Bill C-300 (Historical)

Corporate Accountability of Mining, Oil and Gas Corporations in Developing Countries Act

An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries

The purpose of this enactment is to promote environmental best practices and to ensure the protection and promotion of international human rights standards in respect of the mining, oil or gas activities of Canadian corporations in developing countries. It also gives the Minister of Foreign Affairs and Minister of International Trade the responsibility to issue guidelines that articulate corporate accountability standards for mining, oil or gas activities and it requires the Ministers to submit an annual report to both Houses of Parliament on the provisions and operation of this Act.

[The Chair, Conservative, Kevin Sorenson]

It didn't necessarily come up, but my understanding is that we'll get back to it when Bill C-300 is done.

All right. So we're all in favour of number one.

Number two is that in accordance with the motion adopted, we invite Peter Kent to appear before the committee as soon as possible.

[The Chair, Conservative, Kevin Sorenson]

No, we've had the departments here, and we've had a number of mining associations, and we've had Mr. McGuinty—who was on his own exploration group—and we've had the EDC. We're trying to bring balance to this, but there are a number of other witnesses. I'm told by the clerk this is not just to extend the study of Bill C-300, but to extend this for witnesses.

If we need extra time for clause-by-clause consideration in January, we'll do that, but this is really four extra hours. So it's two days, albeit four hours. I'm told by the clerk this would be sufficient to hear from the witnesses on the paper right now.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

If I may, Chair, I think we need at least an additional two meetings. I'm just wondering, by passing this report, if it's going to then constrain us to two meetings. The reason I say this is because we have been hearing, on Bill C-300, all the way through, from dominantly people who have been in favour of Bill C-300. I think the first time, to my recollection, that I recall any really cogent argument against Bill C-300 was in one half meeting, namely EDC.

[The Chair, Conservative, Kevin Sorenson]

No. Committee business is public unless we request to move in camera for some item.

Has everyone received a copy of the steering committee report?

I am just double-checking on this. The steering committee meets in camera. They deliver a report. If you choose to go in camera you can, but it is public unless you choose.

We have four items on the steering committee report for which we would ask your support in passing. The first one is that the committee has scheduled two additional meetings to Bill C-300. This would take away from your schedule the two meetings that we had on Africa. That would be on November 24 and 26. This would also allow us the opportunity in December to then go clause by clause on Bill C-300.

Mr. Abbott.

[Deepak Obhrai, Conservative, Calgary East, AB]

Thank you very much, Mr. Chair, and thank you very much to EDC for coming.

I would like to raise two points that I would like your expertise on.

The previous speakers who came before us brought along their expertise in development and human rights. Although I was very concerned about Mr. Alex Neve saying “I don't really care whether there is something...” when they said this is the approach Canada takes. Canada takes, as you rightly pointed out...to work together. But their expertise is in this, and your expertise is in business.

I want to go on to what Bob Rae said about the investment process and the business that you've been doing, which is giving money, and the impact, which you rightly pointed out, of the mining industry in Canada. But we seem to have forgotten one serious factor. My colleague from the NDP keeps talking about DRC because he made a trip to DRC. I made a trip to Tanzania and to Zambia, where the copper industry is going on, and to Papua New Guinea and all these places, and as my colleague said about Mongolia, a tremendous investment is being done and impacting the local economy. Papua New Guinea's ambassador to the UN said 12,000 people in Papua New Guinea are not living on dollars a day, which he's talking about, but are actually making a fantastic living out there. So we have this whole economic factor out there.

I have two points on the issue you brought out here. One, what impact, which you're already talking about, will it have on the Canadian companies moving out? For example, we know China is going out to Africa and signing all these deals out there, and there are no standards as far as China or other countries are concerned. They are moving right in there. Now, I'm not saying that Canada should not have standards. That is why we were at this year's round table conference, and we came out with very good suggestions with every stakeholder there. It was very good. The companies, the NGOs, and everybody took part in that. That should be the first stepping stone.

The second factor is the international standards that you're talking about—human rights. As you rightly pointed out, the three environmental ones that came out of the World Bank are applicable to everyone across the world. Why can we not then, at that given time, wait for those international standards to develop through the pressure that the NGOs are talking about, going to their members and going to all these things, using the same pressure to come out so that there is an international standard out there, so that everybody has a level playing field, including China and everyone? Nobody is talking about China. My friend talked about Talisman out there. Let's go to Africa and see what is happening with the investment that China is making out there, in absolute disregard of everything here.

My question here would be about the impact of Bill C-300, the chilling factor on investment, not here but abroad, as well as on the international standards, which are not a level playing field.

