Foreign Affairs Committee on May 28th, 2013

[The Chair, Conservative, Dean Allison]

Thank you.

Thanks, John. That's all the time we have.

We'll go to Madame Laverdière, and I guess Mr. Dewar, for five minutes.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you very much, Mr. Chair.

Thank you to our three witnesses for being with us today following the terrible tragedy in Bangladesh.

I would like to start with a comment. Listening to all three of you, I was struck by the fact that there is a general consensus. In fact, I will repeat what you said. You stated

that we need to work together; that we can't do it in isolation.

There truly is a consensus that everybody must work together, be it the industry, the government, international organizations, the unions, civil society, investors or consumers. I find that very striking. It is simply a comment I wanted to make.

The government has cut the funding it provided to the Corporate Social Responsibility Centre of Excellence. The centre is now funded only by the industry, which puts civil society in a bit of ambiguous situation. It therefore decided to withdraw. It seems to me that things are moving in the exact opposite direction to the consensus here, which is that all players need to work together.

Now, I do have a quick question for you, Mr. Iliopoulos. I would like to congratulate you on all the work you have done in terms of corporate social responsibility and on your achievements. You said that you have built three schools in Honduras. Did you build them using your own funds?

[Peter Iliopoulos]

Yes. Our biggest investment has been a technical school in Honduras. The objective of that school is really to get youth into a school, learn a trade, and be able to parlay that, to turn that, into employment in the future. It's not specific to the textile industry or our industry. There are various different industries. It could be computer engineering. It could be in textile apparel. The school offers a number of different programs.

The objective for us, and the role that we've played in that, is really part of our CSR program—to really partner in the different communities in which we operate. We don't just come and make an investment and turn around and manufacture our product. We will partner with the various local organizations and try to have an impact on the community.

So this is one thing that we did. About 6,000 students have graduated from this school. The job placement record is over 90%. These individuals may end up working at Gildan, they may end up working at a competitor, or they may end up working in a different industry.

This is a $1.5-million investment we've made, and there are other partners. The Honduras government, for example, is involved as well. It's an initiative we started back in 2005. It's just one example of what we're doing in the communities in which we operate.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you, Chair, and again, I just wanted to ask our friend here in Ottawa a question.

On this side, we see corporate social responsibility as an advantage for Canadian companies abroad. We think government has a role to play, clearly, in this. To that end—and maybe if there's time for the others to give their opinions on this too—one of the things I asked Minister Baird to engage his colleagues in was to conduct a full review of Canada's CSR policies. It seems that this is a case scenario where there's an opportunity here to see what more we can do.

In line with the idea of looking at supply chains, looking at binding agreements with those companies and countries where we do business, do you think it would be a smart thing to do, to take a good, solid review, not tonnes of study, but a good review to look at Canada's CSR policies?

[Peter Iliopoulos]

I believe so. I think there's value that will come out of it, both for Canadian companies operating in Canada and for Canadian companies that have international operations all over the world. We'd be very happy, as the company Gildan, to play any kind of role the government would like for us to play and to share our experiences in the different countries in which we've operated and what it's meant for the communities in which we've operated, for our employees, their families. I definitely believe there is value there.

[Paul Dewar, NDP, Ottawa Centre, ON]

Perhaps we can just have time for the other two—

[The Chair, Conservative, Dean Allison]

Just very quickly, we're almost out of time.

Diane and Peter, do you have a quick response to Paul's question here?

[Diane Brisebois]

Let me jump in. I think it's a great idea to bring the different manufacturers, retailers, and the different industries together to share best practices and to assist in forming what we would call guidelines or a framework to educate companies in Canada that are both operating in Canada and around the world. I think that is something we would welcome. In fact, we have been working with government on a document that would assist small to mid-sized companies now looking at importing as well as exporting. There are activities under way, but certainly we would always encourage the sectors to come together with government to share and to assist other players.

[The Chair, Conservative, Dean Allison]

Peter, can we have one last final comment from you, very short, before we wrap up?

[Peter Chapman]

Thank you very much.

If you look at the investment policies of some of Canada's largest pension plans, including the Canada Pension Plan Investment Board, you will see a statement something like this: companies with superior corporate responsibility practices are a better long-term investment. We have a commitment in Canada, by very large institutional investors, to pursue investment in companies with superior CSR practices.

The suggestion that the federal government examine how it might create an environment that would allow Canadian companies to compete more effectively and to allow investors to support that through better disclosure, through better market mechanisms, would be a very positive step.

Thank you.

