Archived Document
Annual Report 2009
Introduction
The OECD Guidelines for Multinational Enterprises (Guidelines) is an instrument of the Organisation for Economic Cooperation and Development (OECD). The recommendations set forth in the Guidelines are a voluntary, multilateral framework of standards and principles on responsible business conduct.
As a member of the OECD and signatory to the Guidelines, Canada is obligated to establish a National Contact Point (NCP). The role of the NCP is to promote awareness of the Guidelines and ensure their effective implementation. This report provides a summary of the activities undertaken by Canada’s NCP in the past year (June 2008 – June 2009).
The Canadian Policy Context
The Guidelines continue to be an important element of the Government’s approach to promoting corporate social responsibility (CSR). A number of federal government departments are active in this area, through activities such as promotion of awareness, information dissemination, facilitation of dialogue among interested parties, promotion of CSR in international fora (such as the G8, OAS, UN, APEC and the Francophonie) and support for the development of international norms. The Guidelines are a central part of these activities, their contribution heightened by the fact that they represent the shared views of forty one national governments on what constitutes appropriate corporate behaviour.
The business community in Canada is promoting CSR as well, with an increasing number of associations and enterprises adopting codes of ethical, environmental and social conduct and related management strategies. The Guidelines offer a frame of reference for private sector initiatives and the NCP serves as a mechanism to facilitate cooperation between the Government and the business community in the promotion of CSR. The Guidelines and NCP also provide a forum for engagement with other key stakeholders, such as labour groups and non-governmental organizations (NGOs) on CSR issues.
The Guidelines make an important contribution to the Government’s policy on promoting sustainable development. Achieving sustainable development requires the responsible engagement of all sectors of society, including the business community. The Guidelines encourage corporations’ contribution to sustainable development and help to strengthen the basis of mutual confidence between enterprises and the communities in which they operate.
Thus, while our NCP has a clear mandate to implement the Guidelines, its activities also support broader policy objectives of the Government.
Corporate Social Responsibility Strategy
While adherence to the OECD Guidelines constitutes a core component of Canada’s overall CSR approach, the promotion of CSR is a comprehensive undertaking which involves policies, programs, initiatives and projects that are complementary and far-reaching in a variety of fields. Canada recently announced a new strategy which complements its ongoing activities relating to the Guidelines and related activities.
The strategy builds upon Canada’s existing commitments to CSR, including support for internationally-recognized voluntary principles.
On March 26, 2009 the Government of Canada announced the adoption of a new CSR strategy named Building the Canadian Advantage: A CSR Strategy for the Canadian International Extractive Sector. The adoption of the new CSR strategy is based on the results of extensive consultation with stakeholders which began with a series of “National Roundtables on Corporate Social Responsibility and the Canadian Extractive Sector in Developing Countries”, held in 2006. The Roundtables were a consultative process which engaged industry, civil society and the public in a solutions-oriented discussion on how to enable the Canadian global extractive sector to better identify and manage the social and environmental risks of their operations. In March 2007, the Advisory Group for the National Roundtables, which was composed of non-governmental experts drawn from across stakeholder groups (civil society, labour, industry, investment sector and academics), released a report containing numerous recommendations to the government.
Following the release of the Advisory Group Report, the Government of Canada began a careful review of the recommendations with a view to developing a comprehensive response. During this period, Canada proceeded to implement several of the recommendations and undertook new CSR-related initiatives. For example, Canada joined the Extractive Industries Transparency Initiative (EITI) as a supporting country in February 2007, and provided $750,000 to the World Bank-administered Multi Donor Trust Fund. The Canadian International Development Agency (CIDA) has subsequently provided a further $100,000 per year to the Fund, and Natural Resources Canada (NRCan) has provided an additional $200,000 to support the EITI’s International Secretariat. Canada has also played a key role in securing endorsement of the EITI in the United Nations General Assembly, the G8 and la Francophonie. In February 2009 Canada (NRCan) began a one-year term on the EITI Board. The EITI builds the capacity of countries to increase transparency of extractive sector revenues from companies.
