Canadian mine firms adopt ethics rulebook

Canadian mine firms adopt ethics rulebook

Accord aims to clean up image on human rights, environmental record

Kelly Patterson, The Ottawa Citizen

29th March 2007

In a move that could revolutionize the global mining industry, Canadian mining representatives have struck an unprecedented accord with environmentalists and human rights advocates on ways to ensure mining and oil companies act ethically in their overseas operations.

The report would create the world's first independent mining ombudsman and sketches out environmental and social standards for projects in the developing world, where standards are often lax or poorly enforced.

It also calls on government to withdraw services, such as diplomatic support and tax breaks, if companies fail to uphold those standards.

If the federal government implements the proposal, the repercussions would be felt around the world, since Canada is a colossus in the industry.

The groundbreaking report, which is to be released today, is the fruit of 10 months of intense negotiations between representatives of industry, advocacy groups such as Ottawa-based MiningWatch Canada, academics and government.

In recent years, the industry has been dogged by a growing international outcry over allegations of human rights abuses and environmental disasters at Canadian projects in more than a dozen countries in the developing world.

In June 2005, an all-party parliamentary committee urged the government to take action. That fall, the federal government announced it would set up a series of national roundtables, just days after the Citizen ran a seven-part series on the issue.

The proposals in the joint report would put Canada on the cutting edge of a growing international corporate social responsibility movement.

"Industry and civil society members have worked together in an unprecedented way and it is now up to government to implement these recommendations," says Catherine Coumans of MiningWatch Canada.

The report urges the government to adopt a made-in-Canada set of corporate responsibility standards based on benchmarks established by agencies such as the OECD and the International Finance Corporation.

It would also improve upon those rules on controversial issues, such as the compensation of people displaced by mining projects, the use of forced or child labour by suppliers, and mine-closing protocols.

An independent ombudsman would monitor firms to make sure they follow the rules and would refer serious concerns to a panel that could recommend government sanctions.

Industry did not agree with civil society groups that Canada's laws should be changed to make it easier to prosecute Canadians accused of corporate wrongdoing or criminal acts abroad -- a measure the 2005 parliamentary panel had recommended. But the two groups did agree the government should strengthen its law against bribing foreign officials and investigate charges the act is rarely enforced.

The recommended sanctions for not following the new Canadian standards would be significant:

- Firms that commit a serious breach of the Canadian rules would be cut off from any financial support from Export Development Canada, which offers millions of dollars in financial and insurance support for Canadian projects overseas.

- Firms eligible to deduct the tax they pay to a foreign government from their Canadian taxes would lose that privilege.

- Companies would lose the support they receive from Canadian consulates abroad.

The report also recommends offering refundable tax credits to companies that adopt the Global Reporting Initiative, which sets common standards for measuring a company's sustainability.

And it calls for a Canadian Corporate Social Responsibility (CSR) Centre of Excellence, which would advise Canadian firms and diplomats, and help brand Canada "as a country committed to CSR."

The report urges the government to adopt the Voluntary Principles on Security and Human Rights, a key accord that sets out guidelines for the corporate use of security forces.

The role of security forces has been at the centre of a string of alleged human rights abuses associated with some Canadian firms in recent years.

Private security forces and government troops at other Canadian mines have injured dozens of civilians in recent years.