What will convince Ottawa to rein in Canadian companies?

Gregory Regaignon, North America Researcher & Research Director, and Emily Kaufman, Research Intern, Business & Human Rights Resource Centre

Ejido la Sierrita protest again Excellon Resources, Mexico - credit: Cencos (Mexico)

Canada recently told a UN committee that the government's human rights duties don't include regulating its companies overseas. Canadian companies' records suggest that it should.

What can make a country realize that voluntary measures to stop its companies from involvement in human rights abuses abroad aren’t working?

Lawsuits from affected community members against mining companies?

A report on clothing companies’ inaction after the Rana Plaza factory collapse in Bangladesh, which killed 1,100 people?

A company implicated in censorship abroad that would violate the country’s own Constitution?

Incredulity from the UN Human Rights Committee about the government’s unwillingness to hold the country’s companies accountable?

Would all of these together convince a government to take stronger steps for corporate accountability? 

In the case of Canada, apparently not.

Canada faced intense scrutiny from the UN Human Rights Committee earlier this month. The Committee expressed concerns over Canada’s approach to impacts of Canadian companies operating abroad.  Committee members responded with dismay to Canada’s assertion that it has obligations to protect human rights of Canadians in Canada, but not to regulate overseas actions of Canadian companies.   One panel member retorted, "A country could not just provide corporate identity to a company and then be unperturbed by whatever the company could do around the world."

Why is Canada so important?

In some sectors, Canada is dominant out of proportion to its size in the global economy.  According to the government, “over 50% of the world’s publically listed exploration and mining companies [are] headquartered in Canada” (2013 figures). 

In Mexico for example, a majority of mining projects with foreign investment include Canadian companies.   These have a decidedly mixed record.  For example, Excellon Resources has been in a long conflict with Ejido la Sierrita over compensation.  Canadian embassy officials allegedly protected the company by cooperating with the company’s call for the Mexican Government to intervene; police and army forces then forcefully broke up the community’s protest, according to United Steelworkers and other groups.  The Canadian Government denied wrongdoing, and Excellon denied calling in government forces.

In Ixtacamaxtitlán, local indigenous people have filed a lawsuit against Almaden Minerals, claiming its concession ignored their land rights.  The local Tiyat Tlali council and community members told Business & Human Rights Resource Centre (BHRRC) that when company officials arrived, they “said they would only drill five holes, now they have drilled more than 1000.”

Canadian companies’ importance is also visible in the largest global database of companies’ impacts on human rights.  BHRRC has invited companies to respond to allegations of abuse over 2000 times in the last decade.  Controlling for the size of their economies, Canada’s companies have faced over 50% more allegations of abuse than companies based in G7 peer nations such as France, Germany and the United States.  

The Canadian Government has launched initiatives aiming to address the extractive industry’s impacts.  The Extractive Sector CSR Counsellor, established in 2009, is mandated to conduct voluntary mediation of communities’ complaints against companies.

But recently, the position of CSR Counsellor was left unfilled for over a year after the previous counsellor resigned. The office has not publicly reported any activity for over two years.

In the garment industry, too, Canadian companies have fallen short. After the Rana Plaza factory collapse in Bangladesh, many companies in the clothing sector sought to mitigate risk in their supply chains by signing commitments to prevent further tragedies.

According to a 2015 SHARE Investors brief, of major publicly-traded Canadian apparel companies only one, Loblaw, signed the binding Accord for Fire and Building Safety in Bangladesh. Three major companies joined a separate, non-binding initiative, but notably LuluLemon, Gildan, and Reitmans have signed neither agreement.

Kevin Thomas, Director of Shareholder Management at SHARE, suggests:

“Canada could support accountability in the global apparel industry by establishing minimum labour standards for preferential tariffs, and for the government’s own apparel orders. Unlike the USA or EU, Canada provides duty-free access to products from developing countries without requirements for labour standards compliance and no mechanism for complaint or review.

“These measures are not anti-business; they support Canada’s apparel industry by promoting sustainable solutions to overseas worker rights risks and reduce uncertainty for investors.”

In the tech industry, Canadian company Netsweeper reportedly provides software to the Pakistan Government for censorship of the internet, including limiting content from independent news sources and human rights organizations.

The Canadian Constitution prohibits such limits on freedom of expression in Canada. David Petrasek, professor at the University of Ottawa, has said, “Legal action against Netsweeper may not be possible, but for the Canadian government to refuse even to make the moral case for disengagement amounts to condoning censorship abroad that would be illegal at home."

Still, Canada’s reaction to the Human Rights Committee is surprising given some recent government actions.   In late 2014 it announced guidance and a clear policy expectation that extractive companies would abide by the UN Guiding Principles on Human Rights and other norms.  The government also announced penalties if companies refuse to participate in the government’s mechanisms to resolve communities’ and workers’ complaints. 

Canadian courts are starting to accept cases regarding alleged abuses overseas; three major ongoing cases address alleged abuses in Eritrea and Guatemala.  

Some Canadian companies may be ahead of the government: Seven of the 10 largest Canadian mining companies have made commitments on human rights – better than the global rate of 53% of extractive industry companies with a human rights policy on BHRRC’s Company Action Platform

These measures promise some accountability, but it remains to be seen whether actual implementation, and outcomes of these court cases, meaningfully address the concerns of people affected by Canadian companies.

Amid these signs of progress, the government’s denial before the UN Human Rights Committee could signal a worrisome reversal. Disavowal of the responsibility to provide robust human rights protections will likely meet with a clear response from Canadian civil society to the government: it’s not working, and the time for action is now.