The new Building the Canadian Advantage: A CSR Strategy for the Canadian International Extractive Sector has four key components. The first component involves supporting initiatives to enhance the capacities of developing countries to manage the development of minerals and oil and gas, and to benefit from these resources to reduce poverty. This component will be led by CIDA. CIDA will establish an internal focal point with expertise in extractive sector development issues and will continue to provide support to developing countries to enhance their capacity to manage their extractive sectors.
The second component of the strategy involves the promotion of the following widely-recognize international CSR performance guidelines with Canadian extractive companies operating abroad:
a) International Finance Corporation (IFC) Performance Standards on Social & Environmental Sustainability for extractive projects with potential adverse social or environmental impacts;
b) Voluntary Principles on Security and Human Rights (Voluntary Principles) for projects involving private or public security forces; and,
c) Global Reporting Initiative (GRI) for CSR reporting by the extractive sector to enhance transparency and encourage market-based rewards for good CSR performance.
The promotion of these CSR performance guidelines will be done primarily through the Department of Foreign Affairs and International Trade (DFAIT) and NRCan. Each of the three performance standards are recognized in the Strategy for their particular relevance to the extractive sector and are complementary to Canada’s commitments under the Guidelines as well as to the OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones. The IFC Performance Standards on Social & Environmental Sustainability address the specific challenges facing extractive sector companies operating in developing countries. They are the de facto performance benchmark for projects in developing countries that require substantial financial investment.
The Voluntary Principles were designed to specifically address the challenges of violence-related risk assessment, including the relations between extractive industries and security providers. The Voluntary Principles provide guidelines to help multinational enterprises (MNE) anticipate and mitigate risk related to the deployment of public and private security, such that operations can be protected without excessive force or abuses of human rights. This guidance is particularly relevant for companies operating in areas affected by armed conflict or insurgencies. The Government of Canada was welcomed as an engaged government at the 2009 Plenary meeting of the Voluntary Principles on Security and Human Rights.
A growing number of MNEs are responding to the demand for increased transparency from investors, insurers, consumers and other market players by reporting on their CSR practices and performance. The need for consistent reporting standards led to the development of the GRI Sustainability Framework. The GRI includes reporting principles, guidance and indicators for organizations of all sizes and sectors, and is broadly recognized as the de facto international reporting standard.
The third component of the strategy involves supporting the development of CSR Centre of Excellence within an existing institution outside of government. The purpose is to encourage the Canadian international extractive sector to implement these voluntary performance guidelines, including the OECD Guidelines, by developing and disseminating high-quality CSR information, training and tools. The Centre will serve as a forum through which sector stakeholders can provide timely access to high-quality CSR tools and information for clients in industry, civil society and government, at home and abroad. The Government of Canada is in discussions with The Canadian Institute of Mining, Metallurgy and Petroleum for the creation of this Centre.
The fourth component of the strategy involves the establishment of the Office of the Extractive Sector CSR Counsellor (“Counsellor”) to assist stakeholders in the resolution of CSR issues pertaining to the activities of Canadian extractive sector companies abroad. Unresolved disputes directly affect businesses through expensive project delays, damaged reputations, high conflict management costs, investor uncertainty, and, in some cases, the loss of investment capital. During consultations stakeholders expressed strong support for a mechanism to resolve CSR disputes related to the Canadian extractive sector active abroad in a timely and transparent manner.
The Counsellor will report directly to the Minister of International Trade. The mandate of the Counsellor will relate exclusively to the activities of Canadian extractive sector companies operating abroad. The Counsellor will review the CSR practices of Canadian extractive sector companies operating outside Canada; and, advise stakeholders on the implementation of endorsed CSR performance guidelines.
The Counsellor and the NCP will operate as two separate and distinct bodies. Canada’s NCP for the OECD Guidelines will continue to be responsible for promoting the effective implementation of the Guidelines across all industry sectors, as well as reviewing any specific instances which it receives, including those in the extractive sector. The NCP will remain the primary authority with respect to the OECD Guidelines. The Counsellor and the NCP will ensure that overlapping activities are closely coordinated.
Institutional Arrangements
The key responsibilities of Canada’s NCP are to promote the Guidelines, respond to inquiries and contribute to the resolution of specific instances of corporate conduct in relation to the Guidelines. Important guiding principles for the NCP’s activities include visibility, accessibility, transparency and accountability.
