Evidence of meeting #23 for Foreign Affairs and International Development in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was abdelrazik.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Louise Léger  Director General, Trade Commissioner Service - Client Services (BSD), Department of Foreign Affairs and International Trade
Donica Pottie  Director, Democracy and War Economies Division, Department of Foreign Affairs and International Trade
Sara Wilshaw  Director, Trade Commissioner Service Support, Department of Foreign Affairs and International Trade
Sabine Nölke  Director, United Nations, Human Rights and Economic Law Division, Department of Foreign Affairs and International Trade
Rob Walsh  Law Clerk and Parliamentary Counsel, House of Commons

3:30 p.m.

Conservative

The Chair Conservative Kevin Sorenson

Good afternoon, colleagues. This is meeting number 23 of the Standing Committee on Foreign Affairs and International Development on Monday, June 1, 2009.

In our first hour, we are going to continue our study of Bill C-300, An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries. We have today, from the Department of Foreign Affairs and International Trade, Louise Léger, director general, trade commissioner service, client services. Welcome. We also have Donica Pottie, director, democracy and war economies division; Sabine Nölke, director, United Nations, human rights and economic law division; and Sara Wilshaw, director, trade commissioner service support.

I understand the director general has an opening statement. Then we'll proceed with questions about this bill.

Again, thank you for coming to our committee today.

3:30 p.m.

Louise Léger Director General, Trade Commissioner Service - Client Services (BSD), Department of Foreign Affairs and International Trade

Thank you very much, Mr. Chair, for the opportunity to speak to you today.

Having served abroad in Colombia, Switzerland, and Israel and as a Canadian ambassador to Panama and Costa Rica, I can tell you firsthand that corporate social responsibility, or CSR, is an issue of great relevance to Foreign Affairs and International Trade Canada, both at headquarters and in our diplomatic missions around the world. The department plays an active role in supporting Canadian companies to develop and implement CSR practices and in fostering uptake of these principles within Canadian corporate culture. As you are aware, our departmental priorities include advocating and supporting respect for freedom, democracy, human rights, and the rule of law. The Prime Minister has directly, and often, reiterated these priorities.

Another key departmental priority is promoting and achieving greater economic opportunity for Canada, with a focus on growing and emerging markets. The department pursues a global commerce strategy to secure Canada's growth and prosperity. This does not mean we promote Canadian companies at any cost. We believe strongly in a win-win approach and that Canadian investment can and should contribute to prosperity and sustainable development in other countries. Having 150 missions across Canada and around the world allows us to pursue this growth and prosperity for Canadians and the Canadian economy.

With respect to the role of the Government of Canada in the area of corporate social responsibility, the trade commissioner service performs several key roles, including advising and counselling companies on Canada's CSR expectations and referring clients to relevant and applicable information tools and guidelines.

Canada's approach to CSR is to encourage and expect Canadian firms operating abroad to respect all applicable laws and international standards and to reflect our values and international commitments. Canada also supports and encourages the Canadian business community to develop and implement CSR standards, tools, and best practices. There is, however, a limit to what companies can provide to support the social, health, environmental, and education concerns of the communities in the sovereign states within which they operate. Host governments are responsible for legislation and programs that meet the needs of their own citizens. Foreign corporations must operate within that domestic legal framework.

Canada also engages on CSR-related issues at a variety of multilateral fora, including the Organization for Economic Cooperation and Development--the OECD; Asia-Pacific Economic Cooperation--APEC; G-8; la Francophonie; the Organization of American States--the OAS; and the United Nations.

Through the engagement of DFAIT, Canada has supported the work of the special representative of the UN Secretary-General on business and human rights, Dr. John Ruggie, since 2005, and welcomed the release of his report, “Protect, Respect and Remedy: a Framework for Business and Human Rights”, in 2008.

