a main barrier for First Nations to participate in the mainstream economy. Most Canadians don’t realize that. They see on the news that indigenous people are getting this grant, or this program, or there’s always poverty. A large part of that is we are blocked from accessing the capital markets of this country like every other Canadian citizen.

Katie Jensen:

Mm-hmm. So how are communities raising the funds? Can you explain that a bit more?

Mark Podlasly:

Because of the limitations of the Indian Act to access affordable capital, Nations have worked tirelessly on workarounds to make things happen, to get access to capital.

So there are programs, now, that have been set up. For example, the First Nations Finance Authority, which is an organization that takes future revenues that are coming to Nations because of either equity deals or any other business opportunity, and they sell bonds in Toronto and New York and forward that capital to the Nations.

That organization is always over-subscribed because the returns are very good for the investors. And it’s essential for the Nations participating to get the capital they need to make plans, to make investments, to make better improvements to their Nations. And they can run through everything from business opportunities to municipal services.

In other cases you have, now, a federal loan guarantee program that’s just been announced by the federal government. These are not grants; they’re co-signing loans, essentially, to lower the cost of capital for First Nations to raise the capital to participate in projects of national importance. And those would be clean energy and critical minerals.

Those programs also exist in the provinces. Ontario has a long-standing one. Alberta does as well. Saskatchewan and B.C. have just announced similar plans.

But in each case, it’s up to the First Nation to figure out how to make that work. And for some Nations that’s quite a challenge—depending where you are in the country, and depending on the talent that’s available to the Nation. But it is happening.

Katie Jensen:

Is that where FNMPC steps in, to help advise on that?

Mark Podlasly:

FNMPC—First Nations Major Projects Coalition—is an organization, when it was started, was to help First Nations get around that capital problem. Since then, other issues have come up that we’ve stepped into.

Issues of governance. So, for example, if there’s going to be a project—a linear project, like an electric transmission line or a natural gas pipeline—it can cross 20, 25, 30 First Nations. Nations are not generally set up in a commercial structure. So there’s questions about: how is that set up; how are revenues shared; how are decisions made that reflect cultural values in a commercial sense. So we will assist with that.

We will also assist in negotiating contracts in procurement or in offtake. It just depends where the Nation is at. We are a service organization to the Nations. We do not take a service fee. We are supported, at this point, mainly by federal government contributions, but we are working to make ourselves more sustainable, long-term.

But any question that’ll come up that any company or conglomerate is trying to figure out, those are the questions that we get from the First Nations.

Katie Jensen:

Can you tell me about the makeup of the Coalition? From the perspective of FNMCP, it’s 70 per cent indigenous, and there’s a wide gamut of people represented in terms of folks who can advise. Can you talk about that a little bit?

Mark Podlasly:

The Coalition is indigenous-led. And at the beginning we were nearly completely indigenous. But what we found is that when you partner with allies who have the skillsets that the Nations require to get to the table to do the negotiations, because of the wide gamut of the projects the Coalition supports—everything from mining, to energy, to regulated utilities, and then increasingly in some cases international interest—we work with those people who have the skills who can help the Nation get to the negotiating table to negotiate fair deals.

So within the Coalition, we have indigenous lawyers, economists, specialists in governance. And we partner with others, as well, who bring skills that the Nation will need to be at the table.

Katie Jensen:

What is some of the positive feedback you’re hearing from communities in the Coalition who have projects that are underway?

Mark Podlasly:

The positive feedback we’re getting from communities who do have projects underway through the Major Projects Coalition is that they have the ability to be at the table for the first time, at an equal level, to negotiate, to engage, to ask questions, to inform, and to improve those projects.

The Coalition will provide the talent to the Nation in everything from economics, the technical aspects of the projects, legal advice, in terms of how to raise capital. Those, to many Nations, were not available to them before the Coalition came along.

And the Coalition being indigenous-led is driven on indigenous values and as a non-profit we will always represent the Nation’s interests first. That’s new for many communities, especially communities who have not been resourced well in terms of capacity to be at the tables.

Katie Jensen:

What are the policy changes that need to happen to better support the initiatives that you’re working on?

Mark Podlasly:

The largest policy challenge for First Nations in this is access to affordably priced capital. Because the Indian Act blocks us from using anything we own as assets, we can’t find the capital.

There are policy initiatives that have just been announced by the federal government, a federal loan guarantee program. That will be essential for many Nations to be able to access capital to make the co-investments with companies in projects.

Those sorts of projects need to be fleshed out. That was just announced by the federal government. We don’t know how it’s going to be set up, yet. We’re waiting for details. But time is of the essence.

With the climate change challenges that we’re facing globally, Canada is in a prime position to be a provider of the clean minerals required to make that happen. But it is a competitive market. You have countries in South America, in Asia, and Africa who are also after the same markets. Canada is now in a competitive position where First Nations issues are going to affect our ability to get to those markets on time.

So the big challenge now: access to capital.