The NCP is an interdepartmental committee chaired by DFAIT at the Director-General level. Partner members include Industry Canada (IC), Human Resources and Skills Development Canada (HRSDC), Environment Canada (EC), Natural Resources Canada (NRCan), Finance Canada (FIN) and the Canadian International Development Agency (CIDA). During the summer of 2008, a process was completed within DFAIT to transfer the role of the NCP chair and coordinator from the Investment Trade Policy Division to the Trade Commissioner Service Support Division in addition to raising the level of Canada’s NCP to a senior official at the Director General level within DFAIT. The Trade Commissioner Service Support Division has a team that advises trade commissioners in Canada and abroad on CSR and coordinates an annual CSR-related program, which includes training and financial support for trade commissioners on CSR-related activities. Given the trade commissioners’ contributions to the project, coupled with the usage of extensive networks both domestically and abroad, Canada’s NCP has been able to raise awareness of the Guidelines and promote their implementation more effectively.
The Canadian NCP’s key business and labour interlocutors on the Guidelines are the Canadian Chamber of Commerce (CCC), the Canadian Labour Congress (CLC) and the Confédération des syndicats nationaux (CSN). The NCP also has frequent contact with domestic and international NGOs.
Information and Promotion
a) Information and Promotional Tools
The Canadian NCP web site is a useful tool for promoting the Guidelines. It has also become an efficient way to communicate information on the Guidelines to our overseas missions. All of our embassies, high commissions and other DFAIT offices in Canada and abroad have been informed of the Guidelines and the importance of this instrument for the promotion of CSR.
Overall, the web site offers a convenient point of reference for a growing number of Canadian organizations and businesses that are seeking information on CSR. To increase the visibility of its web site, Canada’s NCP has asked its interdepartmental members to include a link to the Canadian NCP web site below their signature-block in their emails.
Various other federal government web sites promote the Guidelines, including the Trade Commissioner Service’s internal web site, DFAIT’s CSR web site, and the sites of other departments and agencies, such as IC and NRCan.
During the past year, the NCP web site migrated to the DFAIT website and has two new URLs: www.ncp.gc.ca (English), and www.pcn.gc.ca (French). In the first three months of 2009 the web site received approximately 1,500 hits.
The NCP also developed and posted on the web site a new form to assist any individual, organization, or community (“stakeholder”) who wishes to lodge a formal request for review regarding a “specific instance” with Canada’s NCP. The new guidance document titled “Information Requirements for Raising a Specific Instance” is now available to any stakeholder that believes an MNE’s actions or activities may have breached the Guidelines.
The NCP has also been promoting awareness of the existence of the OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones. The “What’s new” section of the NCP website indicates that the tool is recommended for companies operating in weak governance zones and provides a link to the document on the OECD web site.
b) Promotion with Social Partners
Primary focus is being given to the extractive sector (mining, oil and gas). Because Canada is a major player in the global extractive sector, both the Canadian Government and the Canadian industry share an interest in maintaining a positive image of Canada in this sector, and ensuring that Canadian businesses contribute positively to the broader social and environmental objectives of the communities in which they operate. Promoting the Guidelines in this sector is a concrete way for the Government to engage Canadian companies in supporting these objectives.
Canadian embassies, high commissions and other DFAIT offices in Canada and abroad provide support and services to Canadian firms interested in expanding their international business operations. As a result, DFAIT offices are an excellent vehicle for the promotion of the Guidelines in cooperation with the business community. DFAIT offices incorporate CSR-relevant information, including references to the Guidelines, in the business briefings to Canadian clients. In addition, they communicate the Government of Canada’s commitment to CSR to both Canadian, local business audiences and relevant stakeholders.
Officials from Canada’s NCP were present at the annual Prospectors and Developers Association of Canada (PDAC) International Convention, Trade Show and Investors Exchange in Toronto on March 1-4, 2009 to promote awareness of the Guidelines. This event is widely considered to be the most important mining conference in the world.