[The Chair, Conservative, Dean Allison]

To our witnesses, thank you very much for being here today. We're going to suspend just for a couple of minutes to get set up for our next meeting.

With that, have a great day.

[The Chair, Conservative, Dean Allison]

If I could get all the members back to the table we'll get started.

I want to welcome this afternoon, as an individual, Chris MacDonald, who is the director of the Jim Pattison ethical leadership education and research program at the Ted Rogers School of Management. Chris, welcome, sir. We're glad to have you here today.

From Loblaw Companies Ltd., we have Bob Chant, who is a senior vice-president of corporate affairs and communications. Bob, welcome to you as well today.

Chris, why don't we start with you, sir? You have 10 minutes for your opening presentation, and then we'll go to Mr. Chant. Then we'll go around the room and ask questions just like we did in the first hour.

Mr. MacDonald, we turn the floor over to you, sir.

[Prof. Chris MacDonald, Director, Jim Pattison Ethical Leadership Education and Research Program, Ted Rogers School of Management, As an Individual]

Thank you, Mr. Chair.

I'd like to thank the members of the committee for this chance to speak to you today. The Jim Pattison ethical leadership program and the Ted Rogers School of Management appreciate the opportunity.

I want to make clear at the outset that I do not represent any constituency or interests. I'm neither primarily a critic of business nor a defender; nor am I particularly attached to any industry or sector. I'm a philosopher by training and a professor of business ethics. It is from the point of view of someone concerned with understanding the role of ethics in business quite generally that I speak today.

The role of ethics in business is not to render business saintly, nor is it to cure all that is wrong in the world. Neither is it to be mere window dressing, mere pretty words, or platitudes mouthed to make us feel better. The role of ethics in business is to act as a moderating force, in an attempt to make sure that the net benefits of our economic activity are positive and that fundamental rights are respected along the way, to mutual benefit.

If business is, roughly speaking, the set of practices related to making things and providing services for others in return for money, then ethics is about finding reasonable limits on those practices. Ethics in business is, in other words, an attempt to civilize a rough but productive game. Just how to do that is seldom obvious.

With regard to the subject matter of today's meeting, I have three questions to pose, questions to which I will suggest answers. I will then have three recommendations to make.

First, do Canadian companies have an ethical obligation to go beyond the legal minimum required by the governments of the countries in which they operate?

The answer here is clearly yes. Adherence to the law is seldom enough to guarantee that a company or individual has met all relevant ethical obligations. Even in well-governed countries, the law protects only the most central of interests and is further limited by what is feasible to prohibit or to require. Ethics, embodied in a wide range of moral responsibilities, often goes much further and can offer guidance beyond what is feasible for even thoughtful and thorough regulations.

This is nowhere truer than in the world of commerce. In business, opportunities to take unfair advantage are common, and regulation can only go so far towards remedying this. Government cannot be everywhere, and if it could be, we wouldn't want it to be. So responsible companies seek to go beyond the letter of the law both because it's the right thing to do and to forestall being the target of additional, potentially burdensome regulations.

This responsibility to go beyond the dictates of the law is of special significance in developing countries with underdeveloped legal and regulatory systems. When operating at home, Canadian companies can, and with some justification, take the following stance: let government set the rules and we will play by them. In a country such as Canada, we have capable if imperfect regulatory agencies that enjoy the benefit of the finest in technical expertise on a broad and affluent tax base.

Other countries are not so lucky. In countries marked by a deficiency or absence of regulatory capacity, or in which governments are indifferent or even antagonistic to the well-being of their citizens, companies do not have the luxury of assuming the kind of moral division of labour that characterizes commercial life in industrialized democracies. Indeed, I think the burden of proof rightly rests on the shoulders of companies that do business in faraway places to assure themselves and Canadians that they are being particularly responsible in under-regulated contexts.

Here is my second question. Should Canadians expect companies operating in places like Bangladesh or China to adhere to Canadian labour standards?

The answer here is no. Perhaps no one really expects Canadian companies doing business in developing nations to implement fully Canadian or western European standards, but the point is worth making, nonetheless.

To be blunt, Canadian workers enjoy high pay and high labour standards because we can afford them. Other countries are not there yet, but the fact that their labour is cheaper is precisely what attracts foreign business and foreign investment to their shores. Insisting on Canadian standards for developing nations would be deadly both to national economies and ultimately to the employment prospects of the citizens of those nations.

