Report seeks penalties against unethical Canadian mining operations abroad

OTTAWA (CP) _ Canadian mining and oil companies should have their government financing and other benefits withdrawn if they are found to have acted unethically or committed human rights violations while operating abroad, a government-led committee on corporate social responsibility says.

The recommendation is one of more than two dozen made by a special advisory group of experts, industry and civil society organizations in a report being released Thursday that aims to place Canada in the forefront of ethical behaviour in the controversial area of mineral, oil and gas extraction abroad.

The report is the fulfilment of the key recommendation of a 2005 parliamentary committee that looked into the foreign operations of Canadian extracting firms, such as the much-publicized accusations that Talisman co-operated with the military's persecution of civilians in the Sudan. In response, the government established a roundtable process to make recommendations on how corporate social responsibility should be codified and improved.

The advisory group has called on the federal government to establish a Canadian Corporate Social Responsibility code built on international models that would apply to all Canadian extractive firms operating in the developed world.

Canadian firms operating abroad would be expected to report on their activities through the Global Reporting Initiative.

As well, it calls for the establishment of Canadian standards within three years that would deal with such issues as the use of forced or child labour through supply-chain relationships, what constitutes broad, local community support for a project, resettlement and appropriate compensation, biodiversity conservation, and environment and social assessments of the impact of a project.

Policing the new guidelines would be an independent ombudsman's office with sufficient resources to investigate complaints from both Canadian and non-Canadians, and a duty to publicly report on findings annually.

In the event of serious non-compliance by any firm, the dispute would be handed over to a Compliance Review Committee that could recommend to the government that it withdraw funding or other services.

While some private sectors in Canada have established corporate social responsibility guidelines for their members, adoption of the report would result in the most comprehensive set of rules to guide Canadian corporate behaviour in the developed world, where human rights, labour and environmental laws are often non-existent or not enforced.

``Canada's extractive sectors are committed to improving their social and environmental performance and adhering to best practices wherever they operate,'' said Gordon Peeling, president of the Mining Association of Canada.

``We urge the government to act upon our recommendations.''

Although the report represents a ``consensus'' of its members, it notes that some civil society participants, who could be expected to be harsher to industry, wanted to go further. One recommendation not adopted was to make reporting of activities mandatory, as is the case in the U.K. and France, as well as a listing requirement in the country's stock exchange.

``They noted that the current voluntary approach in Canada has failed to elicit more than a handful of comprehensive reports from Canada's largest companies and even fewer reports based on the GRI (Global Reporting Initiative),'' the report states.

Mining officials told The Canadian Press that industry representatives believed the incentives, positive and negative, were sufficient to resolve most issues. Aside from the possibility of losing government assistance, public reporting of complaints and an unfavourable determination by the ombudsman would have a serious impact on a company's reputation and brand, they note.

``The other side is that the industry welcomes this because it also provides a tool for clearing companies that have done nothing wrong,'' said an official.

Other recommendations in the report ask the government to:

_Create a centre of excellence to act as a depository of social responsibility best practices and act as a clearing house for advice and information to Canadian corporations, non-governmental organizations, and host governments and communities.

_Amend the Pension Benefits Standards Act to require federally registered pension funds and plans to disclose annually how investment decisions have taken into account a company's environmental, social and governance record.

_Seek co-operation from Canadian securities regulators so that a publicly traded company's social responsibility record be considered part of the ``material information'' it must disclose to investors.

_Amend the Corruption of Foreign Public Officials Act to clarify that it applies extraterritorially to Canadian nationals.

_Deny double taxation relief that Canadian companies receive for paying taxes abroad if they are found in serious violation of social responsibility standards.