Similarly, Canadian NCP officials were present at the Canadian Institute for Mines, Metallurgy and Petroleum’s (CIM) Annual Conference in Toronto on May 10-14, 2009. On the margins of the conference, Natural Resources Canada hosted a one-day session entitled Transparency, Accountability and Responsible Investment in Natural Resources Governance. This workshop had keynote speakers engage participants in discussions related to the various CSR-related initiatives that affect the extractive sectors, including the OECD Guidelines. Canada’s NCP participated as a speaker, profiling the Guidelines to Canadian mining industry representatives and stakeholders in attendance.
DFAIT has undertaken a number of initiatives to enhance the capacity of its officers through information and training sessions, an online CSR training tool as well as an Intranet Web portal offering guidance, reference material, inventory of national and international experts, best practices and other learning tools on CSR. DFAIT has created a $180,000 CSR Fund to assist Canadian offices abroad and in Canada to foster and promote CSR to clients and engage with host-governments, communities, indigenous organizations, NGOs and other stakeholders in CSR-related initiatives. Communications and marketing materials have been developed to promote CSR within the Government and to Canadian stakeholders. DFAIT is also increasing its ability to engage in policy development through a series of research analysis projects aimed at understanding the CSR context internationally.
In Latin America, CIDA and NRCan have provided assistance to resource-rich developing countries to improve their governance capacity in the extractive sector. Canada has also held discussions with free trade agreement (FTA) partners, including Colombia and Peru, on how best to address CSR in the context of negotiations. The recently-signed FTAs with both these countries include CSR provisions that are directed at the parties, encouraging them to promote voluntary principles of responsible business conduct with their business communities. In addition, the recently-signed Labour Cooperation Agreements (LCAs) – which are parallel agreements to the FTAs with Colombia and Peru – explicitly recognize the importance of encouraging voluntary practices of CSR within the territories of the parties in order to ensure coherence between labour and economic objectives.
Moreover, at the Canada-EU Summit on October 17, 2008, in Québec, leaders agreed to work toward a stronger economic partnership (Canada and the European Union: Toward a Comprehensive Economic Agreement). Canada and the EU have established areas for the negotiation of an ambitious and comprehensive economic agreement with a view to formally launch negotiations as early as possible. The recommended areas for negotiations include: sustainable development, including provisions on the environment, labour rights and support for corporate social responsibility.
Canada is also active in promoting CSR-related principles in the financial arena. The Canada Investment Fund for Africa (CIFA) publicly discloses its principles related to business integrity, and social, environmental, and health and safety objectives. The CIFA fund managers also report periodically to the Government of Canada on CSR measures implemented in specific investments and reference to these measures is included in CIDA’s Departmental Performance Report, submitted annually to Parliament. Canada also supports the consistent implementation of the World Bank Group International Finance Corporation (IFC) Performance Standards. Canada is a State Party to the UN Convention against Corruption. In February 2007, Canada endorsed the EITI, which seeks to ensure revenue transparency in the extractive sector. In October 2007, Export Development Canada (EDC) became a signatory to the Equator Principles, an international financial industry benchmark for assessing and managing social and environmental risk in project financing, consistent with the IFC Performance Standards. EDC is one of only three export credit agencies around the world which have adopted the Equator Principles.
EDC’s commitment to CSR principles and standards includes the promotion of the Guidelines. EDC supports the NCP’s efforts to promote the recommendations of the Guidelines within the Canadian exporting and investing community. EDC meets with its customers, various business associations, NGOs, and other stakeholders on CSR issues as part of its efforts to promote ethical corporate conduct and continue a dialogue with these groups. Issues relating to the Guidelines, such as the environmental and social impacts of projects, anti-corruption and anti-bribery efforts, and human rights are discussed, when relevant. In addition, EDC also promotes the Guidelines through its website. In 2009, EDC will review options for improvements to its initiatives aimed at raising the awareness of Canadian investors abroad of the OECD Guidelines.
Industry Canada (IC) continues to promote the Guidelines as part of its CSR activities to strengthen the capacity of Canadian business to develop and use CSR practices, tools and knowledge to achieve positive economic, environmental and social performance results. Links to the Guidelines and the NCP appear on the department's CSR website, which receives about 7000 hits per month.
