With interests in more than 8,000 properties in more than 100 countries, Canadian extractive-industry companies account for almost half of the world’s mining and mineral exploration activity.
It should therefore come as no surprise that Canada has come under scrutiny in the past, by international organizations like Transparency International and multilateral organizations like the OECD, for its less-than-rigorous corporate social responsibility (CSR) leadership abroad. In fact, it wasn’t until 2009 that Canada published its first CSR strategy, providing ethical guidance to, and laying out the government’s expectations of, Canadian companies abroad.
Fast-forward five years and the government has had the opportunity to engage industry groups across the country, soliciting feedback on the strategy and taking note of important suggestions for improvement.
The outcome, announced on Nov. 14, 2014, by Minister of International Trade, the Honourable Ed Fast, is Canada’s enhanced strategy, Doing Business the Canadian Way: A Strategy to Advance CSR in Canada’s Extractive Sector Abroad (the “Strategy”). The Strategy builds on Canada’s experience since 2009 and encourages Canadian companies to adhere to the “highest CSR standards and best practices while operating abroad” by setting the water-mark of acceptable behavior higher than it’s been before. It also sets out penalties for companies that are considered to have contravened the Strategy’s ethical objectives.
Key elements of the enhanced CSR Strategy include:
- Making, for the first time, the Government of Canada’s “economic diplomacy” conditional on a Canadian company’s alignment with the enhanced CSR Strategy;
- Increased support and additional training for Canada’s missions abroad to ensure Trade Commissioners and staff are equipped to detect issues early on and contribute to their resolution before they escalate
- Withdrawal of Government of Canada diplomatic support in foreign markets as a result of a company’s non-participation in government sanctioned dispute resolution mechanisms; and
- Increased support and training for CSR initiatives and services through Canada’s diplomatic network of missions abroad to ensure a consistently high level of CSR-related services for Canadian businesses and local networks and communities.
One of the most important changes to the previous policy is the threat of revoking diplomatic support abroad for companies that the government considers are not aligned with Canada’s enhanced CSR Strategy. Such support might include the writing of letters of support to local authorities, advocacy efforts in foreign markets and participation in Government of Canada trade missions.
When the enhanced Strategy was announced, Minister Fast made it clear that Canadian companies are expected to promote Canadian values and operate abroad with the highest ethical standards. He stated:“The enhanced CSR strategy bolsters our commitment to helping our Canadian extractive companies strengthen their responsible business practices. We expect our Canadian companies to promote Canadian values and to operate with the highest ethical standards,” said Fast. Further: “the Government expects Canadian companies to integrate CSR throughout their management structures so that they operate abroad in an economic, social and environmentally sustainable manner” and “respect...all applicable laws,..to meet or exceed widely-recognized international standards for responsible business conduct”.
The challenge for Canadian companies lies in understanding how they can act to ensure they’re “aligned” with the Strategy’s values. The Strategy does not elaborate on government’s decision-making parameters: there are no clear standards to be maintained, no clear guidance or deliverables offered and no real, tangible consequences for companies that don’t implement the Strategy.
The government’s objective may be to leave the details blank with the hope that this uncertainty compels companies to be proactive in aligning themselves with the Strategy.
There are many tools that a company can use to ensure its operations abroad are as ethical as possible, including codes of conduct, business integrity policies, employee and business partner education and training, and strong corporate and financial oversight mechanisms. Increasingly, Canadian resource companies are understanding that compliance with best CSR practices, in addition to allowing a company to remain onside with the enhanced Strategy, also allow companies to enjoy many other benefits of a strong CSR program. CSR can propel innovation, cost savings and brand differentiation. It can also assist a company to attract investors, employees and customers. It can be invaluable to local community engagement. Ensuring long-term local support for projects can go a long way to promoting a company’s stability and corporate growth.