Ground-breaking report on engaging with aboriginal businesses for local procurement released

Engineers Without Borders (EWB) has released a ground-breaking report entitled “Partnerships in Procurement: Understanding Aboriginal Business Engagement in the Canadian Mining Industry”. The report provides useful background, analysis and recommendations for Canadian mining companies on engagement with aboriginal communities in local procurement and supply chains

The report presents the findings from a research study carried out by EWB’s Mining Shared Value program and the Canadian Council for Aboriginal Business (CCAB). The goal of the research was to identify the working relationships between aboriginal businesses and mining companies operating across Canada, in an effort to increase aboriginal supplier involvement and engagement in the supply chain of Canadian mining companies. The research involved interviews with people across Canada, from mining personnel involved in procurement to aboriginal business owners

The report outlines the business case for procurement relationships with aboriginal business. Positive relationships with local communities demonstrate responsible corporate behaviour and can improve a company’s reputation, both for stakeholders and the public. Aside from the benefits to companies, these relationships are important for aboriginal business. The report notes studies which show that nearly 40% of all aboriginal businesses in Canada are working in mining or extraction related industries

The report also outlines some of the characteristics that make procurement relationships with aboriginal business unique. Procurement from aboriginal contractors and communities involves relationship building and sustained partnership development in a manner unique from the typical request for proposal style of supply chain contracting and service procurement that mining operations typically followed in the past. As such, procurement agreements with aboriginal suppliers need to be approached and understood differently than other procurement relationships

Shared or joint governance, monitoring and mediation are among the suggested feedback that was received by the authors of the report. Participants spoke of the importance of having a real and enduring presence in each other’s communities

Among the recommended best practice noted by the authors is:

• To focus on relationships through strong communication including regular town halls or other engagement activities;
• Find ways to build aboriginal business capacity such as through partnerships to increase training opportunities and develop community capacity;
• Include procurement in the implementation of impact benefit agreements (IBAs) and encourage engagement between aboriginal businesses and procurement teams;
• Develop key performance indicators (KPIs) to collectively monitor and check progress on supply contracts;
• Use senior management to encourage cultural shifts and set a tone from the top;
• Incentivize the procurement of services from aboriginal companies in the formal bidding process both for prime and subcontractors further down the supply chain;
• Offering mentoring and training to new aboriginal suppliers on business and management fundamentals;
• Unbundle contracts whenever possible to increase opportunities for small businesses

The report offers a framework for further analysis of this topic by Canadian mining companies seeking to build relationships and benefit from their ongoing relationships with aboriginal communities . It offers a readily available example of shared value that can be captured by companies operating in the vicinity of aboriginal communities beyond simply IBAs. Those companies that do this well will identify opportunities to build trust and partnerships that advance both the business and CSR objectives of the company and its stakeholders.

Michael Torrance is a lawyer with Norton Rose Fulbright, Toronto