Foreign Affairs Committee on Nov. 17th, 2009

[The Chair, Conservative, Kevin Sorenson]

Bonjour, chers collègues.

This is the 39th meeting of the Standing Committee on Foreign Affairs and International Development, on Tuesday, November 17, 2009. Our orders of the day include a return to our committee's study of Bill C-300, an act respecting corporate accountability for the activities of mining, oil, or gas in developing countries.

As our witnesses on our first panel today, we have, from the Canada Pension Plan Investment Board, Ian Dale, the senior vice-president, communications and stakeholder relations, and Donald Raymond, senior vice-president, public market investments.

Welcome to you.

Also, from the Prospectors and Developers Association of Canada, we have Anthony Andrews, the executive director, and Bernarda Elizalde, the program director for sustainable development.

We also have Robert Wisner appearing as an individual.

I'm not certain if any or all of you have attended committee meetings before, but we look forward to your opening statements and then we'll move into different rounds of questions that the members of this committee may have for you.

Perhaps I'll just open up the invitation to Mr. Dale and we'll proceed from there.

Mr. Raymond.

[Donald Raymond, Senior Vice-President, Public Market Investments, Canada Pension Plan Investment Board]

Thank you very much, Mr. Chairman.

My name is Donald Raymond and I'm the senior vice-president of public market investments at the CPP Investment Board. I'm joined by my colleague Mr. Dale, senior vice-president of communications and stakeholder relations.

Thank you for the opportunity to speak to the committee on Bill C-300.

The CPP Investment Board was created by the federal and provincial governments in 1997, the result of comprehensive reforms to the CPP in the mid-1990s. These reforms were implemented following extensive public consultations with business, labour, senior organizations, and Canadians across the country.

Federal and provincial policy-makers established the CPP Investment Board as an independent professional investment management organization--accountable, yet arm's length from governments--responsible for investing the CPP contributions not needed to pay current benefits.

One of the main concerns expressed by Canadians in 1997, which persists today, is that governments would interfere with the investment decisions of the CPP fund. Our independence, established in the Canada Pension Plan Investment Board Act, addressed these concerns and has contributed to our success. Our long-term goal is to contribute to the financial strength of the CPP, arguably one of Canada's most important social programs, and to help sustain the future pensions of 17 million Canadian contributors and beneficiaries.

We have a high degree of accountability to the federal and provincial finance ministers, but the reformers of 1996-97 built important protections around the CPP fund and the CPP Investment Board. For example, the assets in the CPP fund are segregated from government assets and are not tax dollars, as they are contributed directly by employers and employees.

The mandate of the CPP Investment Board, as set out in the act, is simple and fundamental to all of its activities: to maximize the investment rate of return without undue risk of loss. Under the terms of the act we may engage in no other activities. In the pursuit of this very focused mandate we have taken a leadership role in the development and implementation of a policy on responsible investing. This policy articulates how we integrate environmental, social, and governance factors, also known as ESG factors, in how we invest, including Canadian companies in the extractive industries.

As you will hear, the proactive efforts of the CPP Investment Board parallel the intent of Bill C-300 and make its inclusion in the terms of the bill unnecessary. In addition, the bill provides for government ministers to direct investment decisions at the CPP Investment Board. This runs counter to the public policy intent of the federal-provincial reforms of the CPP in 1996-97. Also, because of the provisions of the act, the bill cannot come into force without the required consent of the provincial governments.

Accordingly, we respectfully request that Bill C-300 be amended by this committee in order to remove reference to and, more specifically, direction to the CPP Investment Board.

In considering our approach to responsible investing, it is important to understand the unusually long investment horizon of the CPP fund, which is being invested for decades and generations. While other investors measure their progress by quarter, we look at decades and the quarter century. Being a patient, long-term investor is relevant to our policy on responsible investing because ESG factors tend to play out over longer time horizons.

Secondly, to effectively deliver on our promise to help sustain the CPP, we invest in more than 2,900 public companies around the globe, including more than 600 in Canada. Of that number, approximately 400 are in the extractive industries. As a long-term owner and investor, we believe that responsible behaviour regarding environmental, social, and governance factors by these companies can have a positive influence on their long-term financial performance and therefore to our investment return.

