International Trade Committee on Feb. 13th, 2023

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I call the meeting to order.

This is meeting 49 of the Standing Committee on International Trade.

Welcome, everybody. I give a special welcome to our substitutes, whom we have on all sides this morning.

Today's meeting is taking place in a hybrid format, pursuant to the House order of June 23, 2022. Therefore, members are attending in person in the room and remotely by using the Zoom application.

I would like to make a few comments for the benefit of the witnesses and members.

Please wait until I recognize you by name before speaking. When speaking, please speak slowly and clearly. For those participating by video conference, click on the microphone icon to activate your microphone, and please mute it when you are not speaking.

With regard to interpretation, those on Zoom have the choice at the bottom of their screens of floor, English or French. Those in the room can use the earpiece and select the desired channel.

I remind you that all comments should be addressed through the chair. Members in the room, if you wish to speak, please raise your hand. Members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can, and we appreciate your patience and understanding in this regard.

Please also note that during the meeting, it is not permitted to take pictures in the room or screenshots on Zoom.

In accordance with our committee's routine motion concerning technical tests for witnesses, I inform the committee that all witnesses have completed the required tests. Should any technical challenges arise, please advise me, and we will suspend the meeting in order to ensure that everyone has an opportunity to participate.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Wednesday, February 2, 2022, the committee is resuming its study of environmental and human rights considerations regarding Canadian mining firms abroad.

We have with us today two panels. On the first panel, by video conference from Export Development Canada, we have Rachel Guthrie, vice-president of ESG strategy, outreach and reporting, and Sophie Roy, vice-president of the ESG customer success group. Also by video conference, from the Office of the Canadian Ombudsperson for Responsible Enterprise, we have Sheri Meyerhoffer, ombudsperson.

Welcome to you all.

We will start with opening remarks and then proceed with a round of questions from the members.

Ms. Guthrie, I invite you to make an opening statement of up to five minutes.

[Rachel Guthrie, Vice-President, ESG Strategy, Outreach and Reporting, Export Development Canada]

Thank you.

Good morning, Chair, honourable members, ladies and gentlemen.

It is a great pleasure to be with you today. We are happy to contribute to the committee's study of environmental and human rights considerations regarding Canadian mining firms abroad.

For the last several years, Export Development Canada has been guided by an agenda that puts the pursuit of sustainable, responsible, progressive and inclusive trade at the centre of its business operations. This agenda is built on the foundation of policies that deliver clarity and accountability in three key areas: number one, environmental sustainability; number two, business ethics and transparency; and number three, the protection of humans rights wherever EDC's customers do business.

For those who are less familiar with EDC, let me take a moment to provide a quick primer.

EDC is a Crown corporation dedicated to helping Canadian companies succeed on the world stage. As international risk experts, we serve companies of all sizes and in all sectors of the economy. We provide a wide variety of financial and advisory solutions to help them grow their business with confidence.

As the committee may be aware, EDC operates on commercial terms. Throughout our history, we've been consistently profitable. Since our founding in 1944, EDC's business has also tended to reflect the size and nature of the Canadian economy. As natural resources drove Canada's economy, they also made up a large proportion of our lending and insurance portfolios. Today, as the economy grows and diversifies, so does EDC, such that our current portfolio and activities reflect sectors as wide-ranging as the economy itself.

EDC continues to play a role in supporting Canada's natural resources, including the mining sector, which is both dynamic and complex. Over the course of Canada's history, the sector has played a key role in this country's economic growth as a producer of much-needed raw materials in demand around the world. That legacy continues today, especially as critical minerals grow ever more important to the goal of a low-carbon economy.

In short, conducting business in a responsible manner is integral to EDC and is something that we take very seriously. Every transaction EDC approves has undergone a rigorous due diligence process reflective of industry's best practices and adheres to our international commitments. If we identify specific issues during this process, we will take steps to understand the issue and take appropriate action.

EDC has a well-established environmental and social risk management framework. It guides all of our business and is aligned to various international agreements and standards, including the OECD Common Approaches, the UN Guiding Principles on Business and Human Rights, and the Equator Principles. Our policies are publicly available on our website, as is our due diligence framework. They are regularly reviewed through a robust stakeholder engagement process.