The next one after that will be the attitudes of the companies engaging indigenous people to get their projects built.

We are now seeing a whole range of international companies showing up in First Nations territories, directly, looking for access to: clean minerals, clean energy, and other transportation networks to get them to market.

So it’s no longer just a discussion between Canada and First Nations. It’s now First Nations and international companies; First Nations and foreign governments; First Nations and capital partners from around the world. It’s a very different situation than it was even five years ago.

We have been seen as lesser by certain parties. And sometimes it’s government, sometimes it’s companies. We’ve been seen as blockades to projects, blockades to progress, blockades to the Canadian economy. And we’ve never seen ourselves that way. We’ve seen ourselves as, not only keepers of our lands, we’ve seen ourselves as partners to Canada—as evidenced in the treaties that were signed in the 1800s with the Canadian government.

People have become accustomed to doing things the way they have been doing them for 20, 30, 50, or in some cases 100 years. But the world’s changed. And it’s not just a First Nations issue anymore. It’s a global competitive issue. It’s you sitting down at the table trying to explain to your 16-year-old daughter why you’re doing things as they were done 50 years ago.

I have children. And I have them challenging me, continually, about everything from where are the minerals coming in their iPhone. Where are the—the energy sources being developed for the things that they’re doing? And my children are indigenous! So I know this is happening.

You can ask any corporate executive the ride that they get from their teenage kids when they go home and explain what they’re doing in their company. It’s a different world.

I think what will be interesting, going forward, is a CEO at an annual general meeting trying to justify why they haven’t done things better. People will no longer be patient, especially the younger generation, about past practices.

Let me tell you a story quickly. We were doing some research for the Coalition, just trying to figure out how do we get access to market information. And we discovered that in some cases you have indigenous communities, around the world, who may only have 20 per cent access to clean water, or infrastructure, or school services. But among a certain youth population in those indigenous communities, there’s 100 per cent Google penetration.

So what happens then is that if a company is a bad actor somewhere in the world—either environmentally, or economically, or, or labour practices—youth, indigenous or not, will know about that instantly, everywhere. So there’s nowhere to hide if you’re a bad actor. And on the converse, if you’re a good actor, the praise that will come is immediate.

It's a very different world.

Geoff Capelle:

We’ll be back with Mark Podlasly, after this.

[music]

Jen Hancock:

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Let’s build better together.

Find out more, or join our team, at Chandos.com, that’s c-h-a-n-d-o-s-dot-com.

Katie Jensen:

Can you talk about what the Nations are doing with the surplus after they pay back any loans that they might have had to take to get an equity stake?

Mark Podlasly:

Each Nation is self-determining. They can make the decision on what they’re going to do with their revenues. They can invest them how they wish.

So what’s happened in cases now where Nations have own-source revenues, it allows them to provide the services for their people that may not be provided by the federal or provincial government. It allows them to top up deficiencies.

For example, First Nations indigenous children—status Indians in this country—the children are only funded, and depending on the province, at 75 to 80 to 85 per cent of what a non-indigenous student is provided. So, the average Canadian child, for every dollar that they get contributed towards their education from the government, First Nations will have 80 cents, sometimes less. So that’s something that the Nations are putting their money towards.

Nations are putting their money towards improving services like utilities. Electricity, that’s a big one for a lot of Nations. Or clean water, which you see in the paper often there’s Boil Water Alerts for communities across this country. That’s where some money will go.

In some cases it’s to elder care.

Other cases it’s toward education for children. Because there’s never enough for post-secondary education.

So it’s the different aspects of nation-building that Nations are using this money.

I’d like to point out, too, that there’s no other group in this country that has to go to such extremes to raise money for the basic services that the Canadian government provides for other Canadians.

It’s ironic, in some ways, that this is a group of people—the original inhabitants of this country—who have to go through such hoops to try and raise their standard-of-living to the same level as the average Canadian.

Katie Jensen:

When you give communities an economic stake in a utility or a resource, there’s kind of this natural labour pipeline that follows, that has a built-in knowledge base, no need to relocate, and no need to pay kind of inflated wages to incentivize non-local workers to relocate. Do you see that happening?

Mark Podlasly:

These projects right now, the way they’re proposed—especially the major projects in mining, or energy, or electric transmission corridors—what will happen is the proponent will ship in workers from outside. Those workers tend to be male. They tend to be single. And all of a sudden you can have 500, 800, 1,000 male workers all of sudden land in a community of maybe 300 indigenous people. Many of the communities have women, children. That becomes an issue.

You also have those workers then starting to use the services that are not built for 800 to 900 workers.

You also have the challenge then of influx of money of these workers. Which also can distort the local economies.

This is an issue.

From a First Nations perspective, it doesn’t make sense to send in outside workers. So there’s already workers in the region—the indigenous people—who will stay after the project is done, who are there available to maintain, or operate, or in some cases shut down projects, decommission them.

