PSCI 3801A - Environmental PoliticsPolicy Research Essay (Part I) - 2016/02/23

Ludovica Chiappini #101028674Word-Count: 2048 words (footnotes and bibliography excluded)

Title: Building a Corporate Social Responsibility in the Canadian extractive sector (Bill C-300):

the analysis of a failed initiative.

Research Question: Why did the Bill C-300 on corporate social accountability for Canadian

mining activities in developing countries fail despite the optimistic premises of the Advisory

Group Report in 2007 and the general support for it?

Thesis Statement: The failure of the Bill C-300 lies on the economic threats felt by the

Canadian mining industries and the new-elected Conservative Government that encouraged them

to exercise their privileged political power through an awe-inspiring lobbying effort.

The issue at stake

Canada is renowned for being a mining superpower, meaning that almost 75%1 of world’s

extractive companies have their home in the North American country. Despite being a leader in

this sector, Canada did not play a driving role in imposing a corporate social responsibility

approach to its corporations abroad. The rationale of this theoretical concept is that companies

should be responsible for their impact on societies and the environment while performing their

activities2. As a consequence of the shared negligence between Canadian Government and

1Drohan, M. (2010). Regulating Canadian mining companies abroad: The 10-year search for solution. Centre for International Policy Studies. (Policy Brief NO. 7).http://www.cips-cepi.ca/wpcontent/uploads/2015/01/CIPS_PolicyBrief_Drohan_Jan2010-1.pdf 2Blowfield, M., & Frynas, J. G. (2005). Editorial Setting new agendas: Critical perspectives on Corporate Social Responsibility in the developing world. International Affairs, 81(3), 499-513.

mining industries3, several critiques arose from environmental, human rights organizations, civil

society and international institutions. Bill C-300 aimed that Canadian mining corporations

operating in developing countries and receiving the financial support of the Canadian federal

government would have been subjected to a withdrawal of funding if their environmental and

human rights performance violated international standards. The legislation initiative was

defeated by 140 to 134. Even though it had the initial support of three parties with a majority of

votes, the Liberals, NDP and Bloc Québécois, twenty-five members of those parties chose not to

attend the vote after the pressing lobbying effort of business.

The background of Bill C-300 and its genesis

In June 2005 a parliamentary report issued by the Standing Committee on Foreign Affairs and

International Trade4 recalled the authority of the federal Government to institute regulatory

measures that would have stimulated the Canadian mining companies to act in a responsible

manner, respecting the environment and local communities. The answer of the Canadian

Government occurred the following year by organizing National Roundtables on Corporate

Social Responsibility and the Canadian Extractive Sector in developing countries. Also, an

Advisory Group formed by the representatives of the extractive industry, civil society and

academics was established to summarize the discussions and draft provisions for the

Government. In 2007, it submitted a consensus report referring to some recommendations of the

2005 parliamentary document and embracing the discourse of sustainable development that was

routinely incorporated into environmental legislation and globally accepted as the most effective

3 CorpWatch. (2007). Barrick’s Dirty Secrets: Community worldwide respond to Gold Mining’s Impacts (Rep.). 4Patry, B. (2005). Canada, House of Commons, Standing Committee on Foreign Affairs and International Trade, “Fourteenth Report: Mining in Developing Countries and Corporate Social Responsibility” in Sessional Papers (Rep. No. No 8510-381-179).

approach.

The Advisory Group Report included several measures to develop the Canadian corporate social

responsibility (CSR) framework based on the existing international standards, constant multi-

stakeholder consultations, accountability mechanisms to collect complaints concerning the

detrimental activities of Canadian mining industries and resolve the disputes5.

The Mining Association of Canada and the Prospectors and Developers Association of Canada

publicly voiced their support for the CSR Framework6. Nevertheless, in 2008, the Conservative

Government in power backed away from the results achieved in the previous years by the

Liberals denying to implement the recommendations. The mining associations also reconsidered

their positions. Thus, there was a change of directions and several civil groups and opponent

parties began to organize strategies to obstruct the government decision. It was the birth of the

Bill C-300.

The Bill C-300: key sponsors and their fight for the approval

Bill C-300 was a private member’s bill proposed by the opponent Liberal Party leader, MP John

Mckay in February 2009. Mckay hoped that this legislative initiative would have solved the

serious deficit of Canadian regulation concerning the social responsibilities of its mining

industries abroad. The purpose of the Act, set out in section 3, was to ensure that the extractive

corporations which were receiving support from the Government of Canada would have acted in 5 For further details, Advisory Group Report. (March 2007). National Roundtables on Corporate Social Responsibility (CSR) and the Canadian Extractive Sector in Developing Countries (Rep.). http://www.pdac.ca/docs/default-source/public-affairs/csr-national-roundtables-advisory-group-report.pdf?sfvrsn=66Mining Association of Canada. (2007, March 29). “Groundbreaking Report on Mining, Oil and Gas Companies Released: Civil Society and Industry Representatives Agree on Good Overseas Practices”. Retrieved from http://www.halifaxinitiative.org/fr/node/3122

line with international environmental best practices and human rights standards7.

