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Friday, March 12, 2010

Bill C-300 - Opposition Making Sense

While attending the Prospectors & Developers Association of Canada (PDAC) conference in Toronto Canada this week, I had some very interesting conversations regarding Bill C-300.

As you may know, Bill C-300 proposes (in essence) the establishment of a complaints mechanism that would allow persons affected by the activity of Canadian mining and oil and gas companies.  Complaints could be made by persons anywhere in the world.  The Canadian Minister of Foreign Affairs and International Trade would be required to review the complaint.  If the company under review were found to have violated CSR best practices, as embodied in documents like the IFC Guidelines, the company could be banned from receiving funding or investment from the Canadian Export Development Corporation or from the Canada Pension Plan.

The general mood of participants I spoke with was of opposition to Bill C-300.  The reasons were quite thoughtful and persuasive.  In essence, the opposition was not with the idea of a dispute resolution mechanism in principle.  Instead, it is with the formulation of Bill C-300 and its conflict with current initiatives in the promotion of CSR in the Canadian extractive sector.

The Canadian Government has already enacted a CSR Strategy and has created a CSR Centre of Excellence and CSR Counsellor role to serve as a contact point for complaints regarding the activity of Canadian companies abroad.  This strategy came out of a process of consultation that included NGOs and business.

It should be noted that the Canadian Government did not fully implement the recommendations of that consultation however, and in many respects Bill C-300 is a reaction to that fact.  It is not entirely clear what the role of the CSR Counsellor will be. Some have complained that she will not have a mediation role or powers of adjudication. Participation in any activity with the Counsellor will be entirely voluntary.

The general view amongst opponents to Bill C-300 whom I spoke with was that the Bill is really a distraction to the CSR Strategy and has not been well thought out in its formulation. Basic questions/concerns about the Bill include: How would it be operationalized?  How would facts be gathered? How would investigations be performed? What standards would be applied?  None of these questions have been adequately answered in the minds of industry representatives I spoke with.  Many of these people were strong proponents, and even leading experts, in CSR, not stalwarts opposed to the concept entirely.

Some also fear that the mechanism proposed in Bill C-300 would be used to publicly smear Canadian mining companies, and would do serious harm to their reputation abroad, whether or not complaints had any merit.  While the CSR Counsellor role may not go as far as many would like, the view seemed to be that it is only one part of the Government's CSR Strategy which should be given time to play out.

I heard often that companies themselves want to have dispute resolution mechanisms in place. Such mechanisms can allow companies to rebut misinformation put out by NGOs that are criticizing their activities without legitimate basis. However, the public nature of the mechanism proposed in Bill C-300, coupled with the fact that no provision is made in the Bill for some very basic questions regarding its operation, have led to the conclusion that it is simply not the right solution to reach the legitimate objective of promoting CSR best practices in the Canadian extractive industry, or promoting the "protect, respect and remedy" principles.

When one reads Bill C-300 it becomes readily apparent that such concerns are real and should be troubling to those interested in promoting CSR best practices.  It should be recalled that Bill C-300 is a Private Members Bill and was likely drafted with little anticipation of success.  Despite this, the Bill has passed second reading and may pass in the House of Commons, although it may have little chance of success in the Senate. Whatever the case, the Bill raises interesting and important issues, but may simply be too aggressive, and too poorly thought out to really advance its purpose well.  The message I heard loud and clear from members of industry was that while dispute resolution is a legitimate issue that will likely require more than a CSR Counsellor, Bill C-300 is simply not the way to go.

I tend to agree.  As noted in a previous posting on non-judicial grievance mechanisms (drafted in 2008 in response to work of John Ruggie on this topic) I think adjudication mechanisms for dispute resolution may ultimately be a good thing for companies wishing to clear their name, as well as for those legitimately affected by extractive industries, and society generally. That being said, such mechanisms must be introduced carefully and thoughtfully, particularly if done by government.  Where government develops an adjudicative mechanism, the focus should be on transparency, accountability and fairness.  It seems as though Bill C-300 is not sufficiently sensitive to these balanced objectives to be supportable. The existing CSR Strategy should be given a chance to play out and be developed.  It has already created heightened awareness of CSR in the industry, and will likely have substantial success in increasing voluntary adoption of CSR standards.

Incremental advancement towards adjudication, with eventual introduction of a sanctioning regime may eventually make sense, once these ideas have been more fully developed and with buy-in from industry.  Support should be given to companies wishing to adopt best practices in the meantime.  This will take time and should be done in the pragmatic Canadian way - creating forums for thoughtful and deliberative problem solving, with the interests of all stakeholders, and fundamental principles of fairness (procedural and substantive) at the forefront.

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