Press Responses: April 9, 2007

Industry, NGOs recommend CSR framework to govern Canadian miners abroad

Concluding a 10-month process that saw input from NGOs, mining, oil and gas companies and other groups, a recent report outlines a raft of recommendations that aim to address concerns over the social and environmental effects of resource extraction by Canadian companies in the developing world.

The process, which involved roundtables hosted in Vancouver, Calgary, Toronto and Montreal and was overseen by a multi-sector advisory group, was initiated by the federal government's foreign affairs committee to respond to concerns about Canadian extractive industries and a perceived lack of oversight on their operations abroad.

The recommendations include the establishment of a Canadian corporate social responsibility (CSR) framework for companies operating in developing countries that would employ Global Reporting Initiative (GRI) standards for increased transparency on social and environmental issues; establishment of an independent ombudsman's office to handle initial CSR complaints about companies; and the establishment of a Compliance Review Committee to deal with cases referred by an ombudsman.

The roundtable process started off last summer in Vancouver long on NGOs and short on miners, says Pierre Gratton, vice-president of sustainable development and public affairs with the Mining Association of Canada (MAC), and a member of the advisory committee.

"There's no question that NGOs were faster out of the starting gate," he admits.

"They were the ones who pushed for this process to begin with. But I think in the end, there was a fairly high degree of industry participation as well."

The advisory committee, made up of stakeholders with a history of conflict -- namely mining and oil and gas companies and NGOs such as MiningWatch--as well as other civil society groups, labour groups, plus investors -- was able to agree on a common framework with its final "groundbreaking" report, Gratton says.

"To achieve a consensus, I think we all feel, is a pretty remarkable thing."

Overall, the committee pored over 104 written submissions and heard from 156 presenters -- 61 from civil society, 33 from industry, 15 from labour groups, 31 who represented academia or research institutes and 16 from members of the public with no stated affiliation.

Although there were some points of contention -- specifically disagreement over whether government should legally regulate companies operating overseas by attempting to apply Canadian law extraterritorially -- Gratton says industry representatives MAC and the Prospectors and Developers Association of Canada fought hard to keep some things off the table.

The result -- which Gratton notes is not out of line with programs like MAC's Towards Sustainable Mining, or the earlier Whitehorse Mining Initiative -- is likely to be well received by miners.

"There's no question that compromises were made and there's no question that some of the recommendations are going to be a bit of a stretch for some companies," he says. "But I think we all felt that there is a benefit to the industry to have a framework in place that lays out very clearly what the expectations are, provides tools and access to tools to companies that need support, and that we have a mechanism like an ombudsman."

The recommendation to create an ombudsman's office to deal with complaints is the one that garnered the most support by all stakeholders, and will likely resonate the most with mining and exploration companies, Gratton says.

"Right now it falls into a black hole. There's no way of dealing with (accusations) -- it's 'he said, she said,' and when it plays out in the media, it invariably hurts the company," Gratton says. "This provides a place for it, a place for it to be looked at independently and responsibly and it provides potentially an opportunity for a company to clear its name."

Other recommendations in the report include: making reporting for Canadian companies operating overseas a requirement of listing on exchanges; establishing a "Centre of Excellence" for CSR that would provide advice and information to all stakeholders; the withdrawal of federal government support, including some tax benefits, from companies that are deemed seriously and chronically non-compliant with the new rules; and refundable tax credits for companies that report using GRI.

"It's not just sticks, there's carrots there, too," Gratton says.

It also calls for civil society groups to be more transparent, and for Canada to participate in and work to strengthen UN and other international voluntary regulations.

As for whether such an ambitious and comprehensive program is likely to be acted upon by the federal government, Gratton says two things.

One, the cost would not be prohibitive.

"I don't think the ombudsman's office, which is maybe one of the bigger-ticket items, is that big a ticket," he says.

And two, the government mandated the process in the first place and has participated throughout.

"Canada certainly has an opportunity to show leadership by enacting the recommendations of the process that it launched."