In light of the importance of CSR, the Government of Canada continues to enhance the ability of our trade, political, and development officers in Canada and abroad so that they have the information and tools they need to provide timely and effective CSR counsel and advice to our companies operating abroad. To this end, DFAIT has

First, trained trade and political officers including departing Heads of Missions with respect to CSR policies, guidelines and standards.

Second, created an internal intranet website which is at the disposal of all missions abroad and regional offices in Canada as the primary vehicle for guidance on CSR.

Third, created a $180,000 CSR fund which is a resource for missions and regional offices to foster and promote CSR.

Fourth, issued CSR e-bulletins on a monthly basis from headquarters to all the missions with the latest CSR news from headquarters and around the world to keep the missions informed of the latest CSR developments.

And lastly, created an Internet CSR website which contains a significant amount of information about the department's activities and policies.

Most companies understand that CSR has become a critical part of doing business, and that in order to be credible, CSR principles must be embedded within core business strategies and corporate culture. This is reflected in the concept of "earning" the social licence to operate. We understand that it is also essential to obtaining financing.

The government's new CSR strategy, “Building the Canadian Advantage”, was developed through consultations undertaken with a number of stakeholders, including the national round tables as well as recommendations raised by the Standing Committee on Foreign Affairs and International Trade in its 2005 report entitled “Mining in Developing Countries--Corporate Social Responsibility”.

A number of federal departments and agencies contributed to its development, including Natural Resources Canada, the Canadian International Development Agency, Industry Canada, Environment Canada, Indian and Northern Affairs Canada, Justice Canada, Human Resources and Skills Development Canada, and Finance Canada, as well as Export Development Canada.

Canada's new CSR strategy builds on Canada's long-standing adherence to the OECD guidelines for multinational enterprises, which contain recommendations for voluntary performance standards for responsible business conduct.

Since 1999, the Department of Foreign Affairs and International Trade has been home to Canada's national contact point, or NCP for short, which is responsible for promoting awareness of the OECD guidelines and reviewing reports of specific instances of non-compliance with these guidelines. The NCP provides a mechanism for dispute resolution. Canada's NCP is set up as an interdepartmental committee, which I presently chair.

With respect to Canada's new CSR strategy, it is founded on four key pillars. The first pillar calls for continuing assistance from CIDA for the governments of developing countries to enhance their capacity to manage natural resources in a sustainable and responsible manner. Resource governance, transparency, and accountability in developing countries are critical to ensuring that the extractive sector contributes to poverty reduction. These factors are also essential to creating a business environment that is conducive to responsible corporate conduct in countries where Canadian companies operate. This first pillar builds on existing initiatives where CIDA has played a key role. For example, in Peru, CIDA has worked extensively with the Peruvian government, mining companies, and affected communities to develop regulatory requirements for social and environmental management.

The second pillar of this strategy calls for the promotion of internationally recognized voluntary CSR performance and reporting guidelines. In addition to our continued support for the OECD guidelines, the government will promote the following international CSR performance guidelines.

First are the International Finance Corporation performance standards on social and environmental sustainability for extractive projects with potential adverse social or environmental impacts. These are the de facto performance benchmarks for projects in developing countries that require substantial financial investments.

Second are the voluntary principles on security and human rights for projects involving private or public security forces. At the 2009 plenary in Oslo, Canada was welcomed to this process as the first engaged government under the new participation framework.

Third is the global reporting initiative, or GRI, for CSR reporting by the extractive sector to enhance transparency and encourage market-based rewards for good CSR performance.

These widely recognized international standards will form the basis for Canada's commitment to supporting continuous improvement in the CSR performance of our extractive sector companies operating abroad.

The third pillar of this strategy involves support for the development of a new CSR centre of excellence. In order to address CSR in their operations, Canadian companies need information, education programs, and tools. This one-stop shop would provide information for companies, non-governmental organizations, and other relevant stakeholders. We're currently in discussion with the Canadian Institute of Mining, Metallurgy and Petroleum, CIM, in Montreal, to provide a home for the CSR centre of excellence, which will work with stakeholders to develop the centre.