IC continues to implement commitments made in its Sustainable Development Strategy (2006-2009), including those related to CSR. Accordingly, IC supported and disseminated the results of the following research and other activities: the implications of the draft International Organization for Standardization (ISO) guidance standard on social responsibility (SR 26000) on Canadian manufacturing and service industries; the role of Boards of Directors in implementing CSR; the role of the human resource professional in integrating CSR in order to achieve a high performance firm, including a checklist; a case study on an integrated decision making framework; the integration of sustainability principles into point of purchase communication strategies, including a tool for business and seven case studies; an article for industry associations to publish on their websites and in newsletters on integrating CSR into their organizations and the operations of their membership; the development of a SME sustainability roadmap; and the impact of socially responsible consumerism on business.
IC also supported research and participated in a multi-stakeholder consultation workshop towards the development of a North American framework for sustainable consumption and production under the United Nations-led Marrakech Process. IC will continue to build the business case for CSR through research, articles and participation in conferences. IC also is a member of the Research Network on Business Sustainability, which brings together stakeholders in business, government and academia. This network affords the department the opportunity to promote the Guidelines and the NCP to stakeholders.
The Canadian social partners for the OECD Guidelines include the Canadian Chamber of Commerce (CCC), the Canadian Labour Congress (CLC) and the Confédération des syndicats nationaux (CSN). Each of these three partners was invited tocontribute to this report with a description of their activities promoting the Guidelines. The CCC responded by indicating that it continues to promote the Guidelines and has referred to the NCP and the Guidelines inseveral communications to Members of Parliament and Senators in the context of discussion of CSR policies. The Canadian NCP will be meeting in the near future with each of these social partners to discuss future initiatives and means by which the objectives of raising awareness of the Guidelines and their successful implementation can be further achieved.
c) Promotion within the Government
Promoting the Guidelines within the government is an essential aspect of the NCP’s responsibility to raise awareness of the instrument. A number of departments and agencies interact directly with the business community, labour groups and NGOs through their programs and consultative activities. This is an important channel for alerting these groups of Canada’s commitment to support the Guidelines. The interdepartmental structure of the NCP greatly facilitates promotion within government.
Foreign Affairs and International Trade Canada (DFAIT) provides information sessions on the Guidelines for overseas trade officials. Indeed, Canada’s Trade Commissioner Service recognizes the importance of including CSR as an element of its promotional activities. Responsible business conduct by Canadian companies abroad reinforces the positive effects that trade and investment can have on human rights, the environment and competitiveness. Canada’s trade commmissioners are encouraged to incorporate the promotion of CSR (including the OECD Guidelines) into the delivery of the core services provided to Canadian companies operating abroad. DFAIT is, with that perspective in mind, enhancing the capacity and knowledge of government officials on CSR through training and devlopment tools.
During the past year DFAIT held a number of information sessions for purposes of informing trade commissioners and Heads of Missions of the Government’s CSR policies and the obligations under the OECD Guidelines, including the role and function of the NCP. Similar information sessions have also been regularly organized for officers at DFAIT headquarters in Ottawa. DFAIT also regularly invites visiting guests to speak to the staff of DFAIT and other government departments about various aspects of CSR and, in the process, participating officials articulate government engagement in the CSR file, including commitments with respect to the OECD Guidelines. Further, DFAIT officials, up to the Director-General level, have regularly travelled to various regions of the world and participated in CSR-related presentations and workshops which included Canadian officials working abroad and the local stakeholders. These presentations addressed the government’s CSR policies as well as the OECD Guidelines and the NCP.
Industry Canada (IC) continues to promote the Guidelines within its department and across federal departments with a view to improving the co-ordination and advancement of CSR and sustainability within government. Within the department, CSR related seminars and workshops are regularly featured and the Guidelines are often referenced at that time. The annual internal course on Sustainable Development also references the Guidelines and the NCP. Among federal departments, IC participates in an interdepartmental working group under the CSR Memorandum of Understanding. This group collaborates on projects and also works closely with the NCP. Industry Canada also participates in an interdepartmental working group closely monitoring developments with respect to the ISO Guidance Standard on Social Responsibility (ISO 26 000).