In keeping with our mandate, we view the ESG factors only in terms of investment risk and return. Simply stated, it is in the best interests of the CPP fund when the companies in which we invest meet high standards of disclosure and performance on ESG issues. Our approach to ESG issues is guided by two important documents that have become powerful agents for change, not only for us, but for institutional investors around the world.

The first document is the “United Nations Principles for Responsible Investment”. We contributed to the development of the UNPRI and were in the first group of signatories to this ground-breaking accord in 2006. I was privileged to represent the CPP Investment Board, and was the only Canadian investor involved in the development of this far-reaching initiative. I can report to you today that there are more than 500 signatories to the UN principles, representing more than $18 trillion in assets under management. Like our own policy on responsible investing, the UNPRI reflects the view that effective disclosure and management of ESG factors can positively contribute to the long-term financial performance of investments.

The UN principles are implemented through a collaborative approach coordinated by the UNPRI engagement clearing house, where we work with other global funds to engage companies on ESG issues. In January 2009 this group wrote to 130 companies that had voluntarily committed to standards of disclosure on human rights, labour, environment, and anti-corruption practices—part of the UN global compact.

The CPP Investment Board's own comprehensive policy on responsible investing predates but parallels the UNPRI. Framed by our mandate, this policy articulates how we address these important environmental, social, and governance issues in our investments. A copy of this policy has been provided to this committee.

The implementation of our policy on responsible investing takes a number of forms, including activities that proactively address issues identified by Bill C-300. The first activity is engagement. This involves communicating with the senior executives and board members of companies in which we invest, as well as regulators, industry associations, and other stakeholders.

Our direct engagement activities are highly focused. Most of the companies we select are Canadian. We concentrate on three areas: climate change, executive compensation, and extractive industries—oil and gas, and mining companies. We seek enhanced disclosure and transparency from these companies. Disclosure allows all investors to see and understand the potential risk posed by ESG issues. Disclosure of these risks is the first step to addressing them, and we encourage companies to adopt best practices in the management of ESG issues to improve financial performance.

In the past year we have engaged with Canadian and international companies operating in high-risk countries, including Burma, the Democratic Republic of Congo, and Guatemala, to encourage improved transparency and risk management strategies. It is important to note that this is our initiative, undertaken proactively in the best interests of the CPP fund. It is not in response to any government requirement or specific complaint from a third party.

Influencing corporate behaviour, as you know, takes time. Engagement is a long-term strategy, but one ideally suited to our long-term approach to investing.

Parallel to our engagement processes, we encourage the investment industry to produce enhanced research and analysis of environmental, social, and governance issues. This research from investment dealers and other research sources helps all investors integrate relevant ESG factors into their investment decisions.

Our policy on responsible investing also informs our voting on shareholder issues via our published proxy voting principles and guidelines. Proxy voting by large investors is effective in enhancing disclosure, transparency, and improved behaviour on environmental, social, and governance issues.

As owners we vote on proposals at public companies' annual and special meetings. Proxy voting allows us to engage with all public companies in our portfolio. In the course of the 2009 proxy voting season we participated in more than 3,000 shareholder meetings, including 555 here in Canada. That count includes companies in the mining and oil and gas industries, both Canadian and international.

We voted on nearly 18,000 agenda items. In 15% of those items we voted against management. We make these results public. A summary of our proxy voting activity is included in our 2009 report on responsible investing, and the results of all proxy votes appear on our website.

As a respected global investor, our actions are closely watched and our voice is heard, not only by the companies in which we invest, but by the broader investment community. We also work with other investors, and a relevant, collaborative approach is our participation in the extractive industries transparency initiative. The EITI brings together companies, investors, non-governmental organizations, and governments, including the Government of Canada. Its focus is on oil and gas and mining companies, precisely because they deal with a range of ESG issues that must be managed effectively for long-term financial performance.

Let me explain how this initiative works. Through the collaborative efforts of EITI signatories, more than 40 of the world's largest oil and gas and mining companies are now actively supporting better transparency in 29 candidate countries. Signatories commit to disclosure of company tax and royalty payments, as well as government revenues from oil and gas and mining. This is key to illuminating sources of corruption in those countries.

Our proactive approach and industry leadership have been recognized internationally. The Social Investment Organization of Canada acknowledged our policy on responsible investing and related engagement approach as positive examples of responsible investing activities. We have been cited by the UNPRI for our disclosure of proxy votes. Our policy on responsible investing and proxy voting principles and guidelines have been named as global best practices.

