CANADA: Corporate Accountability for the Extractive Industry

Commentary

CANADA: Corporate Accountability for the Extractive Industry

July 21, 2010 11:23:58 am

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Megan McKee, Pitt Law ’12, is currently an intern with Montreal’s Social Justice Committee (SJC). She writes about the SJC’s advocacy for corporate accountability in the extractive industries…

In May I began working for the Social Justice Committee (SJC) of Montreal as a corporate accountability intern. The SJC is an independent human rights organization promoting education and advocacy in the areas of global poverty and inequality. In terms of corporate accountability, the SJC is currently advocating for passage of Bill C-300, also known the Corporate Accountability of Mining, Oil, and Gas Corporations in Developing Countries Act. This private member’s bill currently before the Canadian parliament seeks to create a mechanism that would allow for the filing of complaints against Canadian extractive companies operating in developing countries if they are believed to be in non-compliance with agreed upon international environmental and human rights standards.

As July 22 marks the second annual Global Day of Action Against Open Pit Mining, and FAO Montreal has organized a march to commemorate the day, it seems appropriate to take a closer look at the Canadian mining industry and its actions abroad. Canada is home to over 75 percent of the world’s largest mining and extraction companies. However, the existing mechanisms to ensure that these corporations, which receive support from the Government of Canada, act in compliance with international environmental best practices and with Canada’s commitments to human rights, are toothless at best and non-existent at worse.

Starting in 2006, the Canadian government held a series of National Roundtables on Corporate Social Responsibility (CSR). The roundtables concluded with the release of a final report [PDF] authored by a multi-stakeholder Advisory Group, which included members from industry, civil society, academia, labor, and the responsible investment sector. In essence the report called for the development of a Canadian CSR framework. The Advisory Group urged the Government of Canada to work with key stakeholders to adopt a set of CSR standards that Canadian extractive companies operating abroad would be expected to abide by, and that would be reinforced by appropriate reporting, compliance, and other mechanisms.

In March of 2009, the government released its official response [PDF] to the roundtable report, and it included no effective complaints mechanism and no mechanism to sanction companies in non-compliance with agreed upon guidelines. Rather, the government’s CSR strategy called for the creation of a CSR Counsellor, a position that suffers from serious limitations. Namely, it lacks enforcement powers and may only investigate complaints with the express consent of corporations. In short, the government failed to effectively take into account the key recommendations of the roundtable report, and did little more than endorse current CSR standards. The government’s CSR strategy would do little more than create a toothless administrative mechanism to generate a façade of accountability.

Following the government’s failure to seriously respond to the roundtable report, legislation in the form of a private member’s bill became the only viable means by which to regulate Canadian corporations engaged in mining, oil or gas activities abroad.

Liberal MP John McKay introduced private member’s Bill C-300 to Parliament in February of 2009. C-300 seeks to implement a number of the key recommendations from the roundtable report. Although the bill pre-dates the government’s official response to the roundtables, it largely picks up the slack where the government’s response fell short.

In summary, if Bill C-300 is passed it would:

Regulate the relationship between Canadian government agencies such as, Export Development Canada, the Department of Foreign Affairs and International Trade, and the Canadian Pension Plan, and Canadian extractive companies operating in developing countries.

Develop guidelines that articulate corporate accountability standards for political and financial support provided to Canadian extractive companies by the aforementioned government agencies. These guidelines are to include standards consistent with international human rights and environmental standards.

Create a complaints mechanism by which complaints are filed with the Ministers of Foreign Affairs and International Trade. The complaint, if entertained, would lead to an investigation of the company and its compliance with the guidelines set forth by C-300. The investigation would culminate with the release of a public report within eight months of the complaint.

Provide a mechanism for removing a company’s government support as long as it is in non-compliance with the guidelines.

Private member’s bills cannot require the support of a budget. As such, C-300 faces some limitations of its own. Namely, the bill may not include a provision for an ombudsperson or independent investigations. However, C-300 would directly forward complaints to the Minister of International Trade and Foreign Affairs, which would be followed by an investigation of the alleged violations. If evidence of a CSR violation is found, then the company would be required to submit annual reports to the House of Commons and Senate, where the reports would be reviewed to determine whether the company is in non-compliance with the guidelines. If a company is held to be in non-compliance, Export Development Canada funding, Canada Pension Plan funding, and consular and embassy support could be withdrawn.

The bill has passed its first reading in the House of Commons. In the second reading, the House referred the bill to the Standing Committee on Foreign Affairs and International Development, which studied the bill and heard testimony from public witnesses during the spring and early summer. When the House of Commons resumes sitting on 20 September, one of the first items on the agenda will be to debate and consider the bill as amended, and it is anticipated that the third reading vote will take place sometime in October. If the bill passes through the third reading, it will be sent to the Senate for consideration, and, if passed by the Senate, it will require Royal Assent (presentment to the Governor General who may assent to the bill in the Queen’s name, withhold assent, or reserve assent) to become law.

Although this legislation proposes only a modest mechanism by which corporations receiving support from the Government of Canada can be held accountable for their practices overseas, it has stirred up a great deal of controversy. The mining sector, Canada Pension Plan, Export Development Canada (both heavy investors in the extractive industry), and the Conservative Party oppose the bill. On the other hand, the bill has received support from a wide range of civil society groups, the opposition Liberal Party, the NDP, and the Bloc Quebecois [French]. While the attention that C-300 has received probably far outweighs its potential impact, I believe that Canadians would like to see their politicians choose to hold government-supported corporations to the international environmental and human rights standards Canada claims to support. And, as a Canadian permanent resident, I would like to see Parliament take a step, if only a modest one, toward greater oversight of corporate actions abroad.

Photos: Paul Lemieux

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