But there are a few things that Canadians can rightly expect of Canadian companies operating abroad. First, they can reasonably expect Canadian companies to respect and to an extent to promote the fundamental human rights of those employed within their extended supply chains. No one should tolerate slavery or other forms of forced labour. No one should accept corporate practices that restrict freedom of association or freedom of expression or that involve collusion with despots. Human rights represent a line in the sand.

Second, Canadians also have the right to expect companies that fly the Canadian flag to behave in a way that reflects well upon Canada as a whole. While there is no obligation in business to be a saint, there is nothing wrong with wanting Canadian companies to be part of an upward trend rather than of a race to the bottom. Canadians have, in other words, the right to expect Canadian companies to take a leadership role where possible on the international stage.

My third question is as follows. Given the concerns shared by many Canadians over the regrettable working conditions and risks recently highlighted by the tragic events in Bangladesh, what's the best way for Canadians to contribute to the well-being of those in factories abroad?

It is to the credit of Canadian consumers that they show considerable concern for the lives and fates of workers in faraway places, but Canadians are divided on how best to act on their concerns. The most fundamental way in which Canadians can help, of course, is to buy goods made in countries in which the economy badly needs the help. The thing that will ultimately raise wages and safety standards in developing nations is competition driven by demand. This is why boycotts are unhelpful to the point of irresponsible, as I think are campaigns aimed at promoting the exclusive purchase of goods made in Canada.

The second way Canadians can help is through charitable donations, for instance donations to organizations that do humanitarian work, but especially to NGOs that can act as third-party verifiers and certifiers of corporate supply chain practices. Canadians can also usefully support organizations that work to promote greater education, and hence, productivity in developing nations. Greater productivity generally means higher income. Perhaps most fundamentally, Canadians can contribute to organizations that seek to promote good governance and to fight corruption, since corruption and poor governance are liable to play a crucial role in allowing labour conditions to deteriorate.

The final thing Canadians can do is to continue paying attention to this issue, and to continue encouraging Canadian institutions of all kinds to work towards making things better. The Canadian government, Canadian businesses, and Canadian NGOs all have a role to play in encouraging and offering guidance on the pursuit of incremental improvements in working conditions.

Lastly, I have three principles to put before you very briefly. I hope these will be recognized as flowing from what I've already said.

One, Canadian companies should adopt progressive standards for workplace health and safety wherever they operate and should expect the same from the companies with which they do business. They should look diligently for cost-effective ways to keep workers safe and well treated throughout their supply chains, and they should be transparent about the standards they adhere to, whether those standards are unilateral or the result of collective action. The Government of Canada should encourage and facilitate such behaviour.

Two, Canadian companies should respect and promote human rights. Where that cannot be done, Canadian companies must not operate. The Government of Canada should encourage and facilitate such a standard.

Three, Canadian companies should help to spread Canadian know-how in areas such as governance and anti-corruption, and should promote, wherever they go, both the ethical and commercial importance of the rule of law. The Government of Canada should encourage and facilitate that commitment.

In conclusion, improving the lives of workers in developing nations is not a straightforward task. Economic development is the key, and economic development cannot be legislated. Canada needs a balanced policy that encourages Canadian companies to invest in and do business with developing nations but to do so in ways that both respect human rights and make reasonable steps towards continuous improvement in working conditions.

I thank the committee again for this opportunity to speak.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. MacDonald.

I'm now going to turn it over to Mr. Chant.

Sir, go ahead for 10 minutes, please.

[Bob Chant, Senior Vice-President, Corporate Affairs and Communication, Loblaw Companies Limited]

Good afternoon.

My name is Robert Chant, and I serve as the senior vice-president of corporate affairs and communications at Loblaw Companies. Included among my duties is leading our corporate social responsibility initiatives, including community investment and charitable giving.

Mr. Chair, thank you very much for the opportunity to speak to this matter.

On behalf of the entire Loblaw organization, I'd like to first extend, once again, our sympathy and our thoughts and our prayers to the victims and families who lost loved ones in the tragic building collapse in Savar on April 24.

At Loblaw, we have a very robust social responsibility regime and a strong commitment to ethical sourcing that includes vendor agreements that require inspections—audits, if you will—of our vendors' facilities, including the one in Savar. Clearly, it wasn't enough to ensure safe working conditions in this case. Frankly, it has not been industry practice to audit the structural integrity of the facilities our vendors use—clearly it should be.