In summary, the CPP Investment Board was created by the federal and provincial governments to invest at arm's length from governments. Our mandate is to generate investment returns to help sustain the future pensions of 17 million Canadian contributors and beneficiaries. The terms of our legislation state that the act may not be amended without the consent of both federal and provincial governments.

Through our policy on responsible investing we have been recognized as a global leader for proactively addressing environmental, social, and governance issues. For these reasons we respectfully submit that Bill C-300 be amended to remove both reference and direction to the CPP Investment Board.

We appreciate the opportunity to appear before this committee today, and we look forward to answering your questions.

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Raymond.

We'll move to Mr. Andrews.

[Anthony Andrews, Executive Director, Prospectors and Developers Association of Canada]

Thank you, Mr. Chairman. I appreciate the opportunity to be here today to talk about this important subject.

My name is Tony Andrews. I'm the executive director of the Prospectors and Developers Association of Canada. My colleague Bernarda Elizalde, before joining the PDAC, spent a number of years advising mining companies on how to apply CSR practices in Central and South America, so she has an interesting perspective to add to the discussion today.

The PDAC is a national association focused on mineral exploration. Our 7,000 members work all over the world and include a large number of junior exploration companies. The Canadian juniors lead the world in numbers of companies and proportion of total funds they raise and spend worldwide on exploration and development. They are small businesses dependent on the capital markets for raising funds. Normally, they do not avail themselves of debt capital from banks and financial institutions. Our members are world leaders in the financing and technical areas and also in the emerging field of CSR. However, we are still in the early stages of understanding CSR development, and there is much work that will be done. It's an evolving process.

I was a member of the advisory group of the CSR national round table process along with a member of our board of directors. The association publicly supported the advisory group report, with some commentary and recommendations. PDAC is in the business of creating leading practice. It has recently launched what we call e3 Plus. It's a comprehensive, online framework for responsible exploration, and stands for excellence in three areas: social responsibility, environmental stewardship, and health and safety. It has an information-educational component consisting of principles, a guidance document, and three comprehensive tool kits. This was launched in March of this year. It also has an accountability component, which is in development at present. This will consist of performance objectives, reporting guidelines, and a system of verification.

As we understand it, the issue before this committee is how to ensure two things: the continuous improvement in CSR practices, and the accountability of Canadian companies operating in developing countries. We believe that the most effective way of accomplishing this will be on the basis of a systematic, integrated approach that will involve a combination of both voluntary and mandatory mechanisms, basically similar to the recommendations of the national CSR round table advisory group report and the CSR strategy recently introduced by the Canadian government. In our opinion, the legislation proposed by BillC-300 would not contribute to the objectives of either improved CSR practice or accountability. In fact, it will pose significant risk to the Canadian industry.

Over the next few minutes I'm going to do three things: I'm going to review some key realities that define CSR at present; I'm going to measure these against the approach contemplated by Bill C-300; and I'm going to define what we feel are key opportunities for making progress in CSR performance and in accountability.

Here are some current realities about CSR. Over the past 15 years, the focus in public priorities has shifted from environmental issues to social issues and, most recently, to an emphasis on human rights and ethical practice. The mining industry has made significant progress with environmental and social issues. Social issues are much more complex, given that they are centred on human relations and human behaviour and complicated by different cultures, values, beliefs, perceptions, and needs—often competing needs.

Environmental matters lend themselves to a prescriptive regulatory regime. Matters of corporate social responsibility do not. Any standard or guidelines for CSR must be comprehensive enough to satisfy public expectations of corporate behaviour. At the same time, they must be scalable to the size and the nature of the company and the project as well as to the stage of exploration or development.

Standards must be flexible to accommodate the wide variety of geographical, cultural, and environmental circumstances where projects occur. The reality is that what will work at one site will not necessarily work at another, so the successful application of CSR will be based on the experience and judgment of industry managers at the site.

What is our level of understanding of CSR? Well, it's a relatively new phenomenon that is still being assimilated. It involves rapidly evolving expectations and uncertainty about how to deliver on those expectations. Until recently there were no comprehensive international guidelines that attempted to define for the exploration business what CSR is and how it should deliver on those expectations. E3 Plus, which I described before, is an attempt to accomplish this.

