Sustainable Finance 2.0 – Application to Capital Markets

Specialist “Equator Principles Bank” Role in Project Finance?

NYT: China Mandates "Social Risk" Assessments for Big Projects

“No major projects can be launched without social risk evaluations,” Zhou Shengxian, the environment minister, said at the news conference. “By doing so, I hope we can reduce the number of mass incidents in the future.” Read full article here.

IFC Performance Standards on Environmental & Social Sustainability: A Global Benchmark for CSR with Legal Implications for International Trade and Finance

In May 2009, the Government of Canada established the Office of the Extractive Sector Corporate Social Responsibility Counsellor (“CSR Counsellor”) and explicitly endorsed the International Finance Corporation (IFC) Performance Standards on Environmental & Social Sustainability (IFC Performance Standards) as a primary part of the Corporate Social Responsibility (CSR) expectations for the Canadian mining and oil & gas industries. This endorsement was but the latest development to highlight the increasingly important role the IFC Performance Standards play in setting the standard for CSR and sustainable development in foreign direct investment. In considering the concept of CSR from a legal perspective, it gives rise to questions about the legal implications of the use of this environmental and social risk management standard in international trade, particularly as it may come to be used in investment disputes and to impose liability on lenders and borrowers.

CSR and Litigation Strategies - Comments on Forbes' CSR Blog Article "Shell, Corporate Social Responsibility and Respect for the Law"

Forbes' CSR blog posted an interesting article by Amol Mehra and Katie Shay on Shell's litigation strategy in relation to litigation under the United States Alien Tort Statute (ATS).  In the article, the authors criticize Shell's arguments to the US Supreme Court that the ATS should not apply so as to bring the allegations (which relate to activities in Nigeria) within the jurisdiction of a US Court.  While I respect their views and think it is an important question to consider, I strongly disagree with their conclusions...

The Meaning of "Prior" in Free, Prior and Informed Consent of Indigenous Peoples

The new Performance Standard 7 of the IFC Performance Standards for Environmental and Social Sustainability, used in environmental and social risk management by Financial Institutions through the Equator Principles Framework, requires the application of the "Free, Prior and Informed Consent" concept to certain projects affecting Indigenous Peoples.  In the book IFC Performance Standards for Environmental and Social Sustainability: A Guidebook, lawyer Pierre Christian Labeau discusses the meaning of "prior" in the context of FPIC.

IFC performance standards: A benchmark for CSR | Canadian Mining Journal

IFC performance standards: A benchmark for CSR | Canadian Mining Journal

Is Employer Neutrality Required by the IFC Performance Standards? Probably Not But Be Careful...

Performance Standard 2 of the IFC Performance Standards for Environmental & Social Sustainability (Performance Standards) requires that workers not be discouraged from joining or forming a workers’ organization. Discrimination, retaliation, refusal to hire, demotion, reassignment, outsourcing, shifting work, or other retaliation in response to union activities is prohibited by PS 2. Does it also require neutrality of the employer in regard to unionization?  Probably not, but FIs and clients applying the Performance Standards should be careful when taking a position regarding organizing efforts of workers.

Corporate Crimes for Employee Conduct - Bribery & Anti-Corruption

The Canadian Corruption of Foreign Public Officials Act (“CFPOA”) and the Criminal Code of Canada (the "Code") makes it an indictable offence for an individual or organization to (i) directly or indirectly (ii) offer or give or agree to offer or give (iii) an advantage or benefit (iv) in order to obtain or retain an advantage in the course of business (v) to a foreign public official or to any person for the benefit of the foreign public official (vi) either as consideration for, or to induce an act or omission by the foreign public official. In applying these provisions, corporate criminal liability may attach to an organization through the acts and intentions of its senior officers acting within the scope of their authority. In other words, the acts of such employees may create legal liability for the corporation itself.

Ability to Pay in OHS Sentencing - Australian and Canadian Analogies

The Work Health and Safety Act, 2011 (the “WHSA”) in New South Wales (NSW) provides that a breach of the WHSA is a criminal offence attracting a maximum penalty of $600,000 and up to five years imprisonment for serious offences by corporate officers. There are a variety of considerations that a Court will make in determining the appropriate penalties where a breach of the WHSA has been found. Among these is the ability to pay of the Defendant pursuant to section 6 of the Fines Act – a sentencing provision which was recently applied in the case of Inspector Hall v Raydaz Design Pty Ltd to reduce the amount of a fine under the WHSA. Recent Canadian case law involving the imposition of fines for workplace health and safety violations may offer some useful analogies for application of section 6 of the Fines Act to sentencing under the WHSA.

Draft of Updated Equator Principles (EP III) Released for Stakeholder Consultation and Public Comment

The Equator Principles (EP) Association today releases the draft of the updated Equator Principles (EP III) for stakeholder consultation and public comment.

The EP is a risk framework for identifying, assessing, and managing environmental and social risks in Project Finance transactions and has been adopted by 77 financial institutions worldwide. Key themes and areas of development proposed in the EP III draft include:

• An extension in the scope of the EP to Project-Related Corporate Loans and Bridge Loans.
• Changes reflecting the recent update of the International Finance Corporation (IFC) Performance Standards.
• New requirements related to managing impacts on climate.
• Greater emphasis on human rights considerations in due diligence and an acknowledgment of the UN "Protect, Respect and Remedy" Framework for Business and Human Rights and Guiding Principles on Business and Human Rights.
• A strengthening of reporting and transparency requirements.