So our perspective on this is, again, use the labour that’s available. It’s in your interest to do that. Not only economically but also in terms of demographics; in terms of paying the salaries of—of additional services that are required to service a population which in many cases is transitory. (inaudible, 23:45) win here for the Nations; and there’s a win here for the companies.

Katie Jensen:

Especially with more controversial projects around LNG, if there’s more buy-in from the local community there’s less blocking of the projects. I would assume.

Mark Podlasly:

The perspective of the Coalition has always been that if you involve First Nations in all aspects of the project, and the First Nations’ interests are seen by them in the projects, they won’t block them.

And if you’re not blocking a project, you’re right, they will get built on time. You will not have the conflict that has been the hallmark of major project development in this country in the past.

For us, as indigenous people, it’s just seen as a natural way of doing things. But that’s not how a lot of companies see it. They wish to do the projects the way they’ve always done them. Which is to fly in people from outside, get the government permits, push through any opposition, for the good of the country. But as the indigenous people who are living with these projects—in our lands, in our territories—and who will—who will be hosts for them for the next 100, 150, 200 years, it doesn’t make sense.

And I think if this happened to any other group in this country, where some group was all of a sudden targeted by a company that say, “You’re going to host this project whether you like it or not,” that wouldn’t happen.

So it’s a new reality.

And it’s not just a question of indigenous people getting something. These are indigenous people investing in projects that match their cultural and environmental values, providing stability for investors, and providing Canada an opportunity to meet its international obligations in terms of exports.

Katie Jensen:

Yeah. I mean, the projects need investors regardless, so why not make them indigenous people.

Mark Podlasly:

One other point about an indigenous investor. An indigenous investor comes in and, yes, will provide capital. But they also provide the rights, the indigenous rights that are required in order to demonstrate consent which is required by government to issue permits.

So if you have an indigenous investor, as a company you get not just capital but you get assurance the indigenous rights have been addressed.

Katie Jensen:

Is the first step to just look and see which communities are part of the Coalition who are interested, who are kind of already in the process, and seeing if that intersects with your project plans? Like what—how does it work from a logistic perspective?

Mark Podlasly:

For a company starting on this journey, about how do they engage First Nations in their projects, the advice we give is to look at a map, find out whose traditional territory you’re located, or the project is located, and just do some initial research.

For many people, they don’t know whose traditional territory they’re operating. They don’t know who was there and who is continuing to be there. Because I can tell you, across this entire country, there is a living First Nation attached to the land that you’re looking to build. Find out who they are.

And then make outreaches. Be curious.

First Nations are not against these projects, in many cases—and perhaps in some they are, if it’s a project that is not in their interest. But in many cases, First Nations are like Canadians: we’re looking to have an economic income; we’re looking to raise our children with the basics of life, good education, water, housing, schools; and we rely on the same infrastructure. Which is why it’s been so difficult for First Nations, for so many decades in this country, is that we have been pushed to the side in everything.

And I don’t think we can continue doing that anymore. We’ve gotten to the point where the fairness awareness of Canadians is that something is off here. And for companies looking to rectify that in their operations to pursue their own reconciliation strategy, interest and curiosity will take you 95 per cent of the way there.

Katie Jensen:

Is there anything else that people should know? I can just ask you, “What excites you about your job?” But is there anything that we didn’t cover that we should mention?

Mark Podlasly:

Oh, I am. I am. I love this job. It’s because there’s such potential. Right?

What excites me about this job is that it is transformative. Not just to First Nations looking to participate in projects that are aligned with their interests—because not all projects are…. If the project is not aligned with their First Nation’s interest, it’s not going to fly.

What also excites me about this is that this is a Canadian question. We look at the world right now and the challenges we face globally—in not only climate change, and geopolitical stability, and environmental protection—and we, as a country, have a role to play that could be a model for how things should be done going forward.

And what excites me is that First Nations see that and, increasingly, the markets see it, consumers see it, businesses see it. There’s an opportunity right now for this country to be a world leader, in not just indigenous relations but in how to live sustainably. That hasn’t happened before. And the opportunity now is immense.

So when people ask me what gets me up in the morning, to go to work, it’s that. This is a job that matters. This is an outcome that will be seven-generations impactful. And it’ll bring together the best of what we have as a country, in terms of civil society, capital, business practices, environmental awareness, and economic stability.

Katie Jensen:

Mm-hmm. Everybody wins.

Mark Podlasly:

Everybody wins.

[music]

Geoff Capelle:

That was Mark Podlasly, Chief Sustainability Officer at First Nations Major Projects Coalition.

Thanks for listening to Building Good. If you want to keep hearing conversations about the future of architecture, engineering, and construction, stay subscribed on any podcast app.

Building Good is a Vocal Fry Studios production, in partnership with Bird Construction and Chandos Construction. The producers are Jay Cockburn and Katie Jensen, with production assistance from Jessica Loughlin and Joanne Hignett. I’m Geoff Capelle, thanks for listening.

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