Thank you very much, Mr. Chairman.
I want to thank you and your colleagues for your warm welcome today. We're delighted to be able to be here. We look forward to having a chance to have an exchange with the committee.
As you mentioned, my name is Perrin Beatty. I am president and chief executive officer of the Canadian Chamber of Commerce. With me this morning is Susanna Cluff-Clyburne, our director of parliamentary affairs.
The Canadian Chamber of Commerce is the organization that is the most representative of Canadian business. Thanks to our network of 325 local Chambers of Commerce, we speak for 175,000 Canadian businesses, of all sizes and in all parts of the country.
The Canadian Chamber of Commerce includes many oil and gas and mining companies among its members.
Our members are very aware of the principles of socially responsible behavior and of the commercial value of sustainable operations. This includes taking account of the economic, social and environmental impact of their operations. They also understand that a single bad apple can spoil the reputation of all Canadian businesses anywhere.
Mr. Chairman, businesses and governments worldwide have been working to meet the increasing social and environmental expectations of their operations at home and abroad. The result has been the establishment of internationally accepted norms, of which committee members are all very well aware.
In support of our members' efforts, the Canadian Chamber has provided considerable input into the Business and Industry Advisory Committee's contribution to the OECD Guidelines for Multinational Enterprises, the International Chamber of Commerce's work with the United Nations Global Compact, and the United Nations Special Representative John Ruggie's investigation into human rights and transnational corporations. The Canadian Chamber has also been an active player in Canada's contribution to the development of the ISO 26000 guidance standard for social responsibility.
The Canadian Chamber of Commerce's long-standing policy on responsible business conduct has been that socially responsible behaviour should continue to be promoted and supported by government. A process of working with companies before they run into problems, then continuing to work with them to solve any issues that arise, ensures that Canada and Canadian companies are seen as world leaders. To be seen to comply with the highest possible standards is a business benefit to us, Mr. Chairman, which the Canadian business community recognizes.
The Canadian Chamber of Commerce has been expressing our members' concerns with Bill C-300 to members of Parliament in writing or in person since it was tabled in February. So I am certain that the members of the committee are familiar with our position.
Building the Canadian Advantage is consistent with the view of the Canadian Chamber and its members in the extractive industries sector that Canada leads best by working with companies to give them the tools to prevent themselves from being drawn into difficulties in developing countries. And if they are, it is even more important to continue working with them to help remedy the situation and preserve Canada's reputation. Simply cutting and running is not the answer.
The government's strategy acknowledges the critical role of host regimes in developing countries and commits to providing additional resources to them through CIDA, Natural Resources Canada, the Department of Foreign Affairs and International Trade, and international bodies such as the extractive industries transparency initiative.
Mr. Chairman, as a former Secretary of State for External Affairs, I believe this is the right approach. For exactly the same reason we would object to foreign interference within Canada, sovereign nations would not appreciate Canadian officials conducting investigations into projects in their territories or having our laws dictate which companies shall and shall not operate in their countries. Bill C-300, if passed, will negatively affect Canadian foreign policy.
The newly appointed CSR counsellor strikes a balance among stakeholders while maintaining the primacy of DFAIT's national contact point in promoting the OECD Guidelines for Multinational Enterprises. Some have argued that the counsellor will be able to conduct investigations only with the agreement of all parties. But we know that credible investigations would be impossible without the cooperation of not only the company in question, but, equally importantly, of the host government. It is our understanding that any lack of cooperation by any party would be included in the counsellor's annual report to Parliament and would rightly be criticized. It would hold any party refusing to collaborate up to public attention. This provision is an important incentive to assist in the investigation.
The role of the CSR counsellor significantly differs from the independent ombudsman recommended in the round tables' report and from what is proposed in Bill C-300 only in that the office does not have the power to recommend that government resources be withdrawn from companies found to be behaving deficiently. Again, this is the right approach. Our goal should not be to punish. It should be to ensure that all companies adhere to the highest possible standards. Our goal is to set standards that lead the world, to encourage people to comply with them, and to work with companies to ensure that this is achieved. By doing that, we can have the most significant benefit for everybody involved.