The draft can be found HERE.

NEW BOOK: IFC Performance Standards on Environmental & Social Sustainability: A Guidebook

This Guidebook provides a comprehensive analysis of the IFC Performance Standards on Environmental and Social Sustainability (IFC Standards), as used in financial investment decision making and international business operations.

IFC Performance Standards as a Benchmark for CSR and Sustainability

When defining what CSR means, mining and energy companies operating in emerging markets should first look to the contents of the IFC Performance Standards.

There are other frameworks, private or public, legal or best practice in nature, which may be important in defining the full extent of corporate expectations, but there is little doubt that the IFC Performance Standards are emerging as the de facto benchmark for CSR and sustainable business practices.

Sustainability in International Project Finance

Michael Torrance and Pierre Dagenais of Norton Rose Group discuss the international project finance landscape, corporate social responsibility issues and the equator principles.

New principles on business and human rights endorsed by United Nations

The United Nations Human Rights Council has endorsed the recommendations of the report of John Ruggie, the Special Representative of the United Nations (“UN”) Secretary-General on human rights and transnational business (United Nations Document A/HRC/17/31) – with significant implications for global human rights responsibilities of business.

Case profile: AngloGold Ashanti silicosis lawsuit (So. Africa)

In October 2006, a South African gold miner named Thembekile Mankayi sued AngloGold Ashanti, his former employer, stating that he developed the lung disease silicosis while working in Vaal Reefs mine. The lawsuit, filed in the Witwatersrand Local Division of the High Court of South Africa, sought R2.6 million in compensatory damages. Mankayi alleges that AngloGold Ashanti failed to meet its responsibility to provide its employees with a safe and healthy work environment under both South African laws and an employer’s common law duty of care to its employees. AngloGold Ashanti responded that Mankayi is precluded by law from making the claims he set forth in his lawsuit. Under South Africa’s Compensation for Occupational Injuries and Diseases Act (COIDA), workers or their families may not sue an employer for injury or death incurred at the workplace. Instead, the compensation commission considers these claims. But Mankayi’s claims of AngloGold’s negligence can only be heard in a court of general jurisdiction, not by the compensation commission.

In addition, mineworkers’ lung diseases are covered under the Occupational Diseases in Mines and Works Act (ODMWA), which limits a mineworker’s compensation for illness due to working conditions to just a fraction of that awarded under COIDA (plaintiff’s counsel estimates that the payout is about a tenth of what it would be under COIDA). The size of Mankayi’s claim challenges the limitations on compensation under ODMWA. The South African Parliament is currently considering revisions to the law to address the disparity between the remedies available to workers under COIDA and ODMWA.

On 26 June 2009, the High Court of South Africa, Witwatersrand Local Division, issued a decision in this case. The court ruled in AngloGold Ashanti’s favour, holding that Mankayi was statutorily barred from making his claim. In March 2010, the Supreme Court of Appeal in Bloemfontein heard Mankayi's appeal of the lower court's ruling. On 31 March, the Supreme Court of Appeal upheld the High Court's ruling. The plaintiff's appeal to the Constitutional Court of South Africa, and this court reversed the lower court's ruling and ruled in favour of Mankayi on 3 March 2011. Mr Mankayi died of lung disease on 25 February 2011.

Article found on Business & Human Rights Resource Centre website.

Globe & Mail - For Canadian companies overseas, a corporate heart of darkness

Article questioning whether Canada is doing enough to legislate CSR practices of Canadian companies operating abroad.

Child labour-free cocoa ‘almost impossible,’ Nestlé head says

According to a report on the cocoa trade by the International Labour Organization (read the PDF here), an estimated 200,000 children, under the age of 18, were engaged in child labour in the Ivory Coast in 2002.


But Mr. Brabeck-Letmathe’s latest comments seem to suggest that eradicating child labour is neither realistic, nor particularly helpful.

“If they have the access to good schooling, then the child labour as such, if it is helping the fathers in the field and helping with the harvesting, I don’t think this is a problem,” he said, according to Reuters. “The problem is when you use the children only for that and don’t allow them to go to school.”

See Globe & Mail Article Here

Professor Kernaghan Webb, "CSR & the Law: Learning from the Experience of Canadian Firms in Latin America."

On Friday, October 29, Professor Kernaghan Webb delivered a lecture on the above subject, as part of the Ryerson Institute for the Study of CSR/Federal Extractive Sector CSR Counsellor Public Seminar Series, at Ryerson University in Toronto.

This particular talk was also co-sponsored by the Ryerson Law Centre. Based on research he is conducting, Dr. Webb’s presentation reviews current CSR-oriented legal disputes involving Canadian mining companies in Latin America, as a way of highlighting challenges associated with the legal regime, and opportunities for proactive environmental, social and economic practices by Canadian mining firms that can go some way towards reducing the likelihood that future legal issues will arise with respect to their operations.

The webcast (approx 1.5) is available for download HERE

SEC weighs forcing disclosure over ‘conflict minerals’

Thousands of companies could be forced to reveal the source of metals and ores they use under a proposed U.S. rule aimed at cutting the flow of money to armed rebels in the Democratic Republic of Congo.  See full article in the Globe & Mail here.