Environment Canada (EC) is actively collaborating with the private sector, academia, non-governmental organizations and other departments to explore CSR principles and policies through the Corporate Environmental Innovation (CEI) initiative to accelerate corporate engagement in sustainability. Environment Canada’s engagement around business sustainability emphasizes collaborative research clarifying the link between environmentally sustainable business practices and competitiveness and then translates the results into information and tools to help Canadian businesses become more sustainable – both environmentally and economically.
EC stimulates and supports corporate sustainability leadership by providing useful and timely information on corporate sustainability performance to decision-makers including consumers, investors, policy-makers, strengthening the link between corporate sustainability and financial performance and making this link more relevant to business and financial sector audiences, and helping Canadian companies access the tools and information they need to reap the benefits of environmental leadership.
CIDA is promoting the Guidelines through internal knowledge networks comprised of officials working in the areas of private sector development and governance. The Guidelines are also being mainstreamed in work on conflict prevention and on poverty reduction in fragile states.
The Labour Program of Human Resources and Social Development Canada (HRSDC), which is part of the Canadian NCP, has specific expertise and particular interest in labour-related principles. The Labour Program manages Canada’s participation in the International Labour Organization (ILO) and promotes compliance with the Declaration on Fundamental Principles and Rights at Work, which encompasses the following fundamental principles and rights: freedom of association and the effective recognition of the right to collective bargaining, the elimination of all forms of forced or compulsory labour, the effective abolition of child lab our, and the elimination of discrimination in respect of employment. The principles are embodied in the OECD’s Guidelines and in the Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy.
Inquiries
A number of inquiries about the Guidelines were received by the NCP in the past year. Inquiries received via e-mail are often from think-tanks and academic institutions looking for information on Canada’s experiences with the Guidelines. Other inquiries come through meetings with businesses or NGOs. Canadian embassies, high commissions, and other DFAIT offices in Canada and abroad have also requested information on the Canadian NCP. Often such inquiries are about the nature of the Guidelines and their possible application in certain situations. As well, the Guidelines are occasionally raised in public correspondence with Ministers.
Submissions and Implementation in Specific Instances
No submission regarding a specific instance was received by the Canadian NCP during the current reporting year. However, in 2008 the Canadian NCP was informed of allegations made regarding the conduct of a Chilean financial institution which was operating in Peru. The allegations of non-compliance with the labour provisions of OECD Guidelines were submitted to the Chilean NCP in 2007. The matters were also brought before the Peruvian courts and the Chilean NCP ceased their review. Peru adopted the Guidelines in 2008 and now has an NCP. Furthermore, since the time when the initial allegations were made, the financial institution in question has been acquired by a Canadian financial institution. In discussions with the Peruvian NCP it was agreed that the Peruvian NCP would have the lead on the resolution of any specific instance that it would receive relating to this matter.
Concluding Remarks
The OECD Guidelines for Multinational Enterprises continue to be a central element of the Government’s approach to promoting CSR, domestically and internationally. The interdepartmental structure of the NCP facilitates the promotion of the Guidelines within the Government and other departmental constituencies, including business, labour and NGOs. Throughout the coming year, the NCP looks forward to new opportunities to promote the Guidelines and to effectively contribute to Canada’s CSR Strategy – Building the Canadian Advantage.
Glossary
APEC: Asia Pacific Economic Co-operation
CIDA: Canadian International Development Agency
Counsellor: the Extractive Sector CSR Counsellor
CSR: Corporate Social Responsibility
DFAIT: Foreign Affairs and International Trade Canada
EC: Environment Canada
EDC: Export Development Canada
EITI: Extractive Industries Transparency Initiative
Francophonie: Francophonie Countries
G8: Group of Eight
GRI: Global Reporting Initiative
HRSDC: Human Resources and Skills Development Canada
IC: Industry Canada
IFC: International Finance Corporation
MNE: Multinational Enterprise
NGOs: Non Governmental Organisations
NRCan: Natural Resources Canada
OAS: Organization of American States
Voluntary Principles: Voluntary Principles on Security and Human Rights
UN: United Nations
