What will the election result and new government in Canada mean for corporate social responsibility (CSR)? The Harper Government’s CSR Strategy for the Extractive Sector (CSR Strategy) was adopted in 2009, adopting some but not all of the recommendations of the 2007 National CSR Roundtables (the “Roundtables”). The CSR Strategy included endorsement of certain international CSR standards, including the International Finance Corporation (IFC) Performance Standards and Voluntary Principles on Security and Human Rights. In terms of dispute resolution, the 2009 CSR Strategy created a “CSR Counsellor” complaints review process, which was purely voluntary and from which several Canadian companies chose to withdraw.
A proposal for an “enhanced” CSR strategy was made by the Conservatives in 2014 but was never fully implemented. The enhanced strategy included endorsement of additional standards such as the United Nations Guiding Principles on Business and Human Rights (“Guiding Principles”). The 2014 enhanced strategy also proposed introducing consequences, namely withdrawal of “economic diplomacy” and government support for non-participation or non-compliance with the endorsed standards.
Pre-election, some Parliamentarians, including key members of the Liberal Party, have proposed even stronger binding adjudication of CSR related disputes involving Canadian companies working abroad, including adoption of the full extent of recommendations from the Roundtables in 2007. The 2007 Roundtables had recommended the establishment of a tripartite Compliance Review Committee (“Committee”), analogous to arbitration, that would determine the nature and degree of company non-compliance with endorsed CSR standards. Such a Committee could indicate measures to be taken by the company to return to compliance and the monitoring of those measures, and determination that no further action is required. In cases of serious non-compliance the Committee could make recommendations with regard to the withdrawal of financial and/or nonfinancial services by the Government of Canada (consequences quite similar to the 2014 enhanced CSR Strategy proposal).
Opposition Members of Parliament, including the now governing Liberals, strongly criticized the Harper Conservatives for not implementing this aspect of the Roundtable recommendations.
During the election it was publicly stated that a Liberal government will act on the Advisory Group’s recommendations, including adopting Canadian CSR standards and dispute resolution mechanisms like the Tripartite Committee.
If this does become policy, Canada’s extractive sector will need to formulate a position to promote fair and effective dispute resolution, reflecting the needs of business, as well as affected communities and other legitimate stakeholders. This will necessitate consideration of the lessons learned, successes and policy failures from 2007 to the present.
Any model for CSR arbitration for the extractive sector should draw from the lessons and best practices of analogous dispute resolution processes that have achieved success in adjudicating disputes between business and stakeholders. To that end, one model worth considering is labour arbitration – a method of private dispute resolution between workers organizations and companies. There is much to be learned from labour arbitration as a model for effective and efficient dispute resolution involving corporate stakeholders, and addressing important issues such as human rights. Key characteristics include the use of private arbitrators selected jointly on consent of the parties in most cases, clear rules on who has standing to bring complaints, application of known standards agreed to by the parties and use of informal legal procedures emphasizing efficiency. Importantly, where arbitration is available, parties are prohibited in law from suing in the courts on the same issues. Decisions of arbitrators are also reviewable by courts, particularly if they are flawed on the basis of procedural fairness. To date, there has been no discussion in policy circles on these types of details.
If that were done, industry may insist that any CSR “arbitration” or dispute resolution process: (1) allow parties to select arbitrators they find mutually acceptable; (2) clearly identify who may access such processes; (3) limit the jurisdiction of the arbitrator to applying transparent CSR standards accepted by industry; (4) prohibit court based legal claims on the same issues covered by arbitration; (5) allow arbitration decisions to be judicially reviewed to ensure arbitration processes are fair and accountable. These are only some of the considerations that would be necessary to take such abstract concepts into reality.
Whatever the policy direction taken, success will depend on heeding lessons from history and responding to realities on the ground. Industry must be ready to get ahead of such debates and respond should a “binding” versus “voluntary” policy approach to CSR become inevitable in the next five years.
Michael Torrance is a lawyer in Northern Rose Fulbright’s Toronto office.