In the hours following the collapse, we determined we had production occurring in the building. That day we informed the media, our employees, and our customers, and gave our commitment to keep them apprised as the situation developed. We were obviously shocked and deeply saddened by this senseless tragedy. We began to take immediate action with local authorities, with the Canadian government, with the Department of Foreign Affairs and International Trade, and with industry to determine how we could help. Our executive chairman, Galen G. Weston, publicly committed to a plan of action, which I'd like to discuss with you today.

It involves creating and funding a relief plan for victims and their families, establishing a new standard at Loblaw for our control brand products—those are our private label products—and enforcing that standard with Loblaw people on the ground in Bangladesh and across the region. Our approach is a combination of actions, both specific to Loblaw and related to our participation in broader industry initiatives. We believe this is the right approach for us as we work to drive lasting change in countries like Bangladesh.

Please let me elaborate further on how we are executing our commitments.

In the days after the tragedy, a team of senior Loblaw executives travelled to Bangladesh. I was part of that team, and I can tell you it was critical for us to go, to learn first-hand about the situation, and to be able to determine how to deploy resources in a manner that means the most to the Bangladeshi people. To that end, we have committed to a three-pronged relief program for the victims and their families to provide support now and in the future.

This includes, first, direct financial assistance. In working with labour, industry, and government, we will be particularly focused on ensuring that the money reaches those who need it the most: the families and the victims.

Second is rehabilitation for injured workers. We will provide support for injured workers through a local rehabilitation hospital in Savar to aid the recovery of injured workers, and when possible, their re-entry into the working place. I was pleased to see that Carolyn Scott, who's associated with that hospital, is here today as an observer.

Third is a community-based program with Save the Children Canada and Save the Children Bangladesh, which will provide life skills education, and workplace support for garment industry workers and their families, particularly in the Savar area of the capital city of Dhaka. Helping victims and their family members find and hold a job is a critical piece of the recovery process, because jobs in the garment industry help improve the quality of life of the people of Bangladesh. It has been well documented that of the nearly 4 million garment industry workers in Bangladesh, the vast majority are young women.

Garment industry jobs have been instrumental in bolstering the role of women in the economy and even within their own families. As The Globe and Mail's south Asia bureau chief, Stephanie Nolen, wrote recently:Women with jobs and income get a bigger voice in their family decisions; their children go to school, get vaccinated.

Amit Chakma, the president of the University of Western Ontario and a native of Bangladesh, also commented that the most significant contribution of the garment industry “is the economic empowerment of a vast number of women by providing them with a source of income”. That's why we have committed to keeping our apparel production in Bangladesh. Our chairman said the apparel industry can be a force for good by staying and improving workplace conditions. We believe that properly inspected, well-built factories can be an agent for economic development and stability in countries like Bangladesh.

To drive that forward, we have undertaken two very important initiatives. First, we have signed on to the Accord on Fire and Building Safety that will establish a program that strives to protect workers from fire, building collapses, and other accidents. It sets out specific timelines for remediation of facilities, requires the cooperation of the signatories, and will make audits publicly available. But its overarching purpose and mission is to protect the workers not only from further disasters but also from income interruption while remediation work takes place on the factories that require remediation.

In addition to the accord, we have established our own Loblaw standard that states that Loblaw control brand products must be made in facilities that respect local construction and building codes. Vendors that want to do business with Loblaw must comply. To increase our visibility to, and ensure compliance from, our vendors, we will have Loblaw people on the ground in Bangladesh and the region in general to work with our suppliers and regularly visit factory sites. They will report directly to us and work to ensure that goods produced for sale by us were made in an environment that reflects Canadian values.

Twenty years ago the international apparel industry aligned with local governments to address the issue of child labour. Through a collaborative effort tremendous progress has been made. We must come together again to ensure the poor structural integrity that led to this unspeakable tragedy in Savar does not happen again.

In closing, l'd like to thank the officials at the Department of Foreign Affairs and International Trade who worked with us in Bangladesh and here in Canada. In particular, I would like to thank Heather Cruden, Canada's high commissioner to Bangladesh, and her terrific team for the support and engagement that they provided us before, during, and after our visit. I've been in touch with them every day since our visit. They've been absolutely tremendous and were essential and integral to the success of our trip. Canada can be very proud of the work they're doing.

We look forward to the Government of Canada's continued participation with industry on improving working and building conditions in developing countries. l'd also like to thank the membership of the United Food and Commercial Workers and the Canadian Labour Congress for supporting us in our response to the tragedy and in our participation in the accord.

One message we received loud and clear from the day we arrived in Dhaka was, please don't leave. To the Bangladeshi people, we want you to know that we hear you, and we'll work with you to drive positive change in the apparel industry.

