It’s three steps forward (and a setback) for accountability

By April 20, 2009News

Canadian extractive companies are no strangers to controversy.  Talisman Energy suffered investor ire for its investments in Sudan, and the company has more recently ventured into contentious territory with projects in indigenous regions in Peru and fragile areas of Iraqi Kurdistan.  Last year, mine processing facilities at Goldcorp Inc.’s Marlin mine in Guatemala were shut down for weeks following a dispute with indigenous landowners.  And most recently, Barrick Gold was dumped from the massive Norwegian State Pension Fund because of “unacceptable risk of extensive and irreversible damage to the natural environment.”

Such headline stories continue to circulate through media articles, blogs and email lists, and demands for Canadian companies to be held accountable for their actions overseas are growing louder—and more frequent.

In March 2009, after three years of focused campaigning by civil society groups, the federal government responded to the issue, publishing a report that outlines its action plan for improving the accountability of Canadian extractive companies.  The government report was issued in response to a long series of submissions, surveys and multi-stakeholder consultations (see SHARE news item “Laggard mining, oil and gas companies”)  SHARE was one of dozens of organizations that participated in the discussion by providing a written submission and recommendation for accountability to the Canadian government.

Overall, the government’s action plan takes Canada three steps forward; and three steps back. It provides long-awaited endorsements of key international corporate responsibility initiatives, but fails to adequately fill a long-standing corporate accountability vacuum in Canada.

THREE STEPS FORWARD

In its report, the government made notable progress on three concerns.  The first is on revenue transparency, a key issue for many resource-dependent developing countries, where high levels of corruption often allow revenues from extractive industries to line the pockets of political and business elites.  In its report, the government has endorsed the Extractive Industries Transparency Initiative, a coalition of governments, companies, civil society groups, investors and international organizations that supports requiring companies and governments to publicly disclose tax and royalty revenues, and subsequently compares those numbers in an effort to root out corruption.

The second area of improvement is the government’s explicit support for the Voluntary Principles on Security and Human Rights, a multi-stakeholder process designed to ensure that company officials, security contractors, as well as in-country police and military partners are trained on key human rights practices.  SHARE advocated for government endorsement of the Voluntary Principles in its submission, recognizing the importance of human rights training for security and military personnel at mining, oil and gas sites.

Finally, the government’s endorsement of the Global Reporting Initiative (GRI) is a positive step forward and responds to SHARE’s recommendation of improving voluntary environmental, social and governance (ESG) disclosure by Canadian companies.  Canadian government support for this initiative, and the federal government’s pledge to provide reporting guidance for oil and gas and junior mining companies, gives the GRI a much-needed boost in Canada.

AND A SETBACK

However, the most disappointing aspect of the government’s response was its failure to implement an effective and authoritative accountability mechanism that would allow parties to seek investigations into claims of corporate wrongdoing.  This is a significant set-back for civil society organizations seeking to redress corporate harms, and for investors seeking credible accountability mechanisms for corporations.

The government’s action plan ignored the recommendation for the appointment of an independent ombudsman with investigative powers to hear and address complaints regarding Canadian extractive companies.  Instead, it instated a government-appointed “Extractive Sector CSR Counsellor” that will be tasked with reviewing and providing guidance on the corporate practices of Canadian extractive companies overseas.  The position reports directly to the Minister of International Trade, and “will only undertake reviews with the consent of the involved parties.”  The Counsellor explicitly does not have a mandate to make binding recommendations, suggest improved performance standards or mediate between parties.  Thus the newly created Counsellor position will have little capacity to address ongoing concerns about the conduct of Canadian companies overseas, an issue that will continue to expose Canadian companies to intense and sustained international criticism.

THE WAY AHEAD?

As a result, civil society groups have expressed disappointment at the government’s action plan, and have now turned their attention to private members bill C-300 currently circulating in Parliament.  The bill sets out clear corporate accountability mechanisms for extractive companies, and if passed, the eight-page piece of legislation will make significant strides in improving corporate accountability in Canada.