New sustainability guidance has been developed to give increased confidence to local communities, industry and investors that hydropower projects can be successfully developed while respecting Indigenous People’s lands, rights and culture.

The Hydropower Sustainability Assessment Council, a multi-stakeholder group of social and environmental NGOs, industry, government and financial institutions, released the guidance as amendments to its Hydropower Sustainability Tools, which are used to assess and rate project performance. 

Projects which achieve the Free, Prior and Informed Consent (FPIC) of affected Indigenous People will now be recognised as meeting international good practice in sustainable hydropower development. FPIC is a principle recognised in the UN Declaration on the Rights of Indigenous Peoples and is a condition of performance standards issued by the World Bank and International Finance Corporation.

An Indigenous Peoples prayer ceremony at Nepal's UT-1 hydropower project

Phurpa Tamang is an Indigenous People’s advocate who advised on the guidance as part of a specially appointed working group which included representatives of civil society and business. “Gaining consent is important because Indigenous People cannot be separated from natural resources due to religious, spiritual and cultural reasons and for livelihoods,” he said.

Phurpa helped facilitate a community consultation with Nepal’s Upper Trishuli-1 (UT-1) hydropower project, which successfully achieved the Free, Prior and Informed Consent of the affected Indigenous communities. “The FPIC process developed a bridge of faith and belief between developers and locals and became a kind of conflict management mechanism,” he said.

The new guidance updates language in the Hydropower Sustainability Tools’ Assessment Protocol and ESG Gap Analysis Tool, which previously required no major opposition instead of consent during stakeholder consultation.

To achieve good practice, a project will now need to demonstrate FPIC following the principle of proportionality with respect to the affected Indigenous Peoples’ rights at risk. Developers will also need to establish that good-faith consultation with Indigenous Peoples’ institutions has been carried out through a culturally appropriate, two-way process, with a mutually-agreed disputes procedure. 

Led by David Harrison, a water resources consultant and former board chairman of The Nature Conservancy, the working group reviewed existing safeguards and standards from international financial institutions and commissioned a study on international law.

“FPIC is not just an outcome, it is an on-going process of good faith consultation and negotiation,” Harrison said. “The amendments help to make FPIC practical and effective. The first, the principle of proportionality, brings in a balancing between the degree of impacts and the rights of Indigenous People involved. The second is the increase of emphasis on the procedural aspects.”

Eddie Rich, CEO of the International Hydropower Association (IHA), added: “We know that community consultation, especially of Indigenous People, is one of the most important aspects of planning and developing any infrastructure project. This guidance will help developers and Indigenous People to work together, recognising their rights, livelihood and dignity, and will mean sustainable projects receive the investment they deserve.”

Juergen Schuol, Head of Sustainability at Voith Hydro, an international supplier of hydropower plant equipment, explained: “With the FPIC amendments in the Hydropower Sustainability Tools we now have clarity on the extent of consultation and consent required. This is a significant step forward for hydropower companies, assessors and most importantly the local stakeholders, especially Indigenous Peoples.”

Greg Guldin from Cross-Cultural Consulting Services, who was engaged by the International Finance Corporation (IFC) to facilitate the FPIC process on Nepal’s UT-1 project, said: “The new FPIC agreement puts the hydropower sector on the frontlines of an emerging new partnership paradigm of engagement with Indigenous Peoples.

“Hydro projects can turn FPIC and Indigenous Peoples policies into veritable project bonuses by increasing the likelihood that local communities will feel engaged and ready to partner with projects over the long term.”