The Bill C-300 proposed accountable guidelines for Canadian mining companies in developing

countries. It provided for mechanisms to receive and solve complaints about the Canadian

extractive sector from individuals damaged by its activities. The Ministers of Foreign Affairs

and International Trade would have been in charge of the entire process. In particular, the pivotal

provision was that financing supports for Canadian extractive companies through Export

development of Canada (ECD)8 would have been highly dependent on the attitude of mining

industries to be in compliance with the proposed standards. This was the most controversial

aspect and the primary reason why the Bill did not become a formal legislation.

The main proponent actors involved in the process were the Liberal party, the New Liberal Party

and the Bloc Québécois that expressed solid support for the Bill during the discussions in the

House of Commons9.

Moreover, several key sponsors from civil society, academics, environmental and human rights

organizations, both national and international, took part to the campaign supporting the Bill.

They mainly organized their action through committee hearings in the House of Commons,

letters to Members of Parliament, media coverage and panel discussions. They generally

emphasized the need of the mandatory provisions of the Bill in order to allow Canada becoming

a leader in corporate social responsibility and having what it takes to respect the environment

and human rights10.7Corporate Accountability of Mining, Oil and Gas Corporations in Developing Countries Act, House of Commons of Canada, H.R. Bill C-300 (2009). http://www.parl.gc.ca/content/hoc/Bills/402/Private/C-300/C-300_1/C-300_1.PDF8 an arm’s length government agency that helps Canadian companies financing their international business opportunities.9 The sum of their votes would have allowed the passage of the Bill C-300 into law.10 Tahir, M. (2012). Corporate Social Responsibility in the Canadian Extractive Sector. Bill C-300: What went

Firstly, the hearings in the Standing Committee on Foreign Affairs and International Trade began

in October 2009 and twenty-five witnesses spoke in favor of the Bill11. Namely, Mining Watch

Canada and other eight representative members of the Canadian Network on Corporate

Accountability (CNCA) based their testimonies on detailed reports12. Human rights organizations

such as Amnesty International Canada, Human Rights Watch and other international NGOs

played an important role during the hearings supporting their testimony on extensive data

concerning human and environmental abuses by Canadian mining companies. Also, some

international government’s figures stood out for the Bill: Romina Picolotti, the former

Environment Minister from Argentina accused publicly the Canada’s Barrick’s Gold Corporation

for having threatened her during the ministerial activity. Furthermore, citizens and global civil

society organizations used the strategy of direct letters to Members of Parliament’s offices13 to

express their hope for the success of the Bill. Finally, media coverage and panel discussions held

across Canada14 tried to enhance public and policy-makers’ awareness on the issue.

To sum up, the passage of the Bill C-300 into law was strongly endorsed by the opposition and

third parties, civil societies organizations, mainly Mining Watch Canada, the Canadian Network

on Corporate Accountability and key national and international players. They developed their

strategies through publicly lobbying effort seeking for support to intimidate the opponents.

wrong? University of Toronto.https://tspace.library.utoronto.ca/bitstream/1807/33552/3/Tahir_Mariam_201211_LLM_thesis.pdf11 MiningWatch Canada. (2010, November 15). “Bill C-300 a High Water Mark for Mining and Government Accountability”. Retrieved from http://miningwatch.ca/blog/2010/11/16/bill-c-300-high-water-mark-mining-and-government-accountability. 12 CNCA unites environmental and human rights NGOs, faith groups, labor unions, and research and solidarity groups across Canada. For further information and details on the report see: Janda, R. for Canadian Network on Corporate Accountability. (2009). “Bill C-300: Sound and Measured Reinforcement for CSR. Retrieved from http://cnca-rcrce.ca/bill-c ‐ 300-sound-and-measured-reinforcement-for-csr/ 13 In the days before the final vote a letter (http://miningwatch.ca/blog/2010/10/27/letter-39-latin-american-human-rights-organizations-supporting-bill-c-300 ) came from Latin America that was signed by 39 organizations in support of the Bill. 14 For example, the International Bar Association panel on extractives and the lack of judicial remedy in Vancouver.

However, their evidence-based and transparent strategies were not enough.

