Canada is often considered to be the mining capital of the world. More than three-quarters of the world's mining and exploration companies are based in Canada. Canada's extractive sector typically amounts to more than one-third of the total value of Canadian domestic exports, and its natural resource sector directly and indirectly accounts for almost one-fifth of the country's nominal GDP and 1.8 million jobs.
While many extractive companies are based in Canada, these companies also operate in more than 100 countries abroad, participate in thousands of projects and account for almost half of the world's mining and mineral exploration activity.1 These global mining operations result in direct benefits to the host country, including the development of infrastructure and the creation of jobs. However, over the past decade, reports from Human Rights Watch, Mining Watch, and the United Nations Human Rights Committee have also cast these operations in an unfavorable light.
At present, there is no overarching Canadian law that directly regulates overseas operations of Canadian-registered mining companies. Instead, there is a legislative "patchwork" that governs these companies' compliance with various standards, including those applicable to international environmental, labour and human rights, and policy-based initiatives and other measures aimed at encouraging corporate social responsibility in host countries.2
In response to this patchwork and the reproaches levelled by industry critics, federal politicians have begun developing a new regulatory framework for Canadian companies operating abroad. In 2009, during the previous Conservative government's tenure, Liberal MP John McKay tabled Bill C-300, a private member's bill that called for the creation of a regulatory system that would allow citizens of host countries to file complaints against Canadian-based mining companies directly with the Minister of International Trade and the Minister of Foreign Affairs. At the time, industry groups, including the Prospectors & Developers Association of Canada and The Mining Association of Canada3 firmly opposed the bill, stating that it ignores the competitive nature of the industry and that the regulations may infringe on the laws of the host state.
Bill C-300 was defeated in 2010. However, in 2014, the Conservative government gave its diplomacy-based corporate social responsibility strategy more teeth by giving the Office of the Extractive Sector Corporate Social Responsibility Counsellor the ability to revoke funding if a company refuses to participate in a review or comply with guidelines.
During the 2015 federal election campaign, the issue of increased regulatory oversight of Canadian extractive sector companies operating abroad gained more traction. The Liberal party's position on increased regulation made specific reference to Mr. McKay's past efforts to increase regulation abroad. The Liberal party took the position that, if elected, it would act upon the 2007 National Roundtables on Corporate Social Responsibility and the Canadian Extractive Industry in Developing Countries Advisory Group's recommendations. The 27 recommendations proposed by the advisory group included, among other things:
- the adoption by Canadian companies of the Global Reporting Initiative reporting standards;
- the disclosure of project information and data from Export Development Canada;
- the appointment of an independent ombudsman and compliance review committee; and
- the amendment of the Corruption of Foreign Public Officials Act to clarify that it applies extraterritorially to Canadian nationals.4
To a certain extent, extractive companies and the communities that host them abroad have dove-tailing interests. For instance, high standards of corporate social responsibility, including proper health and safety standards, improved efficiency of operations, and a company's reputation for demonstrating strong corporate social responsibility can improve share prices at home. These are strong motivating factors that have led, and continue to lead, mining companies to self-regulate their activities abroad.
That, however, may no longer be enough. The extractive industry in Canada is clearly facing a shifting landscape of regulatory oversight and policy that will continue to change with the new Liberal government. It will be important for Canadian extractive companies to keep a watchful eye on the current government's willingness to increase its oversight to levels potentially above and beyond those applicable to U.S., European and Australian competitors.
2. See, for example, the Corruption of Foreign Public Offi cials Act, S.C. 1998, c. 34, Extractive Sector Transparency Measures Act, S.C. 2014, c. 39, s. 376, and the Canadian Extractive Sector Trade Strategy overseen by the Offi ce of the Extractive Sector Corporate Social Responsibility Counsellor.
3. Canada's Mining Industry: Socially Responsible Global Leader – Bill C-300 Will Hurt Canadian Mining Companies
4. National Roundtables on Corporate Social Responsibility (CSR) and the Canadian Extractive Industry in Developing Countries, Advisory Group Report, March 29, 2007.
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