One of the unfortunate aspects of Bill C-300--which will haunt any government forced to implement it--is that it poses an unreasonable risk for the finances and the reputation of extracting companies. This is a very capital-intensive industry which operates on a very long-term basis and is generally active in some regions that are located very far from developed and developing countries. Each project might be challenged, even if the company is acting in a very responsible manner. Those who believe that any type of extracting activity is unacceptable will challenge practically all types of operations. This is the case here in Canada and we have also seen it in other countries. Let me add that their policies are often contrary to those of the communities that benefit from those projects.
Bill C-300 would provide an avenue, based on a piece of legislation, to those organizations the survival of which depends upon their capacity to make allegations against extracting companies. Complaints based on ideology rather than performance would entail huge costs for taxpayers as well as companies.
Mr. Chairman, the auditing function proposed for the Department of Foreign Affairs and International Trade in Bill C-300 would tie up dollars and people that the department desperately needs for other purposes. One can only imagine the fallout resulting from one partner in a joint venture losing its Export Development Canada financing. Lawyers would be the only ones to get more wealthy as a result.
Will Canadian companies ever be able to satisfy critics who are opposed to their activities in principle? Likely not. It's hard to see how they could. Yet they'll face the spectre of having to constantly look over their shoulders to see who is, or who possibly could be, launching an attack via the mechanism that Bill C-300 would institutionalize. Does this represent a competitive disadvantage for Canadian businesses? It definitely does. Will any ministerial investigation satisfy the party that submitted the complaint? Probably not. As a former cabinet minister, I have to say that the loosely defined investigation process outlined in Bill C-300 concerns me. On the other hand, the government's strategy outlines a well-defined five-stage process that includes initial assessment, informal mediation, fact-finding, access to formal mediation, and reporting.
Mr. Chairman, in criminal law we're scrupulous in adhering to the principle that people are innocent until proven guilty, and we take considerable care to ensure that their good names are not recklessly damaged. However, under Bill C-300 the damage to the company accused is done as soon as a complaint is submitted and publicized. For those who wish to prevent Canadian companies from being able to do business abroad--including and most importantly our foreign competitors--there's a powerful incentive to make allegations. The publishing of a finding in the Canada Gazette, several months after the fact, that a complaint was frivolous and/or vexatious will be too late for the company's reputation and possibly for the financial viability of the project in question.
Such a finding will definitely not receive the publicity in Canada, let alone in a developing country, that the original accusation did. And the company may face years of unnecessary reputation rebuilding. In the meantime, their foreign competition will be doing the business. Talisman Energy is an example of the impact that Bill C-300 would have. Its name is still associated with unfounded allegations of appalling human rights abuses in Sudan, several years and tens of millions of dollars in legal costs after it has been exonerated by the courts. And perhaps most tragically for the Sudanese citizens involved, all agree their circumstances did not improve when this highly regarded responsible Canadian company sold its stake in the project.
The fact is that the vast majority of Canadian extractive companies behave responsibly and are considered global corporate socially responsible leaders. Earlier this year, Talisman Energy was named by Maclean's magazine and Jantzi Research as one of Canada's 50 most socially responsible corporations. Another Canadian extractive sector company, Barrick Gold, was named to the Dow Jones Sustainability World Index in 2009 for the second consecutive year. The index, which is one of the world's foremost indices of corporate sustainability practices, tracks the long-term economic, environmental, and social performance of 2,500 leading companies worldwide, using objective benchmarks to identify the top 10% of performers. It provides a very important touchdown resource.
It's important to acknowledge the sustainable benefits that extractive companies bring to communities. Just as they do here in Canada, these companies create economic and social opportunities for the citizens in the countries in which they operate. They also significantly contribute to the host countries' gross domestic products, infrastructure, tax revenue, training and skills pool, as well as sustainable economic development. The positive economic impacts that these activities and investments have are often overlooked.