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Chant.

We're going to start with Mr. Dewar, for seven minutes please.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you, Chair. Thank you to our guests for succinct and clear presentations with some ideas as to what the government can focus on, or we can focus on.

I mentioned the story of a young girl, Tahmina, who's the same age as my son, and who didn't want to go to work on that fateful day but had to. Could you both comment on whether we need to also look at standards on work refusal, something we have in this country? I'm sure you heard, Mr. Chant, when you were on the ground, that people actually were concerned and had been told that the integrity of the building was under question before the tragedy happened.

Can you tell me what your recommendation would be in that instance, in the case of Tahmina going to work in similar circumstances? If she was to refuse work, would she be able to refuse work? If not, how are you going to deal with that kind of dilemma?

[Bob Chant]

That's a very good question, and it's a tough question to answer.

I'll start by reflecting on the comments that our chairman, Mr. Weston, made at our annual general meeting a couple of weeks ago, in which he said very clearly that he was troubled by the fact that we participate in a culture—or wondered what our contribution is to a culture—that would force people back into a building that had been declared so unsafe. It is very unclear to us why that happened, other than that there was a lack of enforcement of the local laws.

I would suggest that this is a common theme that you'll hear from me today. I'm not by any means trying to place any undue responsibility on local authorities, because we certainly recognize our responsibility in this instance and in general terms. But I believe there is a fundamental lack of infrastructure in Bangladesh that makes very difficult the enforcement of both existing labour laws that are in place today....

I can't say I'm an expert on them, but I certainly have talked to enough people over the last few weeks to be comfortable in saying that there are reasonably good labour laws in place in Bangladesh, and we're looking forward to the labour law reform package that I think is to be brought forward in June.

But fundamentally, there exists a culture that would allow this to happen.

A combination of increased inspections and of their intensity and the presence, in the case of Loblaw, of people on the ground on a frequent basis; the demands that buyers can place on and will place on our suppliers—both our vendors or agents and the factory owners, whom we sometimes deal with directly, and sometimes we deal with another.... Ultimately, the factories will feel that pressure, combined with improved infrastructure and inspection capabilities.

I'll mention a meeting that I had—

[Paul Dewar, NDP, Ottawa Centre, ON]

I have only so much time, so I'll come back to you in a second, Mr. Chant.

Mr. MacDonald, you talked about human rights. Let me narrow the question down further. Should not a part of the human rights you talk about be the right to refuse work, if it's not safe, and to join a union?

[Prof. Chris MacDonald]

Sure, I think that's right. The hard part, of course, is what it is that a Canadian company can do to make sure that someone acting on their behalf, or on behalf of someone acting on their behalf, is not violating people's human rights. I think this requires Canadian companies to learn a lot more about what is going on in the local scene, in terms of both cultural and economic factors.

The other thing to point out, of course, is that this is not unique to foreign settings. There are all kinds of situations in Canada in which someone acting on behalf of a company, either internally or externally, does something bad. We have to get better at figuring out—and it's as much a management problem as it is an ethical problem—how we structure workplaces and contracts and working relationships so that we're not encouraging that kind of bad behaviour.

[Paul Dewar, NDP, Ottawa Centre, ON]

This question is to both of you.

I should have declared a conflict of interest at the beginning, Mr. Chant—that your company helps feed my family. But Tahmina and the other kids help clothe our family as well, and that's why this is personal to all of us, I guess.

I want to build on what you were just saying. Is there not a role here for government, then?

Your most recent example, Mr. Chant, was of working with the embassy on the ground. Would you not say, as Mr. MacDonald was saying, that there is a role for our Canadian embassies wherever we have a proliferation of trade deaths around the world?

Is there not a role here for our government representatives to work with Canadian industry on the ground and with other players—you mentioned the United Food and Commercial Workers and the CLC—to help do that job?

[Bob Chant]

I honestly don't think it's my place to pass judgment on government policy in this regard. I do think there is a role for the Bangladesh government to play in solving this challenge and I would encourage the Government of Canada to look at any opportunities that may exist.

But I'm not an expert in public policy, so I'm not going to—

[Paul Dewar, NDP, Ottawa Centre, ON]

I commend both Mr. Weston and you for going to see what's happening on the ground. You mentioned you benefited from that. You also acknowledged the role of our high commissioner there. Was that not a benefit? You're saying that if we could look at recommendations, wouldn't that be important for our embassies and our trade desks to work in concert with industry?

[Bob Chant]

It could prove to be very helpful.