On September 18, 2020, Global Affairs Canada opened its consultation on the Responsible Business Conduct (RBC) Strategy for Canadian companies abroad. The consultation calls for comments from the public and private sectors on new directions for Environmental Social Governance (ESG) for Canadian companies that are active outside of Canada. As we have noted in previous articles, ESG considerations have become increasingly important in the mining sector.
The consultation builds on a September 2020 issue paper, which sets out key themes for the new RBC strategy. The last time this type of policy was developed was in 2014, and it was entitled “Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada’s Extractive Sector Abroad.” This strategy related only to the extractive sector (e.g., mining and oil & gas sectors), and introduced an enhanced Corporate Social Responsibility (CSR) strategy that identified a number of areas where the Government of Canada would assist Canadian extractive sector companies operating abroad in integrating CSR into their operations. Notably, compliance incentives included enhanced diplomatic support through Canada’s Trade Commissioner Service. Under the 2014 policy, companies could also be designated as “non-compliant” which could result in losing access to the Trade Commissioner services and other Government of Canada services, including the issuance of letters of support, advocacy efforts in foreign markets, and participation in Government of Canada trade missions. A designation of non-compliance can also be taken into account in the CSR-related evaluation by Export Development Canada, in its consideration of financing or other support. While only one company has been designated as non-compliant, it has been noted that the threat of a non-compliance designation has influenced decisions of several mining companies with overseas operations.
The new strategy will follow the federal Government’s trend of expanding its ESG framework beyond the extractive sector to include all industry sectors. As noted in the September 2020 issue paper, the new RBC strategy seeks to integrate and address a number of global trends in responsible business practices,including Sustainable Development Goals, climate change, reconciliation with Indigenous peoples, industry standards, supply chains and the increasing adoption of technology.
In particular, the consultation is seeking comments on the following:
- How Canada can contribute to a strengthened and inclusive Responsible Business Conduct environment globally;
- How Canada can work with diverse stakeholders to create an enabling environment to ensure that Canadian companies achieve and exceed Responsible Business Conduct best practices;
- How Canada can contribute to enhanced accountability by providing access to dispute resolution, dialogue, recourse and remedy;
- How Canada can develop tools, incentives and partnerships that the Government could support to further Responsible Business Conduct abroad; and,
- How Canada can contribute to key international frameworks, standards and guidelines that Canada could consider promoting or adopting, which focus solely on or intersect with Responsible Business Conduct.
The new RBC strategy will be in place for the next five years. The strategy’s direction is relevant to all Canadian businesses with foreign operations as it informs Canadian government departments and agencies’ decision making and action in relation to Canadian business abroad. Ensuring that the strategy takes into account on-the-ground foreign business operation considerations is key to ensuring Canada’s future actions support Canadian businesses with foreign operations. This can include a range of issues from anti-corruption, to investment dispute resolution under Canadian investment treaties, and even liability of Canadian companies for their actions abroad. Notably, such liability in respect of a mining company was recently evidenced in the Supreme Court of Canada case, Nevsun Resources Ltd. v. Araya case, which we previously discussed here and may extend to similar complaints that can be reviewed by the Canadian Ombudsperson for Responsible Enterprise.
Submissions on the new RBC strategy are being accepted until October 16, 2020, and can be submitted directly to the Responsible Business Practices Division at Global Affairs Canada by email RBCconsultationsCRE@international.gc.ca. Global Affairs Canada will follow-up with a summary “What We Heard” document at the end of the consultation.