Canada introduces new corporate social responsibility measures

4 minute read
15 February 2018

With a pair of newly introduced tools to encourage corporate social responsibility, the federal government is seeking to expand its reach when it comes to controlling the way Canadian businesses operate abroad.  On January 17, 2018, Minister of International Trade François-Philippe Champagne announced that the government would be implementing an independent Canadian Ombudsperson for Responsible Enterprise and a multi-stakeholder Advisory Body, both of which will be aimed at ensuring that Canadian businesses operating in foreign countries do so in a manner that is consistent with Canada’s international human rights obligations and respects the humans rights of local populations.

The Ombudsperson will be given authority to conduct collaborative and independent investigations into alleged human rights violations by Canadian businesses operating in foreign countries, make recommendations to the parties involved in disputes in an attempt to reach a resolution, and also make recommendations in its public final report on a matter.  If an investigation reveals unlawful conduct, the Ombudsperson can refer the matter to law enforcement for investigation and potentially prosecution. The Ombudsperson’s mandate will be limited to mining, oil and gas, and the garment industry, but the government plans to expand that mandate within a year of the Ombudsperson taking the role. The Advisory Body will have a diverse composition of members who will be tasked with providing the government with legislative advice, and will also advise the Minister on improving the Ombudsperson’s operating procedures and scope of its mandate, including by proposing other industries to include in the Ombudsperson’s mandate.

In the event that a party is unwilling to cooperate with the Ombudsperson’s investigation, a recommendation can be made to deny that company any trade advocacy or Export Development Canada support. It is not clear whether the Ombudsperson will have any means to compel the production of documents or oral examinations from entities or individuals with relevant information (other than by threatening a withdrawal of government support); however, the government has stated that it is committed to providing the Ombudsperson with all the necessary powers to ensure companies comply with information requests.

Announcement of these two new measures is the latest effort by the federal government to ensure Canadian companies are operating responsibly. Previous efforts by the government to accomplish that goal have focussed on the extractive sector. For example, the Extractive Sector Transparency Measures Act came into force in 2015 and required that companies in that industry track and report certain payments to Canadian and foreign governments.  The federal government previously established the Office of the Corporate Social Responsibility Counsellor, which reviews the practices of extractive sector companies and provides advice to those companies on compliance with standards of corporate social responsibility. The government also introduced the Corruption of Foreign Public Officials Act in 1999, which prohibits the bribing of foreign public officials and applies more broadly to include companies outside just the extractive sector.

While the Ombudsperson will not have the ability to commence a prosecution against a company that it finds to have engaged in unlawful human rights violations, the power of this office may simply lie in its ability to shame Canadian companies with negative public relations (potentially causing change from within through the action of nervous shareholders). However, the roadblock that the Ombudsperson is most likely to face is that it has no power to subpoena witnesses and documents. As a result, some of its investigations will be unable to progress against companies that are unwilling to engage in a collaborative investigation that could potentially result in a prosecution.

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