Introduction

This report by Shift examines whether the quality of corporate engagement with Indigenous Peoples and local communities on nature-related issues is financially material. Shift reviewed approximately 40 academic and technical publications and compiled a database of over 1,200 cases where corporate impacts on nature drove social effects, of which more than 800 indicated resulting financial effects (p.3).

Part 1: Impacts on nature and community opposition

Nature-related impacts — including land use change, environmental damage, and resource use — are frequently the primary drivers of community opposition. Land use change was the most common driver in the database (p.12). A review of 51 cases in South-East Asia found displacement was the most common driver (45% of cases), followed by compensation (24%), environmental damage (18%), and resource shortage (14%) (p.13). In Africa, 63% of tenure-related disputes were driven by forced displacement (p.13).

Part 2: The financial effects of community opposition

Community opposition can erode value through operational disruption, project abandonment, regulatory intervention, loss of market access, reputational damage, investor action, security costs, and diverted management time. A major mining project with capital expenditure of between US$3-5 billion will suffer roughly US$20 million per week of delayed production in NPV terms (p.18). A review of 28 mining sites in Peru found conflicts generated at least US$31.9 billion in firm costs (p.16), while 81% of 21 tenure-related conflict cases in Malaysia, Indonesia and the Philippines suffered financially significant impacts (p.16).

Part 3: The relationship between community engagement, community opposition and financial effects

The existence, timing, and quality of engagement are often decisive. A study of emerging market investments found 46% had experienced community disputes, with social dialogue identified as the most effective risk mitigation strategy (p.21). Companies with stronger Indigenous rights management experienced 3 to 66 times fewer material credit events than poorly rated peers (p.21). A review of 51 land-based conflicts in South-East Asia found 76% began before operations started (p.21), underscoring the importance of early engagement. High-quality engagement can also yield smoother project delivery and stronger investor confidence.

Part 4: What drives this causal chain?

Financial risks occur across diverse jurisdictions and sectors — not confined to regions with weaker regulation (p.25). Conflict risk is elevated where projects overlap with customary land tenure, Indigenous territories, or communities’ core resources. A company’s approach to engagement strongly determines whether concerns escalate; organisational capability, board-level commitment, and staff seniority are all within management’s control.

Part 5: Why is this information relevant to companies and investors?

The financial effects of conflict can run into the millions or billions of dollars, yet are frequently underestimated as costs are dispersed across multiple functions (p.29). In the renewables sector, community opposition was associated with around US$200 million in losses, 3.3 GW of undeveloped capacity, and more than US$4 billion in foregone clean energy investment over 10 years (p.29). It is estimated that 54% of critical minerals required for the energy transition are located on or near Indigenous Peoples’ territories (p.30).

Conclusion

Engagement with Indigenous Peoples and local communities is at a minimum highly correlated with — and would appear significantly determinative of — financial effects from local opposition. High-quality engagement, undertaken early and inclusively as part of core business decision-making, can reduce risks and improve project resilience, making it decision-useful for investors, lenders, insurers, and regulators.