Letter to EDC President Re: CSR and the DRC - June 8, 2007

Mr. Eric Siegel
President and Chief Executive Officer
Export Development Canada
151 O’Connor St.
Ottawa, ON
K1A 1K3

June 8, 2007

Re: EDC workshop on socially responsible mining practices in the Democratic Republic of Congo

Dear Mr. Siegel,

We would like to thank Export Development Canada for including the Halifax Initiative Coalition and Entraide missionnaire in its recent multi-stakeholder workshop on “how to best support the mining industry in the DRC.”  We were pleased to participate in this important discussion with representatives of the Canadian mining industry, Canadian government, consultants, international financial institutions and EDC, among others.

As discussed during the workshop, the federal government of Canada recently concluded an unprecedented, cross-country consultation process on corporate social responsibility and Canadian extractive operations in developing countries.  Discussions among relevant stakeholders, invited experts and the Canadian public focused on the responsibilities of Canadian extractive companies in lesser developed countries.  The roundtables included dialogue on the challenges that companies face in conditions of weak governance, in post-conflict situations and in countries where corruption is endemic.  

A multi-stakeholder Advisory Group comprised of representatives from industry, civil society, academia and responsible investors, released a final roundtable report in March of this year.  The consensus-based report includes a series of policy and law reform recommendations for the Government of Canada, including Export Development Canada, aimed at improving the corporate social responsibility performance of Canadian companies.

Central among the recommendations is the adoption of a Canadian corporate social responsibility framework for application to extractive operations in developing countries.  The framework is intended to provide Canadian companies with clarity regarding the standard of performance that is expected in their overseas operations.  The framework includes a set of social, human rights and environmental standards that all companies must meet, public reporting requirements, an ombudsman’s office to receive and investigate allegations of non-compliance, and provisions regarding the denial of government services in cases of serious non-compliance.  

The Advisory Group report also includes two recommendations for EDC.  We include the text of these recommendations on page three.  The first urges Export Development Canada to adopt the corporate social responsibility standards set out in the framework described above and to apply these standards in its due diligence process.  The report further recommends that EDC condition support to extractive companies on compliance with these standards and that EDC withdraw its support in cases of serious non-compliance.

The second recommendation calls for greater transparency at EDC.  The Advisory Group calls on the crown corporation to provide additional information to the public including project classification and assessment details, necessary modification and mitigation measures, and project monitoring and evaluation documents.   
We urge EDC to adopt the Advisory Group recommendations.  Implementation of the corporate social responsibility safeguards and transparency measures identified by the Advisory Group is particularly important in countries plagued by insecurity and corruption, that lack effective regulatory capacity and that have witnessed mining-related human rights abuses. 

The adoption of these measures would be paramount, for example, in a case such as Tenke Mining Corporation’s Fungurume project in the DRC.  The joint venture contract for this project, which was approved by the Congolese Transitional Government, has been questioned on a number of grounds, including by the World Bank’s chief mining expert.  Among other issues, the World Bank has raised concerns about the valuation of relevant mineral assets and the lack of a transparent, competitive bidding process.  The Congolese government has announced its intention to reevaluate this and other contracts.

Conditions in the DRC demand the adoption of clear corporate social responsibility standards, such as those recommended by the Advisory Group.  Moreover, both private sector actors, and the government agencies that support them, must operate transparently.  Only then will outstanding doubts regarding the legitimacy of foreign extractive operations in the DRC be resolved.

It is our position that EDC should not support mining investments in the DRC until such measures are implemented.  We call on EDC to adopt the Advisory Group recommendations before providing services to mining companies with investments in the Democratic Republic of the Congo.

Thank you again for the invitation to participate in the recent EDC workshop.  We look forward to on-going dialogue with EDC regarding these issues.

Yours truly,

Karyn Keenan         
Halifax Initiative

Denis Tougas
Entraide missionnaire

National Roundtables on Corporate Social Responsibility and the Canadian Extractive Industry in Developing Countries: Advisory Group Recommendations

2.3. Export Development Canada Disclosure Requirements
It is recommended that Export Development Canada (EDC) improve its disclosure policy.  Subject to bona fide commercial confidentiality concerns, EDC should publicly release:

  • Project classification rationales;
  • Project assessments (undertaken during EDC due diligence);
  • Modifications and mitigation measures required by EDC; and
  • Project monitoring and evaluation documents generated by EDC, project proponents and consultants throughout project implementation. Financial and Insurance Support
It is recommended that Export Development Canada (EDC) utilize the Canadian CSR
Standards in the development of their policies, practices and in the assessment of proposed extractive-sector projects. It is recommended that EDC ask project proponents to undertake peace and conflict impact assessments or equivalent tools when operating in conflict zones.

During the course of the project, EDC should apply a compliance management process that includes, at a minimum, the following elements:

  • Enhanced efforts to make companies more aware of their human rights and environmental considerations; and
  • Efforts to bring non-compliant companies back into compliance through active engagement with the companies.

EDC’s contracts should provide that serious failure by extractive-sector companies to meet the Canadian CSR Standards should lead to the withdrawal of financial and insurance support when reasonable efforts by EDC and the Government of Canada to bring the company back into compliance have failed. EDC should develop and publicly release policies and guidelines for measuring “serious failure,” reflecting the Government of Canada’s work in this area. Among other things, in deciding whether there has been such a serious failure, EDC should take into account a finding by the Compliance Review Committee that the company is not in compliance with the Canadian CSR Standards and any accompanying relevant recommendations.