[Bob Rae, Liberal, Toronto Centre, ON]

I think you've certainly whacked away at the bill. But if there were a change to the wording of the bill, for example, if we were to suggest that the ombudsman or minister, or whoever's making the determination, would have to find a serious breach of the guidelines, I wonder whether that would not be out of line with what you're in fact already doing. It's just that you have your own standards and your own internal operations. You make your own decisions, which are not reviewable. We can't decide, as we don't know which companies are applying or not applying—and that's entirely appropriate—but we don't have any external mechanism to know what those standards are and how they're applied. I'm not being critical of EDC; I have a very high regard for EDC from my own professional work.

But I'm just wondering, do you not see the concern that we need some sort of process? It sounds to me like the process that's being suggested in Bill C-300 is not completely different. It's not as if you're rejecting the importance of CSR or saying that you don't actually turn down companies you don't think meet your standards or that you're not prepared to do that.

I don't know why we feel we have this huge chasm between what's being proposed in Bill C-300 and what is already under way. I regard Bill C-300 as a modest extension of what's already in place. I think with a little bit of work that's how it could in fact operate.

[Jim McArdle, Senior Vice-President, Legal Services and Secretary, Export Development Canada]

Thank you, Mr. Chairman, and thank you to the members of the committee for inviting me to speak to you today about Bill C-300 and the impact it would have on the Canadian companies EDC serves if we were to be included in it.

I am here today both as Senior Vice-President for Legal Services and as the executive responsible for CSR. As such, I have worked on CSR issues both on the policy level as well as in the context of the transactions I have worked on as a lawyer.

As I’m sure you already know, EDC provides financing, insurance, and risk management solutions to help Canadian exporters and investors succeed in the global marketplace. Our mandate is to support and develop Canada’s export trade and Canadian capacity to engage in that trade, and to respond to international business opportunities. In this way, we work to ensure that Canadians have a level playing field when competing against exporters from other countries.

In our opinion, including EDC in Bill C-300 would put Canadian companies at a significant disadvantage to exporters from other countries and severely inhibit EDC's ability to support Canadian companies and apply our CSR procedures and processes. Let me state clearly, however, that EDC supports the intent of Bill C-300 and shares the belief that Canadian companies should conduct their business in a socially responsible manner, no matter where in the world they operate. However, we believe that the best way to both promote human rights and ethical conduct and to improve environmental conditions related to projects around the world is by working with companies to proactively help them build their capacity in a responsible manner. Where there are established and clear international standards, we hold companies to these standards often in challenging environments.

I think it is important to note, though, that our experience confirms that the international community is struggling with how companies can integrate human rights issues into their daily global business practices, and currently there is no consensus on internationally recognized human rights standards for financial institutions to apply. However, I'm pleased to say that EDC is a very active participant in the international dialogue in this area. For example, EDC is a main sponsor of—and I will be a participant in—an expert meeting next week with John Ruggie, the special representative of the UN Secretary General on business and human rights, entitled “Opportunities and Challenges of Using Corporate Law to Encourage Corporations to Respect Human Rights”.

At EDC, leading-edge corporate social responsibility policies and procedures guide our activities every day. Over the past decade, we have worked hard to develop one of the world’s most comprehensive CSR programs among export credit agencies. EDC has been evolving its CSR standards consistent with international best practices. Our corporation actively supports a number of international commitments, including the Equator Principles, which only two other export credit agencies have signed on to. Being an EDC customer means that your transaction will be seen as having met some of the highest standards applied by any export credit agency.

For our corporation, CSR isn’t about checking boxes; it is an integral part of how we operate and is an ongoing process with our customers. EDC conducts CSR assessments when our support is in relation to sensitive markets or projects in order to ensure that the project and company in question meet our CSR requirements. If there are areas in which we believe a company is not up to those requirements, EDC gives direction and advice to the company on how they should improve. If a company does not meet our strong requirements after this, they will not receive EDC support.

By engaging with companies in this way, EDC is able to provide a balanced approach to CSR: to help build the CSR capacity of Canadian companies as well as ensure that they meet the internationally recognized standards we apply, while still providing the financing and insurance solutions they need to succeed on the international stage. We believe Bill C-300 would severely jeopardize our opportunities to engage with Canadians this way.

Including EDC in this bill and imposing compliance standards, several of which standards are, as noted earlier, still in the process of being defined and agreed upon by the international community, would require EDC to exit a relationship with any Canadian company the moment a CSR violation has been determined. This approach has at least two direct negative impacts. First, it restricts us from working with the Canadian company to remedy the issue and improve their standards; and second, we believe it will mean they won't access capital from EDC in the first place.