Finally, the fourth pillar of this strategy calls for the creation of the office of the extractive sector CSR counsellor. This office would be responsible for providing assistance in the resolution of social and environmental issues related to Canadian extractive sector companies operating abroad. The counsellor will review and document the CSR practices of Canadian extractive companies operating abroad and advise stakeholders on the implementation of CSR performance guidelines. Requests for review by the counsellor may originate from an individual, group, or community, or their representatives, who reasonably believe that it or they may have been adversely affected by the activities of a Canadian extractive company outside Canada. The counsellor will undertake reviews with the consent of the involved parties.

This consensus-based approach will help facilitate constructive and meaningful engagement among stakeholders toward finding a sustainable resolution to CSR-related concerns.

The counsellor will issue a public statement after each review, including on requests that could not be completed because there was no agreement amongst the parties to proceed. The counsellor will also submit an annual report to be tabled in Parliament by the Minister of International Trade.

We anticipate that the advertisement for the counsellor's position will be published in the Canada Gazette in the next few weeks, and we are aiming to have the position filled by September 2009.

In conclusion, “Building the Canadian Advantage” strategy represents a comprehensive step in defining our role in supporting and promoting responsible corporate practice.

Thank you, Mr. Chair. We'd be pleased to answer the committee's questions.

3:40 p.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you, Ms. Léger, for your opening statement.

I just want to ask you if you've had an opportunity to take a look at Bill C-300.

3:40 p.m.

Director General, Trade Commissioner Service - Client Services (BSD), Department of Foreign Affairs and International Trade

3:40 p.m.

Conservative

The Chair Conservative Kevin Sorenson

Because none of your opening statement really looks forward to Bill C-300; it looks back to where we are currently.

But you're all prepared to answer questions in regard to the new legislation before us? Thank you.

We'll move to the opposition, and Mr. Patry.

3:40 p.m.

Liberal

Bernard Patry Liberal Pierrefonds—Dollard, QC

Thank you very much, Mr. Chair.

Thank you to today's witnesses. I will be sharing my time with Mr. Pearson, and Mr. McKay.

Ms. Léger, in your opening statement, you talk about four pillars. The fourth pillar of the strategy calls for the creation of the Office of the Extractive Sector CSR Counsellor. This office would be responsible for providing assistance in the resolution of social and environmental issues related to Canadian extractive sector companies operating abroad. You will also advise using CSR practices.

However, on the last page, you state that the counsellor will not undertake reviews without the consent of the involved parties. From what I understand, if a party does not agree to being subject to a review, regardless of the mining company concerned, this means that there will be no review.

3:40 p.m.

Donica Pottie Director, Democracy and War Economies Division, Department of Foreign Affairs and International Trade

It is true that the CSR counsellor could not proceed with an investigation if either party decided they didn't want it to continue. So in the case where the CSR counsellor might receive an allegation from the local community, the counsellor would then approach the Canadian company and ask the Canadian company whether it would be willing to proceed to the next step.

If the Canadian company says no, then the counsellor would issue something in writing on the counsellor's website, and it would also go into the counsellor's report to Parliament that this allegation had been received and that the company had declined to allow the counsellor to be involved in trying to understand the facts and do some informal mediation.

We feel that making public the fact that the allegation was received and the company declined to proceed will have a consequence for the company. Many companies, of course, or most of our companies, do want to resolve their CSR disputes with local communities or individuals and would agree to allow an issue or an allegation to proceed, but if they didn't, there would be a written record and that would be made public.

3:45 p.m.

Liberal

Bernard Patry Liberal Pierrefonds—Dollard, QC

Ms. Léger, you also said that the Department of Foreign Affairs and International Trade created a special fund worth $180,000 which is a resource for missions and regional offices to foster and promote CSR.