Key opponents and their privileged lobbying power

The Conservative Government led by Stephen Harper, the members of Mining Association of

Canada and the Prospectors and Developers Association of Canada (PDAC)15 were undoubtedly

the enemies of the Bill C-300. Their general arguments were that the Bill C-300 would have

produced capital mobility from Canada due to its stringent provisions; Canadian companies

would have been in a competitive disadvantage in the international market through different CSR

standards and the severe sanctions related to the withdrawal of institutional funding in case of

noncompliance with the established standards. Essentially, the Bill would have led relevant

economic threats for Government and Mining industries, affecting all Canada. Nevertheless, they

held to demonstrate their shared sentiment with Bill’s sponsors concerning corporate

accountability and improvements of CSR performance but they considered that the voluntary

measures proposed by the Government would have been more effective in reaching these goals.

Indeed, one month later the introduction of the private Bill, the federal Government launched its

counterpoint releasing the CSR strategy for international extractive sector16. In contrast to Bill C-

300, parties subjected to the complaint could decide not to cooperate without consequences to

the violation of the guidelines and the withdrawal of government financing was not part of the

discussion. The Government stance to build the Canadian Corporate Social Responsibility was

extremely light compared to the provisions of the Bill.

15 a national trade association in the extractive sector.16 Foreign Affairs and International Trade Canada. (2009). “Building the Canadian Advantage: A Corporate Social Responsibility (CSR) Strategy for the Canadian International Extractive Sector”. http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/csr-strat-rse-2009.aspx?lang=eng

Several testimonies were unleashed in the House of Commons to prove evidence of negative

impacts of Bill C-300. The response to the Bill of Jim McArdle17, Senior Vice-President of ECD,

is explicative: according to Bill C- 300, EDC would have withdrawn all its support for the

project if the company would not have respected the CSR guidelines. However, since companies

would have always looked for secure funding, they would have sought financial support other

than EDC and the national borders. This would have proved a source of embarrassment for the

Government unable to solve the problem of irresponsible behavior.

On the other side, the industries started to lobby after the Bill passed in the second reading due to

the increasing threats. The Mining Association of Canada and the PDAC testified against the Bill

during the parliamentary committee of Foreign Affairs and International Development in

October 2009 and they also made public statements18. The campaign became fierce in spring

2010. PDAC and Mining Association revealed their efforts against the Bill through publicly

lobbying strategies during the annual International Mining Convention held in Toronto, stating

that they were opposing the Bill and not the CSR strategies. PDAC handed out anti Bill-C300

posters, organized a panel on the Bill, realized a press conference and launched a website to

spread its message. Furthermore, the Mining Association of Canada and PDAC exercised their

privileged political power through private lobbying pressure on the Members of the Parliament.

17Canada, House of Commons, Export Development Canada to the Standing Committee on Foreign Affairs and International Development. (2009). EDC’s Response to Bill C-300 (J. McArdle, Author) [H.R. Bill]. http://www.parl.gc.ca/HousePublications/Publication.aspx?Language=e&Mode=1&Parl=40&Ses=2&DocId=4178126#Int-291491318Prospectors and Developers Association of Canada. (2009). Bill C-300 Position Statement. Retrieved from http://www.pdac.ca/pdf-viewer?doc=/docs/default-source/publications---news-activities/090812-bill-c-300-position-statement.pdf. In addition, Barrick Gold Corporation, Kinross Gold Corporation, & Goldcorp Inc. (2009). Submission to the Standing Committee on Foreign Affairs and International Development on Bill C-300. Retrieved from http://www.barrick.com/investors/news/newsdetails/2009/BarrickGoldSetsOutPositiononBillC-300andProvidesFacts1121285/default.aspx

Here they won the battle19: on October 27, 2010, Bill C-300 was definitely defeated by 6 votes of

difference in the House of Commons. The Conservative party whipped its MPs to oppose the Bill

and twenty-five members of the sponsor parties did not attend the vote.

The failure of the Bill C-300 and warrant considerations on the table

The research essay adopted a political economic approach focusing on the way economic

interests have shaped the decision on the Bill. The primary interpretation of the event reasonably

leads to conclude that the failure of the Bill C-300 lies on the nature of the economic threats that

the Canadian extractive sector would have faced not only for its profitability but for its survival.

Indeed, the possibility of lacking public financial support for their projects encouraged mining

industries to actively react against the mandatory provisions of the Bill and exercise their

privileged political power to influence the decision. Bill C-300 brought on the table serious

threats for the corporations’ sustenance thus, they could not be accommodating as they were in

the release of the Advisory Group Report in 2007.

Nevertheless, the fact that they initially accepted to seat at the multi-stakeholder consultations

and publically voiced their support for the measures identifies their need to gain environmental

legitimacy as well. In that context, they used the strategy of embracing the discourse of

sustainable development that allowed them to move from being part of the problem to be part of

the solution and increase the public legitimacy that they lost due to their detrimental actions.