Most companies are trying to apply CSR. They believe that they are applying CSR, using common sense, oftentimes, and homegrown approaches, but they have nothing against which to benchmark their practices. Therefore, there is wide variability in the manner and approach of their applications. This is where guidelines and assistance to our members come into play.

It is not only about human rights. Human rights are central to the issue of CSR, but it is not only about human rights. CSR involves broad dimensions of social responsibility, environmental stewardship, and health and safety, all encompassed in government regulations, industry good practice, and international instruments and conventions. It's a very broad and complex area.

How many allegations have been made against Canadian mining companies? Research conducted this year by the Canadian Centre for the Study of Resource Conflict revealed that over the past ten years there have been a total of 171 alleged CSR violations by mining companies. These are reported from around the world and from all sources. About 50% of these allegations were reported by advocacy NGOs. Of the 171 allegations, 56 involved Canadian companies. That is an average of fewer than six alleged cases a year.

Since its inception in 2000, the IFC compliance advisor ombudsman, the CAO, has received and processed a total of 110 complaints. Of these, there were eight complaints involving four mining companies. Of these, one was Canadian and another was partly Canadian owned.

I'll just add that as of June 2008, just prior to the global financial crisis, there were about 1,000 Canadian companies working in over 100 countries on 5,000 projects outside Canada. I think those numbers put this into context.

Given these realities, how does Bill C-300 measure up as a practical, effective system of applying accountability? It is an investigative, punitive system based on assigning blame and imposing sanctions. It will be dependent on the difficult process of collecting evidence in foreign jurisdictions. It will try to discriminate between right and wrong.

How can this approach be rationalized in a situation that is so fluid and variable and that is complicated by differing cultures, beliefs, perceptions, and needs? How will companies be judged against a set of guidelines that will need to be scalable and flexible? How will companies know where the boundaries of compliance are? How will the minister determine whether a contravention has occurred? Why would we introduce such a negative, high-risk approach in a situation that cries out for information, education, and assistance and that involves so few cases of proven intent to harm? Why would we introduce such a punitive approach prior to the establishment of fundamental definitions, basic information, and clarity of expectations?

These are fundamental problems that cannot be corrected through the artful rewriting or amending of Bill C-300. There are additional significant legal issues with the bill, which I'm sure my colleague, Mr. Wisner, is going to describe.

Canadian mining companies are already accountable in many different ways and on many different levels, but we believe there are some areas where accountability can be improved. The first and most important one is host country governance capacity-building. This is a highly significant area. This is the seat of accountability for Canadian companies and it lies with the host government where they are working. So attention and resources should be focused on governance capacity-building in those countries where governance is a critical issue.

The second area I would suggest we have a look at is access to capital and strengthening the requirements in securities regulations around materiality. This is related to disclosure and reporting of CSR matters to investors and the public.

Significant improvements for industry need to occur in the area of due diligence and risk assessment, as well as community engagement. That's our own assessment. This will contribute to accountability as preventative mechanisms.

Finally, applying the fundamental building blocks of accountability to industry good practice guidance makes a lot of sense to us. This includes performance measures, reporting requirements, an ombudsman function to take care of a grievance, and a form of verification. To us, the advantage of this kind of approach is that it's focused on the preventive, it helps companies perform better, it's broad in scope so it will capture a large part of the industry, and it's upfront and integrated into the business practice.

Thank you very much, Mr. Chairman.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Andrews.

Mr. Wisner.

[Robert Wisner, Partner, McMillan LLP]

Thank you.

Members of the committee, it is a great honour to appear before you today to talk about the legal problems that Bill C-300 causes.

The international law and fairness issues that I will discuss today are set out in more detail in a written submission that we prepared at the request of the PDAC that and will be distributed to members of this committee later this week.

From my perspective as an international lawyer, Bill C-300 will do more harm than good to the worthwhile causes that it seeks to promote. That's because it suffers from three fundamental legal flaws that cannot be remedied by minor amendments.

First, the bill will hamstring the ability of the Canadian government to promote Canadian values abroad because it will be seen by developing countries as an interference into areas that are their exclusive jurisdiction under international law.

Second, the obligations in the bill are so vague that they will create a high degree of legal uncertainty for Canadian mining, oil, and gas companies.

