After 10 months of hard work, representatives of the mining and oil and gas sectors, civil society, academia, labour and socially responsible investors have reached an unprecedented consensus on a Canadian corporate social responsibility framework. Why is this important? Because Canada's extractive sector is big, its reach is global and, in recent years, the performance of several companies has come under close scrutiny — and been found wanting. There have been allegations of complicity in human-rights violations, land-use conflicts and environmental disasters. Industry's reputation has been tarnished and so has Canada's face to the world.
Demands for higher standards of industry conduct have come both from both within the industry and beyond. Under the leadership of the federal government, a series of roundtables were held in 2006, bringing together experts from Canada and around the world to explore these important issues. Despite sometimes very different ideas and perspectives, it became quickly apparent that participants held the shared objective of improved corporate social responsibility performance. The job then became to develop a comprehensive framework to make this happen.
Implementation of the CSR framework will take time and the ongoing commitment of all stakeholders. It will require leadership from the government. But the promised outcomes are compelling.
Adoption of the framework, the first of its kind in the world, will establish Canada as a global leader in CSR. It will lead to extractive projects that are more socially and environmentally responsible, and help to distinguish our extractive sectors as investors of choice in developing countries. The central recommendation in the report urges the government, in co-operation with key stakeholders, to adopt a set of standards that Canadian extractive-sector companies operating abroad will meet and to reinforce them through appropriate reporting, compliance and other mechanisms. This approach will simultaneously raise the bar and level the playing field.
Other key elements of this CSR framework include:
-- CSR reporting obligations based on the Global Reporting Initiative, or its equivalent, during an initial phase-in period, at a level that reflects the size of the operation.
-- An independent ombudsman's office to provide advisory services and fulfill a fact-finding function in complaints involving the operations of Canadian companies in developing countries.
-- A tripartite review committee to assess company compliance based upon the ombudsman's findings of fact and to make recommendations regarding appropriate responses in cases of non-compliance.
-- Provisions requiring the withdrawal of government support to extractive companies in cases of serious failure to comply with the CSR standards and where efforts to bring the company into compliance have failed.
Other recommendations concern the development and dissemination of tools for industry in support of the framework. The report calls for enhanced disclosure by publicly traded companies, including environmental, social and governance performance information. Pension and mutual-fund disclosure requirements will provide a market incentive to companies to improve their CSR policies, management systems and performance records. This disclosure will be of great interest to Canada's rapidly-growing $500-billion socially responsible investment industry.
The government is also encouraged to support developing countries that promote investment in the extractive sectors in their efforts to optimize the social and economic benefits that accrue from such investment. In countries where governance is weak and where there is corruption or armed conflict, adherence to good CSR standards can challenge the best of companies.
Canada can, and should, do more to support good governance. It's time to adopt clear, universal CSR standards for our extractive companies that operate in developing countries. It's good for business, it will help affected communities and it's the right thing to do.
Gerry Barr is president and CEO of the Canadian Council for International Co-operation. Gordon Peeling is president and CEO of the Mining Association of Canada. Robert Walker is vice-president, sustainability, at the Ethical Funds Company. All three were members of the advisory group to the national roundtable process.
