Bill C-300 would impose serious burdens on Canada’s mining industry

The following article appears in the Sept. 27, 2010, edition of The Hill Times (http://www.thehilltimes.ca/)
 

Bill C-300 would impose serious burdens on Canada’s mining industry

By John Manley
 

Good intentions don’t always translate into good legislation.

It’s a lesson I learned again and again during my 16 years in the House of Commons—and it’s a lesson today’s Parliamentarians should bear in mind as they consider Bill C-300, a well-intentioned but misguided private member’s bill that would impose serious burdens on Canada’s mining industry.

The stated purpose of Bill C-300 is “to ensure that companies engaged in mining, oil or gas activities and receiving support from the Government of Canada act in a manner consistent with international environmental best practices and with Canada’s commitments to international human rights standards.”

Not for a second would I dispute the motives of those who support this legislation. But the question that MPs need to ask themselves is whether the measures contained in C-300 would benefit the people and the countries we as Canadians should be trying to help—or would it have other consequences that would be detrimental to Canada’s interests while doing little to produce the hoped-for results?

I believe that far from promoting more responsible behaviour by Canadian corporations operating internationally, the bill could result in those same companies losing business to corporations based elsewhere that do not have the same regard for environmental, safety and human rights standards. Furthermore, it would encourage mining companies to locate in jurisdictions with less regulation and no commitment to corporate social responsibility.

Let’s be clear: by any objective measure, Canadian companies are already among the most socially and environmentally responsible companies operating internationally.

The organization I now lead, the Canadian Council of Chief Executives (CCCE), has been a consistent advocate of good corporate citizenship at home and abroad. As the voice of large, globally engaged Canadian enterprises in every sector of our economy, the CCCE fully supports efforts to improve the governance practices of all companies operating in developing countries.

Canada’s mining companies already operate in one of the world’s most heavily-regulated industries. They are among the recognized leaders in their industry, not only in terms of their ability to compete around the globe, but in their adoption and implementation of corporate social responsibility (CSR) standards and practices.

Bill C-300 would require that the ministers of Foreign Affairs and International Trade investigate any complaint regarding a Canadian mining company that is made by any citizen or resident of Canada or of a developing country where that company operates. Ministers would then have eight months to decide whether the complaint is valid. Offending companies would be punished by the withdrawal of any support for the project in question given by Export Development Canada (EDC) as well as a withdrawal or avoidance of any investment by the Canada Pension Plan (CPP) in the shares of the company.

Our main concerns are as follows:

The legislation is based on a flawed premise since it assumes that Canadian companies are not to be trusted in their international operations, and that it is necessary to embarrass them into being better corporate citizens through the imposition of arbitrary, unbalanced and punitive regulations.

There is as yet no internationally recognized set of standards for corporate social responsibility against which Canadian practices can be judged.

By suggesting that unilaterally determined Canadian standards should take precedence over the laws and regulations established by sovereign nations, Canada would be engaging in a form of extraterritoriality that it consistently has rejected when attempted by other countries.

The mere threat of a withdrawal of export financing from Export Development Corporation or loss of access to investment from the Canada Pension Plan Investment Board could easily jeopardize projects in developing countries. We know of no other national legislation that would seek to discipline the international activities of its resident corporations in this manner, and thus competitors in other countries would have an unfair advantage over Canadian companies.

The bill purports to screen out frivolous or vexatious claims, yet provides no effective mechanism for doing so. Any person can request such an investigation, regardless of whether or not he or she is personally affected and without having to supply any credible evidence of inappropriate behaviour by the company in question.

The filing of a single complaint sets the process in motion and the mere fact of such an investigation, regardless of its eventual outcome, would likely prejudice the Canadian company. In a bidding situation, a competitor could easily arrange for a complaint to be launched and then lobby the foreign government to exclude the Canadian company from the bidding process while the investigation is underway.

Undertaking an investigation under the Act likely would require the assistance of the government of the developing country, which may or may not be forthcoming. In any event, the Canadian ministers would not have ready access to resources and the detailed expertise needed to easily determine the merits of the complaint. All of this would lead to unacceptable delays and prejudice to the Canadian company.

In an era when a “national brand” is increasingly important, Bill C-300 can only tarnish Canada’s well-deserved reputation for good corporate citizenship.

Rather than imposing new burdensome and ill-considered regulation on Canadian companies, Canada should continue to assist developing countries in establishing the resources they need to monitor corporate behaviour for themselves. Indeed, the federal government has been engaged with responsible Canadian companies for some time in an effort to develop and promote sound CSR standards. These efforts should be allowed to continue and not be short-circuited by misguided legislation.

John Manley is President and Chief Executive Officer of the Canadian Council of Chief Executives, representing 150 CEOs and entrepreneurs of leading Canadian companies.