Third, the bill lacks guarantees for even a minimum level of procedural fairness for the companies that will be accused of wrongdoing. That is a problem that, as I will explain, is inherent in a private member's bill, which cannot allocate funds to provide the necessary level of procedural fairness. This uncertainty and lack of procedural fairness will deter even the most responsible Canadian companies from investing abroad. That deterrence of foreign investment harms not only the Canadian economy, but developing countries as well.

Let me begin with how the bill will make it harder for the Canadian government to promote Canadian values abroad.

It's important to understand here that the issue is not one of voluntary or mandatory standards. The voluntary CSR guidelines that PDAC and other groups have developed are intended to complement rather than substitute for mandatory legal standards. Rather, the issue is about who should decide what the mandatory legal requirements should be. Should it be the governments of the states where the activities are actually taking place, or should it be a government thousands of miles away?

The underlying assumption behind Bill C-300 is that all developing countries, as they are defined in the bill, suffer from a legal void in terms of environmental, labour, or human rights rules. That assumption is simply incorrect. As you'll see in my written submission, every relevant jurisdiction for Canadian mining companies has detailed laws and regulations to hold corporations accountable in these areas, laws that are usually drafted with the help of UN agencies or international financial institutions.

What proponents of Bill C-300 are really doing is asking the Government of Canada to pass judgment on how other countries are enforcing their own laws. At the same time, Bill C-300 doesn't distinguish between governments that have the capacity to enforce their own laws and those that don't. So for example, in testimony before this committee that I've seen, disputes in democracies such as Chile and Argentina have been lumped together with disputes in conflict zones that are emerging from civil war.

We all agree that some developing countries could benefit from assistance in building their enforcement capacities, which is something the Canadian government has agreed to provide them with. The question, however, is whether we should ignore a developing country's own enforcement decisions simply because of Canadian ownership of a corporation in its territory. Under international law the answer to that question is no. With limited exceptions, Canada's Parliament and its government agencies cannot exercise jurisdiction outside of Canadian territory. These limits arise from the very foundation of the international legal order, which is respect for state sovereignty.

On other occasions, I've heard Mr. McKay suggest that Bill C-300 avoids any extraterritorial jurisdiction because it merely imposes conditions on Canadian government assistance. If this were so, the bill would be redundant, because as you've heard this morning, CPP and other government agencies do set conditions and do screen the assistance that they provide, but the heart of this bill sets standards and calls for investigations of companies that may not receive a single penny of government assistance. Furthermore, these companies do not even meet the definition of a Canadian company under international law.

Bill C-300's violation of international law is exactly the same as what Canada protested when the United States tried to regulate Canadian subsidiaries of U.S. companies that trade with Cuba. We even passed laws, under the Foreign Extraterritorial Measures Act, blocking these companies from complying with those directions.

Imagine, if you will, what would happen if the Minister of Foreign Affairs of Brazil or his representative were to show up in Canada one day, start examining witnesses in Sudbury, for example, hold hearings there, and then put pressure on a Brazilian shareholder of a Canadian mining company to close his operations because they don't comply with that minister's view of appropriate environmental standards. I don't think Canadians would view that as an appropriate exercise of Brazil's jurisdiction.

This breach of international law will make the promotion of human rights and the environment by our own diplomats much more difficult. It will be hard for us to be listened to if we're seen as being selective in our own application of international law.

Let me turn to some of the specific problems with the way the bill imposes rules on Canadian mining, oil, or gas companies. Bill C-300 doesn't actually set out what those rules are going to be. Rather, it directs the ministers to develop standards based on two types of documents.

First, you have more than 260 pages of voluntary guidelines that cover just about every aspect of corporate conduct. Now, these are valuable and important documents, but they were not drafted with the intention of being binding legal rules. They were supposed to be guidelines that help management make better business decisions. That means they're not written in accordance with legislative conventions and they lack the clarity and specificity that you normally see in legislation.

To give you an example of this, it's like the difference between a manual on safe driving put out by a driving school and the Highway Traffic Act. The manual on safe driving is a very useful, important document, and it helps people to be better drivers, but it won't have the clear rules and definitions that you usually see when legal penalties are being applied.

