After the deal is inked
How do you ensure you fulfil your agreements? Christy Smith and Michael McPhie provide practical guidance.
Christy Smith and Michael McPhie at IPSS 2022. This article is an excerpt from the Rights & Respect Magazine, Issue 2.
Christy Smith and Michael McPhie have seen the scenario many times: an agreement is signed between industry and an Indigenous Nation and there’s much fanfare, but then afterwards, nothing happens except for monetary amounts being paid out.
“The other compliance stuff [is] missed out just because of not looking after that agreement,” says Smith.
Smith and McPhie co-authored the book Weaving Two Worlds: Economic Reconciliation Between Indigenous Peoples and the Resource Sector to provide guidance to both companies and Indigenous communities on entering, and following through with, agreements.
“Often we’ve found that’s where some of the challenges are,” says McPhie. “Particularly with smaller companies, you can build expectations and then it’s all really about the follow-through. . . . How can we make sure that original intent that happened at the beginning is going to be followed through as a complete organization? . . . Does the whole organization share in the values that are maybe being exposed at the beginning of the agreement? . . . Have you applied the resources all the way through to make sure that you can fill in the support?”
Smith says Indigenous communities should also be mindful of their resources. “We are limited in capacity to monitor the agreements. I know for a fact that it may be one or two agreements for a resource company, but you may be sitting with 10 agreements, 10 plus, depending on where you’re located. . . . And how do you monitor compliance through all those agreements? How do you keep everybody accountable?”
Poor management of agreements can lead to the deterioration of relationships, and to loss of the trust that both sides have worked hard to build. “It is like a marriage,” says Smith. “You’re married to that agreement and the output of what you’re supposed to be doing. And if you don’t fulfil your side, it can deteriorate the relationship very quickly.
“If there is an obligation to strike a committee or develop a communication plan for the year, and that just gets waylaid because you’re busy, those are areas that you’re going to fail in the agreement, and it eats away at . . . that relationship.”
Through her work, Smith has seen the pressure that dealing with agreements puts on Nations’ leaders. “There’s a lot of internal angst when you’re sitting at the table and you’re trying to make the best agreement possible for your Nation. Jobs and contracts tend to be the foundation of a lot of agreements and there are promises made. But what happens if the promises aren’t fulfilled?”
Michael McPhie shared insights at IPSS 2022.
McFie urges companies to “remember that when you’re entering into a community as a corporation, you’re entering their home. You have to treat it with the utmost respect. . . . The leadership on the other side, they have to go back and represent that to their community. And if as an industry person you break your vow, you’re actually forcing the leadership that’s on the other side of the table to break a commitment that they’ve made to their own people.”
“People intellectualize this stuff, but this is real. This is people’s lives. This is their home. And the things that industry does can really affect that. . . . It’s a sacred kind of oath that you’re doing when you’re sitting at that table and making representation. So, you’ve got to follow it through. And the training and the commitments and the understanding and everything is so important.”
When negotiating agreements, one area Smith and McFie encourage companies and communities to consider is procurement arrangements.
They give an example where a community received one week’s notice of a bid, and then ended up disqualified because it couldn’t demonstrate a history of doing successful projects of the required scale. “You might be living to the letter of the law, but you’re setting it up for failure,” says Smith. “If [the company] had taken the time to make the Nation aware of it, maybe a month or two before, they could have built the joint ventures ahead of time . . . and then they would have succeeded, I think.”
Another aspect to consider is any change of leadership. “A real issue in the corporate world is leadership change or company change or mergers and acquisitions,” says McFie. “Most agreements have a buy-in that that if leadership, or if the company, changes, it’ll pass on . . . to the acquirer that they have to fulfil the intent of the agreement.”
“Leadership change is real,” says Smith. “And then you’re back to the table building that trust again.”
“Part of this is that things do change, and you’ve got to have a chance,” says McFie. “There will be disputes. It’s going to happen. And you’ve got to figure out how are you going to work through those tough times.”
Smith suggests “maybe not signing that 20-year agreement. But say that it will be reviewed after five years and changes are allowed . . . because things change, community needs change. The company could have changed leadership and then we need to talk about different things. The company could be doing really well and equity needs to be back on the table. So there’s a lot of things that need to be considered. And one of my recommendations is to ensure that there’s wording in there that allows you to reopen every certain amount of years.”
Also consider what happens when the company leaves the area. “I think that’s really important to think about when you’re negotiating your agreements,” says Smith. “Because you’re not just agreeing, ‘Okay, we got a fiveyear project, that’s it.’ It’s how can we ensure that there’s opportunity past those five years, past those 10 years . . . that you’re leaving a legacy.”
This article was originally published in Rights & Respect, Issue 2. To purchase a physical copy of the magazine, click here. To purchase tickets to the Indigenous Partnerships Success Showcase, coming June 1-2, 2023, click here.