This is not a lot of money, considering that there are 150 consulates and embassies located throughout the world. This barely amounts to $1,000 per establishment. What will you do with the $180,000? For me, this is peanuts: we can't do anything with $180,000. You can create an intranet website and a bunch on things, but on the ground, in countries where Canada does not have a consulate or embassy, what can we do?

3:45 p.m.

Director General, Trade Commissioner Service - Client Services (BSD), Department of Foreign Affairs and International Trade

Louise Léger

I must clarify that the $180,000 is being used exclusively abroad or by our regional offices. The other tools that we have just presented will be financed through our own funds. As these resources are to be used exclusively for the extractive industry, many of our missions abroad can be eliminated.

Last year, we were still able to hold an impressive number of seminars and conferences, often with other partners. In those cases, the only costs that applied were the transportation costs of our invited experts. Often, our missions organize one or two-day conferences in collaboration with local governments and civil society. During these conferences, we promote corporate social accountability and the obligations our companies must fulfil in that context.

With very little money, we have also been able to organize 20 or so different presentations in Africa, and primarily in Latin America, presentations which are ongoing this year. We have $180,000 each year.

The missions give us concrete proposals of what they wish to do. I believe that the maximum amount allocated to each project is perhaps in the order of $10,000, but the average is $7,000 to $8,000 per initiative; these events attract some 100 to 150 people, and rooms are filled to capacity.

3:45 p.m.

Conservative

The Chair Conservative Kevin Sorenson

John.

3:45 p.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

Thank you.

I'm on subsection 5(1), “Limitations of Authority” and it says “The Counsellor shall not review any activity that occurred before the day on which the first Counsellor was appointed.”

Am I reading that correctly, that any current activity cannot be investigated by the counsellor?

3:45 p.m.

Director, Democracy and War Economies Division, Department of Foreign Affairs and International Trade

Donica Pottie

You are reading that correctly. There's no provision to grandfather.

3:45 p.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

So any activity, no matter how egregious, that is occurring today could not be investigated?

3:45 p.m.

Director, Democracy and War Economies Division, Department of Foreign Affairs and International Trade

Donica Pottie

There's no grandfathering provision in the CSR strategy. However, if it is continuing on the day the counsellor is appointed, then it could be investigated from that period onward.

3:45 p.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

The counsellor may review an issue or receive a request from an individual group or community that may be adversely affected. So if the individual group or community is not adversely affected, i.e. it isn't a part of that community, can it initiate a complaint?

3:45 p.m.

Director, Democracy and War Economies Division, Department of Foreign Affairs and International Trade

Donica Pottie

The paragraph you read is almost meant to be read in the reverse. The idea is that if communities believe they could be adversely affected, or if they have concerns in advance of a mining operation really being present on the ground, they can come to the counsellor in advance of a problem. The point of that was just to enable the counsellor to engage companies and communities early on in the development cycle of a mining operation to try to avoid problems.

3:45 p.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

But if I'm an NGO, for instance, and I observe something on the ground, it seems to me that I would not be able to complain to the counsellor. Is that correct?

3:45 p.m.

Director, Democracy and War Economies Division, Department of Foreign Affairs and International Trade

Donica Pottie

Sorry, I misunderstood your question.

Representatives of individuals or communities that are affected can make representation on behalf of that community. So Canadian NGOs who are active on these issues could represent a community and bring forward a specific instance or a case for the counsellor.

3:50 p.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

You have a section in here that says they will not initiate or undertake a review without the written express commitment of the parties involved. You indicated in your response to Mr. Patry that even in the middle of an investigation, the company could withdraw its consent. Is that correct?

3:50 p.m.