We believe that the uncertainty caused by the application of this bill and the standards would also impact other lenders’ willingness to provide financial intermediation to Canadian companies. If this happens, the void left by the Canadian companies will be filled, more than likely, by other international players with less regard for CSR.

Let me explain how this would occur. According to the wording of this bill, if a determination is made that a company has breached the guidelines during the period of a loan or an insurance policy with EDC, EDC would be required by the bill to terminate that loan or policy whether or not EDC has the right to do so under the contract. Therefore, we would have no ability to work with the company to have them remedy the situation in question.

Secondly, EDC cannot allow itself to be in the position of being required by the bill to terminate our support without having the right to do so under the contract. Our experience tells us, however, that Canadian companies, as well as other lenders, would be unwilling to accept such an EDC right in the contract, as its application would be out of their control and in the hands of a third party. That means that if Bill C-300 becomes law, EDC's ability to provide lending and insurance as well as to apply our rigorous CSR standards to projects and companies in the extractive sector will be seriously compromised. And given that the bill captures all business activity with a connection to the extractive sector regardless of size or product, all Canadian businesses along the supply chain would be negatively impacted by EDC's forced departure from the market.

The significance of this departure would be deeply felt here in Canada. In 2008, for example, EDC facilitated $27.4 billion of exports and investments in the extractive sector. EDC's support in this sector helped generate $21.4 billion in Canadian GDP and sustain 139,000 Canadian jobs in communities across the country.

EDC enables Canada to be a leader on CSR without tilting the playing field against Canadian companies. What we do at EDC is reviewed and regularly benchmarked, including by the OAG. To impose standards out of step with the rest of the world would not, in our view, improve CSR. It would only hurt Canadian companies and take them out of the game.

We believe there is a big difference between being a leader and a cheerleader. A leader is on the playing field, working with the team and using their skills and resources to reach the goal. A cheerleader is on the sidelines, hoping for the best. Today EDC is on the playing field, working with Canadian companies, influencing them, and building their CSR capacity. If this bill becomes law, we believe that our opportunities to be on the field would be severely limited. Instead, we as Canadian companies and EDC would be on the sidelines hoping that the other companies who remain in the market do the right thing from a CSR perspective.

Thank you very much. I'd be happy to take questions.

[The Chair, Conservative, Kevin Sorenson]

Thank you, committee.

In the second portion of our meeting today, we're going to continue in our study of Bill C-300.

We have appearing, from Export Development Canada, Jim McArdle, the senior vice-president, legal services and secretary. Again, you were here for the opening hour. We'll give you an opportunity for opening comments, and then we'll move into the first round of questioning.

Welcome, Mr. McArdle. We look forward to what you have to say.

[Michael Casey]

I'll be very brief.

We fully support the comments of Mr. Neve on this. There has been a disappointing lack of evidence that voluntary compliance works. We feel it is necessary that there be more teeth put into compliance mechanisms and enforcement, which we feel is the necessity for Bill C-300 to go beyond the recommendations that were in the round table's report.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you, Chair.

Thank you to our guests for their presentation today and for lending a voice to human rights, both here in Canada and abroad. I applaud the work they've both done, not only in their interventions here but in connecting with Canadians about the importance that we as a country demonstrate in walking the walk. We are the country of Mr. Humphrey's UN Declaration of Human Rights, which everyone around this table is proud of and, as Canadians, we should all be proud of. But it matters little if we don't actually get behind those words and do something.

One of the things that have disturbed me is the lack of coherence when it comes to human rights protection. I say “coherence” because I'm not going to get into the invectives and the cleavages that might be attractive in this debate. I'll give you the example of the Congo, from last spring.

We have 75% of the population living on a dollar a day. We have Canada's reach, through its mining intervention, responsible for about $300 billion in assets. We have people making money off this, in other words, and that's what companies do. No one's going to challenge that thesis. So when you look at these equations, a dollar a day--and by the way, the amount of money that the Congolese government receives from mining is about 60% or 70% of their budget. Yet when you look at the revenues they derive, it's about 5% of what comes out of the mining industry, so 95% goes, I guess, for operations, but probably a little bit to profit.

I think what people are looking for is some coherence. What is our responsibility? I see Bill C-300, as many of us would like to see, doing a little more. The tripartite approach is something that we would like to see, but Mr. McKay can't do that because it's a private member's bill.