The second set of documents incorporated into the bill is made up of international human rights conventions to which Canada is a party. These rules are indeed binding legal rules, but they're designed to be binding on states, not on private persons. As a result, they have no clear meaning when they are applied to corporations. It's as if, overnight, the Canadian Charter of Rights was extended from governments to private citizens. If that happened, there would be a great deal of uncertainty as to what exactly was the meaning of the obligations that were being imposed.

When you take standards that are designed for one purpose and simply transpose them into another area, you raise a whole host of questions about their meaning. This bill therefore makes every Canadian mining, oil, and gas corporation operating in developing countries, no matter how responsibly run, a target for costly and unpredictable investigations.

Finally, because it is a private member's bill and cannot create any new offices, the bill lacks the procedural fairness safeguards that must accompany any ministerial investigation into alleged wrongdoing. For example, in the Canadian Human Rights Act, we create a Human Rights Commission to examine complaints, and then an independent Canadian Human Rights Tribunal to hold hearings into whether standards have been violated. Bill C-300 is completely silent on all of these elements of procedural fairness, because including those in the bill would render it out of order.

Having said that, I note that even if this type of administrative tribunal were created, it would still expose Canadian companies to the stigma of government investigations and second-guess good faith decisions by Canadian agencies and diplomats. This is completely different from the non-governmental bodies that were recommended by the advisory group report following the national round tables on corporate social responsibility.

We've already had some experience with this type of plaintiff diplomacy, and it hasn't worked very well. A Canadian company, Talisman, was sued in the United States based on nothing more than the fact that it paid royalties to the Government of Sudan and upgraded infrastructure. After several years of litigation, that complaint was thrown out of court because of lack of evidence. By that time, the damage was already done. After enduring the adverse publicity generated by the legal complaint, Talisman sold its interests. The ultimate dismissal of the complaint went virtually unnoticed by the media and the cause of corporate social responsibility was hardly advanced by the new owners.

Bill C-300 creates very similar risks. Indeed, witnesses appearing before this committee have already alleged that simply by paying royalties to bad governments or by building roads that can be used by government forces, Canadian companies are committing human rights violations abroad. If this is a standard to be applied, no Canadian company can avoid being investigated, and that will mean that many worthwhile projects will not go forward. That's not just bad for Canada, it's bad for developing countries as well.

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Wisner.

We'll move into the first round. Mr. Patry and Mr. Rae.

[Bernard Patry, Liberal, Pierrefonds—Dollard, QC]

Thank you.

Thanks also to our guests.

Mr. Raymond, the committee notes your recommendations on Bill C-300, An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries, including the one about removing the reference to yourselves. I read your 2009 report on responsible investing. In your opening remarks today, you tell us that you intervened last year specifically in Guatemala, Burma, and the Democratic Republic of Congo. Your words were: “[...] to encourage improved transparency and risk management strategies.”

Mr. Raymond, can you provide the committee with copies of those letters as well as the responses from the companies, if any, and tell us if you have done any follow-up with those mining companies? I would like to know who does this follow-up, how it is done, if the companies move forward, and, if not, what you see as the next step.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Patry.

Mr. Raymond.

[Donald Raymond]

I think the most important thing to note about our engagement practices, as I stated in my opening remarks, is that this is a long-term strategy. We don't necessarily get results immediately. We have a team dedicated to engagement within the CPP Investment Board in my department that do follow up with companies and ensure that they are moving forward with higher levels of disclosure for all investors to see what their practices are.

[Ian Dale, Senior Vice-President, Communications and Stakeholder Relations, Canada Pension Plan Investment Board]

Mr. Chairman, if I could just add, just to answer the member's question, you can see on our website how we would have voted on shareholder proposals, and all that is disclosed on the website. I will reiterate my colleague's point. By ourselves we may not have a significant amount of influence. But one of the things that we do is work with coalitions of other investors. When companies might have their top 10 shareholders knocking on their door asking for increased disclosure, that tends to create action and movement to address these issues.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Dale.

[Bernard Patry, Liberal, Pierrefonds—Dollard, QC]

I just wanted to add to this. First of all, I will ask you some questions.

Do you agree to submit to the committee the letters that you sent to these companies and the response, if there was any, from these companies?