Director, Democracy and War Economies Division, Department of Foreign Affairs and International Trade

Donica Pottie

There are four separate stages to the process. The first stage would be that the counsellor would receive a letter or some form of communication and would then go to the company. And I should add here that it could happen in reverse. Companies can decide that they're subjected to frivolous and vexatious complaints. But in the more standard way of thinking about it, an NGO or a community or an individual could come to the counsellor. The counsellor would approach the company to see if it was willing to let the counsellor first embark on informal fact-finding. That could include going to the place itself and interviewing people, talking to people, and trying to figure out what's happening. After the informal fact-finding, if the counsellor feels that informal mediation is warranted and would help in this situation, then the two parties would be asked whether they agree to proceed to that step. If informal mediation doesn't succeed in coming up with a game plan forward to resolve the situation or to mitigate the situation, then the counsellor would ask whether the parties would like to be put in touch with a formal mediation process, with the expertise that could formally mediate.

3:50 p.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

Unfortunately, my time is up, but I want to--

3:50 p.m.

Conservative

The Chair Conservative Kevin Sorenson

It is, yes. We'll get back to you on a second round.

Ms. Deschamps, you have seven minutes.

3:50 p.m.

Bloc

Johanne Deschamps Bloc Laurentides—Labelle, QC

Good afternoon, ladies.

As concerns the strategy that the government has had us talking about recently, it is a far cry from the recommendations in the round table report; however, extraordinary work has been done in the last two years. Among many things, 104 submissions were tabled, 156 oral presentations were made, 50 experts were invited to participate, and there were more than 101 hours of public hearings with the public and experts. A consensus has nonetheless emerged from these consultations, and recommendations were presented to government that are not necessarily part and parcel of the strategy it is now proposing.

When the government unveiled its new strategy, it claimed that the strategy was based on consultations with various stakeholders. Who was consulted, and how were the consultations carried out? We still had to wait for two years to go by before the government responded to the round table reports. What approach did the government use and which groups were consulted? I am not entirely convinced that it consulted the round table reports.

Page 2 of your statement reads as follows: "Host governments are responsible for legislation and programs that meet the needs of their citizens [...]." This is all very well, but in Africa, some countries have no government structure, and most companies operating there are wealthier than the emerging country itself.

How can we encourage those governments to adopt legislation that meets the needs of their citizens, when CIDA has allowed eight African countries to fall by the wayside as it assists others, for reasons known only to the government. I don't know how we could support them. I am referring specifically to Africa, because some countries there have no structure in place and societies are at the mercy of corruption.

3:50 p.m.

Director General, Trade Commissioner Service - Client Services (BSD), Department of Foreign Affairs and International Trade

Louise Léger

If I may, I will answer your second question. Ms. Pottie can talk to you a bit more about consultations with civil society.

In many countries, when foreign investors arrive, it happens too often that local, even national governments will wash their hands of these regions. In other words, a company wants to invest, and all of a sudden it becomes responsible for building schools, roads, setting up health care services, and providing basic services that all governments must ensure their citizens. Countries, or local governments, often say that when a foreign company arrives on the scene, it has to act. I have even witnessed a case of a community that became completely and utterly dependent on a project because it provided basic services that had absolutely nothing to do with the project. In addition, the local governments located three provinces away claimed that their power plant had broken down, and since the company was present and providing electricity, it should build a new thermal plant.

We have clearly seen that there are companies that choose to invest in certain communities, fulfil their duties and provide what they are obliged to provide, but they must not replace local governments. Everyone knows that one day a project must come to an end—fortunately the most serious companies will always have an exit strategy—but when that happens, there will no longer be a school, there will no longer be a clinic, there will be nothing. We advise our companies to carefully choose the projects and initiatives that a community will benefit from. We also advise them to be careful and to not replace local governments.

A very large number of additional consultations were held in a more targeted manner. I myself took part in some of these consultations at the end of the round table, and many associations were consulted. Some companies were consulted more extensively. Our people working abroad were consulted, and we asked them what the local governments' and foreign governments' expectations were. There was that aspect as well. I know that this committee has undertaken additional consultations with civil society. We can therefore involve the same groups that have been participating since the beginning, but proceed in a more in-depth manner.

3:55 p.m.

Conservative

The Chair Conservative Kevin Sorenson

You have one minute.