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FOCAL Views: A corporate accountability bill of no avail

As an independent think-tank at the juncture of civil society, academia, government and the private sector with extensive work in corporate social responsibility (CSR) and indigenous governance in mining, we feel confident saying that the Corporate Accountability of Mining, Oil and Gas Corporations in Developing Countries Act, or Bill C-300, has to be in the running for the worst piece of legislation before Parliament.

The bill creates an illusion of action to improve Canadian company behaviour abroad. In reality it adds nothing to CSR standards already required by Export Development Canada (EDC) and used by Canadian companies.

Worse, the bill would weaken one of Canada’s most competitive industries by imposing Canada-only costs on companies that, contrary to the bill’s assumption, are acknowledged global CSR leaders. Asian and especially Chinese companies —recognized leaders in social irresponsibility— face no such burdens and would benefit.

We have seen this train wreck before. Well-intentioned, but naive Canadian NGOs chased Canada’s Talisman Energy out of Sudan only to see it replaced by a Sino-Indian joint venture that immediately gutted Talisman’s belated but serious CSR initiatives: Sudan lost, Canada lost and the oil still flowed. But Canadians felt better about themselves.

Bill C-300 sets us down this path again. It mandates the international trade minister to develop “human rights and environmental standards based upon the International Finance Corporations (IFC) Performance Standards on Social and Environmental Sustainability; the Voluntary Principles on Security and Human Rights and any other standard consistent with international human rights standards” to judge complaints against Canadian extractive companies.

Why? Canadian companies are already de facto bound by the Equator Principles, a benchmark based on the IFC Performance Standards and used by EDC, all major Canadian banks and 70 of the world’s largest financial institutions to manage social and environmental impacts of projects they finance. Banks using the principles simply do not lend for projects not passing muster. Unless financed by the Government of China, any extractive company has to comply with the Equator Principles.

Standards evolve and the IFC is revising the Performance Standards. Yet, at least these standards and the Equator Principles are transparent: if changed, a company knows what it will face. But Bill C-300’s “any other standard” qualifier is simply absurd. How can anyone be held accountable now for a standard that will be determined later and could perpetually change?

It gets worse. Under the bill, complaints could be brought by anyone regardless of whether they are impacted by a company’s activities. Accessibility to complaint procedures is crucial, but the bill practically invites the disgruntled or irresponsible to seize this officially sanctioned, and very public, platform to slander companies through baseless accusations.

Office space in New York or London is looking attractive to companies not to escape responsibility, which is impossible given the prevalence of the Equator Principles, but to avoid the headaches and competitive disadvantages of staying in Canada.

The real shame here is that Canadian companies are working to improve conditions in communities where they operate. As just one example, Canadian mining company Placer Dome won the prestigious World Bank Development Marketplace award for its innovation in community health work. Instead of encouraging this type of activity by having the government provide resources and assistance similar to what the U.S. and European governments use to leverage CSR activities by their companies, Bill C-300 would only add costs and thereby cede ground to our competitors.

Canadians want to see improvements in communities where extractive industries operate. They also want to see Canadian companies compete. But Bill C-300 would achieve neither; it would only reinforce a Canadian competitive disadvantage —that of shooting ourselves in the foot. The bill may make a few Canadians feel better, but it will not help anyone else.blue square

This new section reflects our institutional position on current issues in the Americas. It presents collaborative opinion articles originating from staff, board members, non-resident fellows or colleagues at sister institutions.


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