Creating an Indigenous Sustainable Bond Framework: From Vision to Action

Creating an Indigenous Sustainable Bond Framework: From Vision to Action

Published on: May 12, 2025

Category: Insights

The responsible investing world converged on Toronto for the PRI in Person conference in October 2024, where the United Nations-developed Principles for Responsible Investing (PRI) network gathered to share and advocate for best practices. Taking advantage of this moment, Addenda Capital, the First Nations Major Project Coalition (FNMPC), and the First Nations Financial Management Board (FNFMB) convened Indigenous leaders, debt issuers, asset owners, and sustainable finance leaders for a focused roundtable discussion.

Under Chatham House Rules, participants learned, engaged, and shared ideas on how to leverage the success of the green and sustainable bond market to support the financing needs of Indigenous Peoples. The roundtable explored whether developing an Indigenous Sustainable bond framework would drive more interest and capital from investors, while ensuring that proceeds would be used to finance projects with benefits to Indigenous communities.

This groundbreaking discussion led to the development of a comprehensive discussion paper and three articles examining key aspects of this initiative. The first two articles addressed Indigenous finance challenges and lessons to be learned from the emergence of green bonds.

Crafting a successful Indigenous Sustainable bond framework requires that Indigenous Rights-holders drive the creation of the core principles, through broad consultation in the spirit of Free Prior and Informed Consent. Below are key recommendations for moving this idea forward.

Core Principles

During the roundtable discussion, Nations and Indigenous organizations, investors, issuers, and market participants shared the following key elements as being important for an Indigenous Sustainable bond framework:

• United Nations Declaration on the Rights of Indigenous (UNRIP), Free Prior and Informed Consent (FPIC), and Reconciliation as Foundational Principles: Indigenous Rights Holders (e.g., Band Councils, Modern Treaty Nations, etc.) or their delegates should lead the development of the bond framework in accordance with UNDRIP, FPIC, and Reconciliation Principles - “Nothing About Us Without Us.”
• Principle-based and Flexible: Develop a flexible principle over prescription approach and build in more clarity over time. Allow for piloting and a learning-centric approach, especially in the early days of first issuances.
• Open to Any Entity: Bonds could be issued by any entity investing in projects that benefit Indigenous Peoples (Indigenous Peoples or Nation, Indigenous businesses or non-Indigenous businesses, financial institutions, corporations, development banks or government entities).
• Transparency: Reporting on community or Indigenous Rights Holders’ benefits to bond buyers is essential.
• Second Party Opinions (SPOs): These are now very important to help ensure the quality of green bonds and will eventually also be important for Indigenous bonds. However the consensus at the roundtable was that SPO providers may not yet have the expertise and training to conduct these effectively until after the market has some pilot issuances. SPO training and capacity building on the new framework will be required. It will be important that those conducting certification and audits are either Indigenous Rights Holders or endorsed by Rights Holders.

Key Actions Needed

Roundtable discussions identified three critical actions to bring this framework to reality:

Action 1: Build Indigenous-led consensus and socialize and gain feedback from non-Indigenous stakeholders

• Engage and get feedback from:
  • a broad spectrum of Indigenous Rights Holders and Indigenous organizations
  • a wide representation of finance, bond issuers, rating agencies, sustainable finance, and market participants
• Encourage Indigenous Nations, government, corporate and other potential issuers to consider Indigenous bond issuance
• Work with Indigenous, government, issuers, and non-profits to build a coalition of the willing and source funding for principles/standards development

Action 2: Developing the Standards and Governance Structure 

• Draw in a broad spectrum of Indigenous voices to develop the key principles
• Create an Indigenous-led secretariat to lead development of the standard with:
  • An Indigenous advisory group to engage with rights holders and Indigenous organizations to develop FPIC and UNDRIP principles
  • A technical advisory group to engage with capital markets actors (experienced sustainable bond issuers, investors, bond market and sustainable finance experts) to ensure that the above principles developed can practically be applied in the markets and gain strong market interest.
• Leverage the knowledge and experience of organizations such as the Climate Bonds Initiative (CBI) and International Capital Markets Association (ICMA) in bond principle and standards development.
• Set up a funding mechanism to support the above

Action 3: Implementing Initial Bond Issuance as Proof of Concept and Iterating

• Pilot issuances that showcase the principles/standard, in particular, from issuers that are familiar with UNDRIP and have established or the ability to establish a credit rating for example:
  • Federal or provincial-directed borrowing for Indigenous purposes
  • Crown financials with proceeds directed to Indigenous borrowing
  • Nations borrowing to invest debt or equity in First Nations Major Projects Coalition projects
  • Borrowing of Nations and Corporations for major infrastructure (e.g. transmission lines)
  • Nations borrowing for real estate development and housing
  • Nations borrowing for the purchase high quality secured assets
  • Indigenous buy outs of strong businesses that have upside potential in the major projects or procurement value chain
  • Borrowing by existing development bank, crown financials or a prospective Indigenous Development Bank
• Pilot issuances of first-time bond issuers including supporting institutions that can aggregate Indigenous financing needs (e.g. build on success of FNFA)
• Develop an ecosystem of Second Party Opinion providers
• Review and amend the principles as needs evolve
• If successful, the Indigenous secretariat could evolve into a broader Indigenous-led standard-setting body that advises on sustainable finance reporting and sustainable accounting standards beyond Indigenous sustainable bonds
• Some components of the Sustainable Indigenous bond principles could be useful in informing key principles or best practices for broader Indigenous bonds.   

Call to Action

We invite you to:

• Engage: give us your feedback on this concept and recommendations. 
• Champion: share this article and its ideas, introduce us to supporters, and lead the change.
• Participate: Reach out to us at [email protected] to share your comments, receive updates on this concept, participate in future events, and express interest.

For a comprehensive analysis of Indigenous finance challenges and opportunities, please refer to our full thought leadership paper.