You've heard from Export Development Canada how Bill C-300 would affect its ability to enter into financing agreements with Canadian extractive companies. You've also heard how government interference in the investment decisions of the Canada Pension Plan Investment Board would affect its mandate to operate at arm's length from government to maximize earnings for those Canadian employers and employees who contribute to it. It would also require amendments to CPPIB's governing legislation.
Some have asked how serious being cut off from EDC financing and/or Canada Pension Plan investment could be. After all, extractive companies are large, with significant financial resources. EDC financing and institutional investments like the Canada Pension Plan are essential financial resources to Canadian businesses, extractive and otherwise. The sanctions proposed in this bill could be very serious and potentially devastating for the companies and their Canadian and foreign employees, as well as for the projects in developing countries involved in the allegations. To be cut off from EDC financing and political risk insurance, as well as being blacklisted for Canada Pension Plan investment, would mean the cancelling of projects and the cutting of jobs. Faced with the uncertainty of being measured against undefined guidelines, many Canadian companies would simply not take the risk of pursuing new ventures in developing countries.
Bill C-300 would affect not only the large extractive companies, but also the dozens of smaller firms that serve them.
One of the greatest ironies is that while we all express concerns about the takeover of Canadian companies and say that we would instead like to see our businesses buy foreign companies, by discriminating against Canadian businesses, this legislation would do exactly the opposite. Bill C-300 would deter Canadian companies from acquiring firms operating inappropriately in developing countries and bringing their operations up to international standards. Why would they do so with the prospect of penalties and reputation damage lying before them? And yet those who would lose most would be the citizens of the developing countries who would have to settle for companies from countries with lower standards.
Canada's extractive sector companies are experiencing the economic downturn head-on. Their challenges have been exacerbated by having to live with uncertainty in the years since the release of the round tables' report and concerns with the government's response. Bill C-300 adds to the interminable uncertainty under which these companies have been working. Even after passage, there would more uncertainty while guidelines are being completed. This is a sector that plans in decades and requires as much certainty, consistency, and clarity in policy and regulations as possible.
The Canadian Chamber of Commerce believes that any Canadian company operating abroad must comply with high standards of social responsibility. Our message to parliamentarians is that the government should work with companies and with governments in developing countries before problems arise to ensure that Canada and Canadian companies are seen as world leaders. It is in all of our interests to see this as part of the Canadian brand.
Bill C-300 could result in an environment of minimal compliance rather than one in which competition motivates companies to attain best practices. For companies that get into trouble because of a lack of experience or circumstances beyond their control, being cut off from government resources when they are alleged to have behaved badly leaves the situation unresolved, the allegedly injured parties no better, and potentially worse, and the company in no better position to take measures to make things right, if that's proven to be necessary. It also leaves in tatters the reputation of Canada, the Canadian government, and one of our most important industries and economic contributors.
I don't quarrel for a moment with the motivation of the bill's authors or of its supporters. The author of the bill, like the rest of us, would like Canada and Canadian businesses to have the reputation of following the highest ethical standards in the world. And, like us, he would like to see Canadian companies succeed in the global economy. And yet, ironically, Bill C-300 would push us in exactly the opposite direction by encouraging reckless and untrue allegations and by giving competitors with lower standards a weapon to use against Canadian companies.
Canadian businesses need support from the government in good times and bad. They do not need more bureaucratic burdens, disincentives to invest, and encouragement to move their operations elsewhere.
The government's CSR strategy is barely seven months old and it needs time to be fully implemented before it's judged to be deficient. Once it's had a fair chance to make itself felt, by all means, let's review it and decide whether we should make changes. If improvements should be made then, let's make those changes based on experience. But let's at least give it that chance before we start tinkering with it.
On the face of it, Bill C-300 is good politics. However, upon closer examination, Bill C-300 cannot live up to its intentions as it lacks some important context that could do more damage to the extractive sector than it intends. That's why, Mr. Chairman, we urge the members of the committee to vote against the bill.
I thank the committee for its courtesy in hearing us today, and I would be delighted to answer your questions.
