After much discussion and speculation the Canadian government announced in January 2018 the formation of a new Canadian Ombudsperson for Responsible Enterprise and a multi-stakeholder Advisory Body on Responsible Business Conduct. This body will replace the Corporate Social Responsibility (CSR) Counsellor for the Extractive Sector which has been in place since 2009.
The federal government’s original Corporate Social Responsibility strategy for the Extractive Sector was released in 2009. That strategy included the creation of the Office of the Extractive Sector CSR Counsellor, a non-judicial grievance mechanism with a primary mandate to intermediate international disputes between local communities and Canadian extractives companies. The CSR Counsellor’s Office received much criticism for not being effective.
An enhanced Corporate Social Responsibility (CSR) strategy for the Canadian mining sector was announced by the federal government on Nov. 14, 2014, that would create consequences for companies who refuse to adhere to endorsed CSR best practices and dispute resolution processes. As part of the renewed CSR strategy, Canadian mining companies would face withdrawal of Trade Commissioner Services and other government of Canada advocacy support abroad if they do not meet the endorsed CSR standards and participate in dialogue facilitation processes of Canada’s CSR counsellor and OECD National Contact Point. This included withdrawal of government of Canada services, including the issuance of letters of support, advocacy efforts in foreign markets, and participation in government of Canada trade missions. Such matters would also be taken into account in the CSR-related evaluation and due diligence conducted by the government of Canada’s export financing body, Export Development Canada (EDC), in its considering financing or other support.
International standards such as the 2012 International Finance Corporation Performance Standards on Environmental & Social Sustainability (IFC Performance Standards), the United Nations Guiding Principles on Business and Human Rights (the UNGP) and OECD Guidelines for Multinational Enterprises were endorsed in that strategy.
The new ombudsperson’s mandate goes a step further than even the “enhanced” CSR counsellor. The ombudsperson’s mandate will be to investigate allegations of human rights or other business conduct abses arising from Canadian corporate activity abroad. The ombudsperson will operate with a budget that allows them to conduct independent investigations (presumably globally). The details of the office remain to be determined and will be established through an Order-in-Council that has not yet been introduced and no specific date has been announced.
The government of Canada has announced that the ombudsperson will have the ability to undertake collaborative fact-finding, initiate independent fact finding (even without submission of a complaint, report publicly on findings and make recommendations to parties involved in the complaint and to the federal government. Like with the enhanced strategy, if a company refuses to participate or cooperate in the process, the ombudsperson can recommend denial or withdrawal of certain federal government services as an interim measure or final recommendation. In that respect, the ombudsperson’s “stick” is similar to that of the CSR counsellor under the enhanced CSR Strategy of 2014.
One important new development is the scope of the ombudsperson mandate. Whereas the CSR counsellor was focused on the mining and oil & gas sectors, the ombudsperson will cover those sectors plus the garment industry sector.
It is also expected that the mandate will be expanded to add new business sectors in its second year.
Another new development is the establishment of the advisory body that will comprise experts in civil society, industry and government and will report to the minister of International Trade. Its role will be to advise the government on the effective implementation of the strategy and further development of law and policy around human rights and CSR for Canadian companies operating abroad. The advisory body will help the government determine the ombudsperson’s mandate and investigative procedures. Notably, Dr. John Ruggie, lead author of the UNGP and now chair of the board of trustees of the human rights consultancy SHIFT and Harvard Professor will be on the advisory board. This shows the federal government’s increasing focus on human rights as the core focus of “responsible” business conduct.
For the Canadian mining sector, this is a step change rather than a paradigm shift. It remains to be seen whether the ombudsperson operates fundamentally differently than the CSR counsellor did. This development may (and likely will) mean more complaints are brought for review, even if only to test the new powers of the ombudsperson. Consequences of findings of non-compliance or non-cooperation will be essentially the same as under the enhanced CSR Strategy of 2014.
The fact that other sectors, like retail, will also be in the scope of the ombudsperson’s mandate should also be seen as positive for the mining sector, which had previously been the exclusive focus of scrutiny. Whether the new mechanism means that Canada’s reputation abroad will be improved is an open question. It is also uncertain whether the new mechanism will reduce at all the number of lawsuits that have emerged in recent years alleging damages for human rights related harms against Canadian companies operating outside of Canada. It likely will not. What it will do is raise the importance of the UNGP and other human rights focused standards as a baseline for acceptable CSR or responsible business conduct for the mining sector. Companies should consider the extent to which they are grappling with that standard or other human rights standards in particular as part of their CSR programs and consider beefing up their understanding in that area.
MICHAEL TORRANCE is the director of environmental, social and governance at BMO Financial Group. CAROLYN BURNS is director of operations at NetPositive, a non-profit that works with diverse stakeholders to help local communities see sustained positive outcomes from mining