Now, Mr. Dale just pinpointed the website. On the website, I can see all your votes and some things like this, but it's nothing really. You vote against the nomination of some people. You say a lot of things. It's really on the business side of the view that you're voting against. We talk about the environment, social, and good governance. This is the idea of Bill C-300, and I would like to get some answer on this Bill C-300.

Now, you say that you're looking at what's happened over there, but how do you do it? Who gave you the response over there? If a company in Guatemala.... There are not that many companies in Guatemala. Do you know which company you're thinking about? What are you doing in Guatemala?

I want to have some real answers about this, not just to say to go on a website. A website is not sufficient for me.

[The Chair, Conservative, Kevin Sorenson]

Mr. Patry, are you asking for the letters that they've sent to those companies, to disclose them and now--

[Bernard Patry, Liberal, Pierrefonds—Dollard, QC]

Yes, sure. I want to get the letters, yes. They can disclose it. It's public.

[The Chair, Conservative, Kevin Sorenson]

Mr. Dale.

[Ian Dale]

Okay, thank you. I'd be pleased to answer that question.

I think we engage with companies in three ways. We talked about proxy voting. I think the most powerful one has to do with coalitions of other investors. We also do direct engagement with companies. With regard to mining companies, if there is an engagement with a company that is ongoing, while that discussion is ongoing we don't disclose the nature of that conversation. But if it is not going the way we would want it, we reserve the right to do that. There are a number of instances when we have disclosed those letters with some Canadian mining companies. We could share those with the committee.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Dale.

Go ahead, Mr. Rae.

[Bob Rae, Liberal, Toronto Centre, ON]

To our guests from the CPP, just to clarify, would you object to the idea that the findings of the minister, as set out in section 4 of the act, could be referred to the investment board as information relevant to your own social responsibility activities? You wouldn't want to ignore a report from the minister that was clear.

I can understand the problem with the wording in section 10, but I'm still trying to see whether there isn't a way of simply indicating a common sense function, which would be that you would obviously take into account a finding by the minister of a flagrant breach of the guidelines as set out in the act.

[Ian Dale]

Thank you, Mr. Chairman. I'd be pleased to answer that.

Obviously I don't think we would ignore such a determination, but we look at this really in two ways.

What we hope to show the committee here this morning is that we do look at environmental, social, and governance factors. They are integrated into our investment process, we do that for investment reasons, and it's consistent with our mandate.

Our challenge with the legislation is that it would create a precedent that would give a minister of one government the power to direct how investment decisions are made, which is counter to the public policy intent of the CPP reforms and how we were set up.

[Bob Rae, Liberal, Toronto Centre, ON]

I understand that.

Let's assume that we accept that argument or that perspective with respect to the independence of the CPP, but precisely because you've already indicated that you take corporate social responsibility seriously, how could you object to the minister's simply sending you a copy of a report and indicating that this is something you should take into account--not necessary follow, but take into account--in the decisions you make? Why would that be objectionable?

[Donald Raymond]

As I said, an independent research group within my department looks at these factors, so to the extent that there was information in there that they thought was relevant from an investment perspective, I think we would welcome that information.

[Ian Dale]

As well, Mr. Chairman, there are a variety of inputs that we use. We have, as Don mentioned, an internal research function, we use external research providers, and we have discussions with NGO groups. We use a variety of inputs, but again it's just making a judgment on a risk-return basis.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Dale.

Go ahead, Madame Bourgeois.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Thank you, Mr. Chair.

Good morning, ladies and gentlemen. Thank you for being with us today.

Your testimony makes me think that this question of Canadian responsibility is being dealt with rather haphazardly.

Mr. Raymond, of course you were congratulated for your policies on responsible investing. But I feel that you have not been applying those policies for a long time. If that whole question about Canadian investment in Burma had not come up, we would not have known that you had policies on responsible investment.

I have been following this file for several years. Until recently, we never knew that the Canada Pension Plan had invested money in Canadian mining companies that were systematically violating human rights. Now it seems that you have made extraordinary progress in bringing those companies to the realization that they have to pay attention to human rights. I am truly astonished by that.

I would say that you also have a responsibility to those who contribute to the Canada Pension Plan. I am extremely disappointed to see that your responsibility is primarily aligned with your desire to make money.

Have you done studies to determine the extent to which it could be to Canadians' financial advantage to pay into a pension plan that would in turn invest in mining companies that respect both the environment and human rights?