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31 May 2017

Karyn Keenan, Director, Above Ground (Canada)

From dialogue to accountability: A call for Canadian leadership on business and human rights

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This week members of the United Nations Working Group on business and human rights wrap up a 10-day visit to Canada. The selection of Canada as one of just two countries the group will visit this year was opportune, given the particularly high risk of social and environmental harm associated with extractive industry projects and Canada’s global dominance in mining. To eradicate the serious harm often linked to mining, oil and gas development, Canada will need to play a major role in closing the governance gap. Fortunately, the question of what role the Canadian government should take to address the impacts of Canadian-owned extractive projects overseas is well established in Canadian public discourse.

It’s been debated in Parliament since at least 1999, when allegations emerged that oil company Talisman was complicit in human rights violations perpetrated by the Sudanese army. More recently, the issue has gained media attention in relation to lawsuits alleging Canadian companies’ involvement in abuses in Eritrea and Guatemala, and research documenting forty-four deaths and more than 400 injuries at Canadian-owned mines in Latin America. As a region, Latin America has seen at least 85 cases of local socio-environmental conflict involving Canadian mining companies, some of which receive political or financial support from the Canadian government.

It’s also a question to which clear answers have been given by UN authorities. In the past two years alone, UN treaty bodies have urged Canada to strengthen its laws governing Canadian firms’ activities abroad, require that companies assess human rights risks before making investments, create a mechanism to investigate complaints of human rights abuse by Canadian multinationals, and develop a framework that affords legal remedies to victims of such abuse.

Canada’s government has not, to date, presented a clear, credible plan for how it will fulfill its legal duty to protect against and redress human rights abuse by Canadian multinationals. Its policy framework in this sphere is limited to a strategy inherited from the previous government that encourages but does not require extractive firms to respect standards of environmental and social responsibility in their operations abroad. When complaints arise that a company is not meeting these standards, Canada offers only closed-door mediation processes, encouraging the company to engage in dialogue with complainants. These processes are explicitly non-investigative and do not ensure access to justice.

Access to remedy

Canada may soon begin to chart a new course on corporate accountability. The government is expected to announce the creation of an ombudsman office to investigate alleged wrongdoing by extractive firms operating abroad – a move that all but one of Canada’s main political parties committed to support. An effective ombudsman, as detailed in model legislation advanced by Canadian civil society, would be empowered to investigate and determine if a company is in breach of international human rights norms. She or he could publicly recommend actions to be taken by the company or the government to stop abuses, provide remedy or prevent future harm – all elements missing from Canada’s current framework.

Announcing the creation of an ombudsman office is one step the government could take immediately, before the conclusion of the UN Working Group visit, to demonstrate Canadian leadership in promoting accountability in the extractive sector.

To further address the need for access to justice, the government should work to remove the barriers foreigners face when seeking remedy in Canadian courts for harms caused by Canadian companies or their foreign subsidiaries. While cases involving foreign plaintiffs and Canadian corporate defendants are currently before the courts in two provinces, such litigation remains extremely challenging. Legal, logistical and financial barriers make Canadian courts inaccessible to the vast majority of prospective foreign plaintiffs.

Driving corporate accountability

Beyond this, Canada must do more to prevent business-related human rights abuse before it occurs. In step with the move towards mandatory due diligence underway in Europe, it should require companies to assess and mitigate risks of human rights abuse throughout their global operations and supply chains, as France has done. Canada should also introduce civil and criminal sanctions for companies or corporate directors responsible for human rights abuse. Canada must take steps to ensure that international investment agreements preclude neither it nor its trading partners from fulfilling their human rights obligations. In any trade deal, investment protections must be matched with equally robust provisions safeguarding governments’ ability to protect human rights and the environment through effective regulation.

Finally, it’s crucial that Canada withhold public support from companies that violate human rights. Corporations receive substantial political and promotional support from Canada’s embassies and trade ministry, and hundreds of billions in financing and equity from its export credit agency and public pension fund. Under current policy, a company accused of human rights abuse abroad may face ineligibility for trade support or export credit financing under two circumstances: if it is subject to a formal complaint and refuses to engage in facilitated dialogue, or if the extractive sector Corporate Social Responsibility (CSR) Counsellor is of the opinion that its practices do not follow CSR norms.

Only once has a company faced the prospect of being sanctioned under this policy since its adoption in 2014. Canada’s OECD National Contact Point declared in 2015 that China Gold’s refusal of mediation would be “taken into consideration” by the trade ministry or export credit agency should the company apply for support. The complaint lodged against the company alleged that its practices had contributed to the deaths of 83 workers. To secure eligibility for government services, China Gold need not demonstrate that the claim is untrue, nor bring its operations into compliance with OECD standards. All that’s required is dialogue. 

While Canada limits itself to imposing a modest penalty on companies that refuse to engage in dialogue, other countries are introducing penalties for corporate wrongdoing that causes harm. To restore its reputation as a global leader on human rights, Canada must go beyond dialogue and get serious about accountability.