Finally, I would like to highlight the important role EDC plays as a financial institution and how we look for opportunities—

[The Chair, Liberal, Judy Sgro]

Just hold on one second, Ms. Guthrie.

Go ahead, Mr. Brunelle-Duceppe.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Madam Chair, unfortunately, there is a problem with the interpretation. It's very difficult for the interpreters to do the job they are being paid to do because the witness's audio is very poor right now.

[The Chair, Liberal, Judy Sgro]

Just hold on for a minute. We'll suspend for a second until we can see what the difficulty is.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Were the sound checks done in advance?

[The Chair, Liberal, Judy Sgro]

They were done beforehand.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Okay, I just wanted to be sure.

[The Chair, Liberal, Judy Sgro]

I have to suspend for a minute until we make sure that everything is functioning properly. It was tested prior to starting the meeting.

[The Chair, Liberal, Judy Sgro]

We'll resume the meeting.

The issue is with Ms. Guthrie. Your presentation is fading in and out. The translators have your written script and they feel they can follow that. There may be a problem after that when we get into the questions and answers. I understand you have a colleague who may have a better connection.

If you want to complete your opening remarks, during the questions we'll have to take it as we go in order to ensure that all of the members can hear you clearly.

[Rachel Guthrie]

Thank you, Madam Chair. I will resume.

Finally, I'd like to highlight the important role that EDC plays as a financial institution and how we look for opportunities to use our leverage and promote sustainable and responsible business practices.

From our perspective, an important element of our role is to identify risk, work with the company to identify ways to mitigate that risk, and then actively monitor progress. We believe that this is how we can have the biggest impact and drive the most change. To ensure that we are driving the right kind of change, we are continuously learning and continuously evolving our approach. Our priority is to ensure that we have the right processes in place to identify risks and make good decisions.

Thank you for your invitation to appear today.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Now we move on to Ms. Meyerhoffer, please, for five minutes.

[Sheri Meyerhoffer, Ombudsperson, Office of the Canadian Ombudsperson for Responsible Enterprise]

Thank you, Madam Chair and honourable members of this committee, for your invitation to appear today. I look forward to your questions.

To begin, I would like to acknowledge that I am joining you today on the traditional unceded territory of the Algonquin Anishinabe people. Respect for indigenous rights is closely linked to the work of my office and to your study of environmental and human rights considerations, given that Canadian mining operations overseas frequently take place in remote areas, often on or alongside indigenous land. My team and I recognize and honour the enduring relationship between the Algonquin peoples and indigenous peoples around the world and their traditional territories.

Before providing my remarks, I would like to say a few words about my mandate. I am the Canadian Ombudsperson for Responsible Enterprise, or the CORE, as my office is referred to. I have a mandate to promote respect for human rights and responsible business conduct by Canadian garment, mining, and oil and gas companies operating abroad. My office also provides a complaint mechanism for individuals and communities who believe their human rights are negatively impacted by Canadian garment, mining, or oil and gas operations outside of Canada.

Canada is a leader on the world stage, including among G7 and OECD partners. Canada is also a leader when it comes to mining, with a significant global mining footprint. This means that Canadian mining companies have the potential to impact human rights and environment around the world.

My first remark is that Canada's responsible business conduct abroad strategy is clear: Our government expects Canadian mining companies to respect Canadian standards for human rights and environmental protection regardless of where they are doing business. Responsible business conduct, or RBC, includes respect for human rights and the environment.

Canadian mining companies also have a duty to respect the United Nations Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. These two documents provide internationally recognized and respected guidance for human rights and environmental protection. This includes human rights and environmental due diligence, or HREDD.

My second remark is to reiterate the CORE's support for mandatory human rights and environmental due diligence legislation in Canada. We believe that mandatory due diligence legislation that applies to all sectors and that covers all human rights will advance corporate respect for human rights and help prevent human rights and environmental abuses from taking place.

This legislation will require companies to identify and address human rights and environmental risks and to put in place prevention and remediation measures to reduce the potential for harm to workers, communities and the environment. It will also reduce company costs, both financial and reputational. It will enhance Canada's leadership in protecting human rights and the environment wherever Canadian companies do business.

My third and final remark is that Canada has the capacity to strengthen effective redress for human rights and environmental harms arising from the operations of Canadian mining companies outside of Canada. This can be done by providing the CORE with the power to compel documents and witnesses.