So I hear from those who say, well, the voluntary approach is what we're doing and that's okay--and we're probably going to hear that from the EDC. Then I see the results of what I just laid out, a disproportionate redistribution of wealth but also the outcomes. And I won't get into that. People can read it for themselves, and I just hope that they get into it.

I'm not giving a speech; I'm laying some facts out, Mr. Goldring. I think it's a matter of people understanding that we do have a responsibility here.

I'll start with Mr. Neve. Do you see whether there is any other way, other than legislation, to ensure that human rights are actually going to happen? Do you know of any other jurisdiction or any attempt through voluntary methods to ensure that human rights are protected, and if so, where?

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Don't you think that's rather important? I mean, let's take as an example.... I was very pleased to see recently, as I'm sure most of us were, that there had finally been an agreement between a Canadian mining company in Mongolia and the Government of Mongolia respecting issues regarding royalties and that kind of thing so that the company should go ahead. One of the few other companies in the world that would be big enough to be able to handle that particular extraction in Mongolia would be, say, a firm like Rio Tinto out of Australia, who will not have to comply with Bill C-300.

Going to Mr. Neve's point, if this were to proceed, there would likely be a substantial difference in the availability of financing to a Canadian company, as well as other restrictions that a firm like Rio Tinto, because of their jurisdiction, would not have. Therefore, I postulate that a Canadian company would not have been able to enter into this kind of gigantic mining project that they're talking about in Mongolia, and for Mr. Neve to turn around and say that's irrelevant I find really quite cavalier.

[Alex Neve]

I'll be honest with you. Amnesty International had not called on Talisman to leave Sudan. We didn't say that they should stay; we didn't call on them to leave. We certainly were pressing them to adopt stronger human rights policies in the way they were operating in Sudan and to use the opportunity of being in the country to better promote human rights reform within the Sudanese government.

We agree with you, therefore, that in many respects it's a setback. It has been difficult to maintain and exert pressure on the Sudanese government with respect to the operations in the oil fields. But I don't think that means that Bill C-300 is a flawed approach. Bill C-300 isn't calling for Canadian companies to leave countries; Bill C-300 is calling on companies, requiring companies, to live up to human rights obligations. I think that if Talisman Energy had had those at the centre of their operations back in the mid- to late 1990s as they were moving into Sudan, they would have moved in a very different way. They would have had different policies and programs in place and would have been able to make a much more positive impact early on. Probably a lot of the controversy that later erupted, including problems they ultimately had with their own share prices because of that controversy, would have been, if not avoided, at least minimized. And they may not have been required to leave in the end.

[Alex Neve]

I'll take 30 seconds.

I think the requirement that there be new Canadian standards that explicitly incorporate Canada's international human rights obligations is absolutely key. It's missing in the current strategy. Yes, of course Bill C-300 doesn't propose the creation of the ombudsman or the tripartite compliance committee, which the round table process had. But the powers given in Bill C-300 to ministers to ensure that there will be proper investigation of allegations of a failure to conform to those standards, leading to public findings, are absolutely essential, as are repercussions and implications with respect to eligibility for various forms of government assistance.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you.

First of all, I want to express my sincere thanks to both Amnesty and Development and Peace for their enormous support in moving Bill C-300 to this stage and hopefully beyond.

Sometimes we sit here inside of some kind of objectivity bubble and talk about human rights. We talk about all kinds of initiatives at the UN and various other places. We don't actually get a feeling for what this is like on the ground.

Last week I talked to a man from Guatemala who had seven bullet holes in him, apparently courtesy of--I won't get into the facts--a Canadian mining company.

Again last week I talked to the former environment minister for Argentina, who talked about the ugly face of Canadians in Argentina and how it's actually destroying our reputation with that country.

I'd like you, Mr. Casey, but also Mr. Neve, to give Canadians examples of where mining operations in particular have gone wrong, whether it's Guatemala, Honduras, Papua New Guinea, Argentina, or Chile, where it is your personal experience, or the experience of your organizations, to give witness to those things.

The second question, if you can answer it, is to make the linkage between those particular companies, those particular issues, and Canadian financial support of those companies.

I wonder if you could possibly start, Mr. Casey.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you, Chair.

Before I ask the witnesses a question, I have to register an objection to this format, Chair.

We have EDC representatives sitting in the room here. For some bizarre reason--this was last week and now this week--you choose to not put the two together. There should be a conversation between those who are in favour of Bill C-300 and those who are against it.

I'm a guest to this committee, but I do want to lodge that objection. There should be a reasonable debate. Otherwise, we just end up talking--