On November 14, 2014, Canada’s Minister of International Trade, Ed Fast, announced the government’s updated corporate social responsibility (CSR) strategy, Doing Business the Canadian Way: Advancing Corporate Social Responsibility in Canada’s Extractive Sector Abroad.
The updated CSR Strategy reflects the Canadian government’s continued commitment to CSR, particularly in the extractive sector. It affirms the government’s expectation that Canadian extractive companies will operate abroad at the highest international standards and outlines various initiatives to support this goal. Among other notable developments, it contemplates tangible consequences for companies that fail to meet these expectations.
The updated CSR Strategy comes at the conclusion of a review of Canada’s first CSR strategy which was released in 2009, Building the Canadian Advantage: A Corporate Social Responsibility Strategy for the Canadian Extractive Sector Abroad. Like its 2009 predecessor, the updated CSR Strategy is slated to be reviewed in 5 years’ time.
While the primary audience for the updated CSR Strategy is the Canadian extractive sector, the strategy also provides a helpful overview of Canada’s approach to promoting and advancing CSR abroad more generally.
The updated CSR Strategy includes, among others, the following key developments:
- Consequences for Failure to Adopt CSR Best Practices or Refusal to Participate in CSR Dispute Resolution Processes.
The updated CSR Strategy states that companies are expected to align their policies and practices with established CSR guidelines. Those that do so will be recognized by the CSR Counsellor’s Office as being eligible for enhanced “economic diplomacy” from the Canadian government. Conversely, companies that do not adopt CSR best practices or that refuse to participate in established CSR dispute resolution processes will be penalized by withdrawal of Government of Canada support abroad. This designation will also be taken into account by Export Development Canada when considering whether to make financing or other support available to extractive sector companies.
- Strengthening the Office of the CSR Counsellor and Updating Approach to CSR Dispute Resolution.
The mandate of Canada’s Office of the CSR Counsellor is to be refreshed, including by enhancing its role in promoting and advising extractive companies on the adoption of strong CSR performance guidelines.
In addition, the updated CSR Strategy provides that the Office’s non-judicial review process will be offered to parties at earlier stages in disputes to help companies and communities resolve issues before they escalate. Going forward, the Office’s review process will operate more closely with Canada’s OECD National Contact Point—a dispute resolution mechanism, guided by the OECD Guidelines for Multinational Enterprises on responsible business conduct. In cases where formal mediation is required parties may be referred by the Office of the CSR Counsellor to the National Contact Point.
- Endorsement of New International CSR Best Practice Standards.
The 2009 CSR Strategy endorsed the following international CSR performance guidelines with Canadian extractive companies operating abroad:
- OECD Guidelines for Multinational Enterprises
- 2006 International Finance Corporation Performance Standards on Environmental & Social Sustainability
- Voluntary Principles on Security and Human Rights Global Reporting Initiative
The updated CSR Strategy expands this list by further endorsing:
- 2012 International Finance Corporation Performance Standards on Environmental & Social Sustainability (in place of the 2006 document)
- United Nations Guiding Principles on Business and Human Rights
- OECD Due Diligence Guidance on Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Area
The updated CSR strategy makes clear that where host country requirements differ from the international standards listed, the expectation is that Canadian companies will meet the higher, more rigorous standard. As such, companies will need to be familiar with these standards and reflect them in their policies and practices.
- Support for CSR Through Canada’s International Missions. The New CSR Strategy contemplates increased support for CSR initiatives at Canada’s diplomatic network of missions abroad to improve CSR-related service to the Canadian business community internationally, as well as the provision of additional training for Canada’s missions abroad to aid early detection and resolution of issues where Canadian companies are doing business.
The updated CSR Strategy shows that the Canadian government remains engaged and committed to advancing CSR best practices at home and abroad. It serves as a reminder to Canadian companies of the ongoing importance of integrating CSR into their business practices.