I referred earlier to the United Nations Guiding Principles on Business and Human Rights. Those principles recognize the duty of states, including Canada, to ensure effective access to remedy for impacted individuals and communities.

The CORE currently has the power to conduct investigations, engage in mediation and, when appropriate, make remedial recommendations to Canadian companies and others. We also have a duty to report publicly and to follow up on our recommendations. These powers can have a positive impact. However, the CORE does not currently have the power to order Canadian companies to produce documents or witnesses. With these additional powers the CORE would have a greater positive impact.

Specifically, a CORE with powers to compel documents and witnesses would, first, provide access to effective remedies for impacted individuals and communities who do not have access to relevant information and who may face retaliation for exercising their rights. Second, it would incentivize Canadian companies to voluntarily participate in the CORE's complaint process, including by using consensual dispute resolution such as early resolution and mediation. Lastly, it would demonstrate that Canada is meeting its obligation to ensure that access to remedy is part of corporate accountability for human rights and the environment.

Thank you very much.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll begin with questions. Mr. Seeback, you have six minutes, please.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Thank you very much, Madam Chair.

My first question is to EDC.

With regard to the mandate of EDC, the 2014 strategy mentioned that Canada's trade commissioner service can provide Canadian mining firms with contacts and advice related to identifying, managing and mitigating environmental and social risks, such as the risk of human rights abuses associated with their mining activities abroad. According to the strategy, the Government of Canada will not support Canadian mining firms that do not comply with corporate social responsibility guidelines and best practices.

What we heard at committee earlier is that companies that are not in compliance are still able to access trade commissioners. Do you have any evidence about that? Do you have a way to enforce this? Have you ever been notified that this has taken place? If you were notified, what steps did you take to remedy that situation?

[Rachel Guthrie]

As we have stated, conducting business in a responsible manner is core to how EDC conducts itself and is something that we take very seriously. We understand that we can't avoid all transactions in which environmental and social human rights risks and impacts may exist, regardless of how robust our environmental and social due diligence practices are.

Our approach allows us to use leverage and remedy. I'm actually going to pass it to my colleague, Sophie Roy, to answer your question regarding the trade commissioners.

[Sophie Roy, Vice-President, ESG Customer Success Group, Export Development Canada]

Good morning, and thank you for your question.

We're not in a position to attest today if the trade commissioners office actually follows process or provides support to companies with regard to the application of its own policies. Whenever we intervene and provide support to companies, we conduct our own due diligence to ensure that the companies are meeting our own standards to gain our support.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Are you saying you don't have any information about access to trade commissioners by companies that may not be compliant?

[Sophie Roy]

I'm sorry, but I'm getting an echo.

Can you please repeat the question?

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Do you have any information about trade commissioners assisting companies that are not following the towards sustainable mining program, for example, or have been found to be in violation of some of these principles? Are they still able to access trade commissioners? Are you aware of that, and do you do anything to try to prevent that?

[Sophie Roy]

No, so we are not responsible for a trade commissioners office's support for Canadian companies. We are not aware of its due diligence process or when it does not provide support.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Within your own governance structure, do you have a system in place that would look into things like that? You say you have some due diligence. What is that due diligence? What scrutiny are you applying to the assistance you're giving to Canadian companies and Canadian mining companies abroad in particular?

[Sophie Roy]

We have a robust due diligence framework for both environmental impacts and human rights impacts at EDC. Every transaction we support needs to go through this process. We take a risk-based approach and we prioritize transactions that have the potential of having severe human rights risks or impacts for further due diligence. We do the same for environmental issues.

EDC assesses the capacity of our customers to manage human rights risks and impacts. We use our leverage, whenever we can, to influence the actions of our customers to prevent and mitigate their human rights impacts on the ground. When higher residual risks are identified in a transaction, we will track and monitor the human rights performance of our customers.

EDC also plays a role in enabling remediation based on its connection to the harm. We do this for transactions in the mining sector, just like in every other sector that we support at EDC.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Do you have a document that outlines that particular process you described in sort of very little detail? If you do, can you provide that guidance document to the committee so we can use that as part of our report?

[Sophie Roy]

Yes, absolutely. We'll be happy to provide that to you. All of our due diligence processes are accessible on our website as well, but we'll be happy to circle back with the committee.