Opinion: Corporate Canada needs to guard against 'Indigenous-washing'

Big money is now going to Indigenous suppliers of goods and services. Businesses need to be sure these suppliers are actually First Nation

By Michael Fox

Corporate Canada is investing tens of billions of dollars in Indigenous procurement. But with any significant investment comes the risk of fraudulent claims. Recent revelations that Ottawa has awarded millions of dollars in contracts to companies falsely claiming Indigenous ownership should be sending shockwaves through the business sector. If the federal government, with its elaborate oversight mechanisms and procurement rules, can be so vulnerable to manipulation, what’s stopping the same from happening in the private sector? The answer, unfortunately, is very little.

We need reliable verification to ensure the Indigenous spend is legitimate. Corporate Canada has embraced economic reconciliation with Indigenous peoples. But its efforts will mean little if they are not anchored by verification. As companies commit to supporting Indigenous communities, they must ensure the businesses they partner with are, in fact, legitimate Indigenous enterprises. Not doing so may expose companies to unnecessary reputational risks, not to mention waste significant resources in ways CEOs and boards of publicly traded companies will have to explain to their shareholders.

More must be done, including by the federal government, to ensure that businesses claiming to be Indigenous actually are Indigenous. Media reports have revealed that businesses with absolutely no ties to Indigenous communities have simply self-identified as Indigenous-owned in procurement applications and secured lucrative government contracts. Those same reports found that billions of dollars in contracts are being awarded to Indigenous businesses without any verification.

We’ve already seen the damage “greenwashing” can cause in the context of Environmental, Social, and Governance (ESG) initiatives. A company caught inflating its environmental or sustainability credentials is called out, and investors, partners and customers lose trust. The next wave of such scandals will involve companies getting caught “Indigenous-washing” — that is, claiming they’re working with Indigenous-owned businesses that turn out to be frauds. CEOs and boards need to get ahead of this issue before funds are misdirected and Indigenous communities lose out on vital economic opportunities. Failure to do so will erode efforts to achieve genuine economic reconciliation and build meaningful partnerships.

One option is to work with organizations like the Canadian Council for Indigenous Business (where as a former board member I’m still involved in the partnership accreditation program). Through CCIB’s “certified Indigenous business” program, applicants provide corporate documents demonstrating 51 per cent ownership by an Indigenous person and provide proof of that person’s Indigenous status (such as a Status Card, Inuit beneficiary card, or federally recognized Métis card). Such checks should be standard operating procedure for any business claiming to be Indigenous. Historically, however, they have not been. If companies are serious about working with Indigenous partners, they should look to credible third-party validators like the CCIB to confirm the authenticity of a company’s Indigenous ownership claims.

Billions of dollars are at stake, and as more corporations look to demonstrate their commitment to reconciliation, the risks only grow. Good intentions are not enough. Without verification, the whole system can be gamed, and both Indigenous communities and the businesses trying to support them will lose out.

It’s not enough to take a company’s word that they’re Indigenous owned. There needs to be independent verification. By making use of third-party certifications, businesses can both ensure they’re advancing economic reconciliation and help build trust with Indigenous communities and customers.

The commitments to Indigenous procurement are real and the resulting opportunities for Indigenous communities vast. But everyone involved needs to be playing by the same rules. Corporate Canada should not hesitate to ensure the legitimacy of its Indigenous partnerships, not just because it’s the right thing to do, but because it’s the smart thing to do.

Michael Fox, president of Indigenous & Community Engagement (ICE) Inc., is a member of Weenusk First Nation.

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