Further evidence of their “legitimacy-seeking” was that they act through public lobbying

strategies that were not decisive for them to influence the failure of the Bill. Specifying their

19 Canadian Barrick Gold Corporation and other mining companies such as Vale Canada, Gold Corp, Kinross and IAMGOLD, increased the number of their lobbyists to influence the failure of the Bill. It is reported that they met overall 50 MPs.

adverse stance on the Bill but not in the pursuit of corporate social responsibility, they were

protecting their corporate image. These fluctuations of business’ behavior concerning the Bill C-

300 lead to some considerations that should be addressed in future analyses.

Although the mining interests were predominant in influencing the political decision, the

companies needed to justify their actions to avoid other consistent damages to their public

legitimacy. Does this aspect show the lack of business inherent political power and its

dependence on other ideas outside its control? Is it possible to think legitimacy as the Achilles’

heel of business power in the future?

In addition, the case of the Bill C-300’s failure points out another important observation that

deserves attention. Canada was one of the international players that supported the

conceptualization of sustainable development in the field of environmental policy. The 2005

report and 2007 national Round Tables are the evidence of the integration of the sustainable

development discourse in the environmental policy-making process. Nevertheless, the

Government’s CSR strategy in 2009, the argument against the Bill concerning the competitive

disadvantage that the Canadian mining corporations would have faced in the international trade

and the idea that less regulatory measures would have been more effective, demonstrate that the

sustainable development approach did not bring changes in the practice of environmental

regulations in Canada. The failure of the legislative initiative shows that the sustainable

development discourse was integrated only in a symbolic manner and that neo-liberalism was the

predominant attitude that impacted government regulatory actions20.

20 Neoliberalism emphasizes the idea of free-market and moderate state regulation for trade and investments across international borders.

Hence, considering the Canada’s enhanced CSR strategy launched in 2014, does the failure of

the Bill C-300 open a new era in which the sustainable development attitude would influence the

environmental politics or does the political initiative is a further evidence of the rhetorical use of

this discourse?

Bibliography

Advisory Group Report. (March 2007). National Roundtables on Corporate Social Responsibility (CSR) and the Canadian Extractive Sector in Developing Countries (Rep.). http://www.pdac.ca/docs/default-source/public-affairs/csr-national-roundtables-advisory-group-report.pdf?sfvrsn=6

Barrick Gold Corporation, Kinross Gold Corporation, & Goldcorp Inc. (2009). Submission to the Standing Committee on Foreign Affairs and International Development on Bill C-300. Retrieved from http://www.barrick.com/investors/news/newsdetails/2009/BarrickGoldSetsOutPositiononBillC-300andProvidesFacts1121285/default.aspx

Canada, House of Commons, Export Development Canada to the Standing Committee on Foreign Affairs and International Development. (2009). EDC’s Response to Bill C-300 (J. McArdle, Author) [H.R. Bill]. http://www.parl.gc.ca/HousePublications/Publication.aspx?Language=e&Mode=1&Parl=40&Ses=2&DocId=4178126#Int-2914913

Corporate Accountability of Mining, Oil and Gas Corporations in Developing Countries Act, House of Commons of Canada, H.R. Bill C-300 (2009). http://www.parl.gc.ca/content/hoc/Bills/402/Private/C-300/C-300_1/C-300_1.PDF

Drohan, M. (2010). Regulating Canadian mining companies abroad: The 10-year search for solution. Centre for International Policy Studies. (Policy Brief NO. 7). http://www.cips-cepi.ca/wpcontent/uploads/2015/01/CIPS_PolicyBrief_Drohan_Jan2010-1.pdf

Foreign Affairs and International Trade Canada. (2009). “Building the Canadian Advantage: A Corporate Social Responsibility (CSR) Strategy for the Canadian International Extractive Sector”. http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/csr-strat-rse-2009.aspx?lang=eng

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Patry, B. (2005). Canada, House of Commons, Standing Committee on Foreign Affairs and International Trade, “Fourteenth Report: Mining in Developing Countries and Corporate Social Responsibility” in Sessional Papers (Rep. No. No 8510-381-179).

Prospectors and Developers Association of Canada. (2009). Bill C-300 Position Statement. Retrieved from http://www.pdac.ca/pdf-viewer?doc=/docs/default-source/publications---news-activities/090812-bill-c-300-position-statement.pdf.

Tahir, M. (2012). Corporate Social Responsibility in the Canadian Extractive Sector. Bill C-300: What went wrong? University of Toronto. https://tspace.library.utoronto.ca/bitstream/1807/33552/3/Tahir_Mariam_201211_LLM_thesis.pdf