The federal government plans to punish mining and energy companies that run afoul of its new corporate social responsibility policy by withdrawing support they receive from agencies such as Export Development Canada and embassies abroad.
International Trade Minister Ed Fast is to announce the measure in a speech in Vancouver Friday, saying it is important to protect Canada's "brand" as a global heavyweight in the resource industries.
"Let there be no mistake," the minister says in a draft copy of the speech provided to The Globe and Mail, "Canada's expertise in the extractive sector is second to none; Canada is a world leader in sustainable technology, and in environmentally, ethnically and socially responsible business practices. That is the 'Canada brand' – it is how we are known throughout the world."
The government is launching a corporate social responsibility (CSR) strategy as part of its broader effort to enhance the business prospects for resource companies abroad. Toronto is a global centre for mining finance and Canadian-based companies are particularly prominent in Africa and South America, where more than 250 companies controlled $81-billion in assets in 2011.
Moving with the European Union and the United States, Ottawa is already set to impose new transparency standards on resource companies, having introduced legislation this fall that will require them to report all payments made to national, state and local governments both at home and abroad.
In the speech to be delivered Friday, Mr. Fast said he will appoint a new CSR counsellor to fill a post that has been empty for a year, and give the ombudsman role some teeth by insisting companies co-operate with the office or lose the support of the government. Many mining and oil companies rely on Export Development Canada to provide insurance against political risk and other losses, as well as lines of credit and other financial support. Commercial counsellors in embassies can play an important advisory role, particularly in politically unstable or violence-prone countries.
"Our message is clear: If you don't play ball by doing business the Canadian way, then we won't go to bat for you," he said.
While the Trade Minister extols the international reputation of Canadian companies, many critics have complained about human rights and labour abuse and poor environmental practices. And they argue that a government ombudsman should be given investigatory powers and the ability to ensure companies co-operate in arbitration cases.
Mr. Fast has now concluded a review of the corporate social responsibility policy that was first announced in 2009. Under the mandate of the CSR counsellor, company co-operation will still be voluntary and informal, but with a "hammer" that failure to adhere to Ottawa's policy and work with the counsellor will mean the forfeiture of government support. Ottawa will also require companies to adhere to CSR guidelines set out by the Organization for Economic Co-operation and Development, which include formal dispute settlement mediation.
The previous counsellor, Marketa Evans, was handicapped by the lack of enforcement power in her role as arbitrator of disputes between Canadian companies and local unions and communities. Ms. Evans drew criticism for spending time and money to attend conferences but doing little investigative work; she quietly resigned a year ago.
She was able to mediate none of the six cases that were filed with her office. One case involved Toronto-based Excellon Resources Ltd., which walked away from the process when Ms. Evans attempted to hold talks between the company and its workers at the La Platosa Mine in Durango, Mexico.