2016 Annual Report to Parliament: May 2015 – May 2016

The Office of the Extractive Sector Corporate Social Responsibility (CSR) Counsellor
Government of Canada

Views expressed herein are those of the Office of the Extractive Sector CSR Counsellor

Errors and omissions remain the responsibility of the Office

November 2016

Executive summary

In accordance with the 2009 Order-in-Council (OIC) mandate, the Office of the Extractive Sector Corporate Social Responsibility (CSR) Counsellor produces an Annual Report to Parliament.^{Footnote 1} This report is the first prepared by the current Counsellor, Jeffrey Davidson.^{Footnote 2} It covers the period from May 2015 to May 2016. 

In addition to the OIC, the current Counsellor is guided by the Government of Canada’s 2014 Extractive Sector CSR Strategy, “Doing Business the Canadian Way”.^{Footnote 3} In line with the current Strategy, the Counsellor’s first year concentrated on strengthening the Office’s advisory role, and implementing its new “early detection and intervention” function through more intensive and direct engagement with relevant stakeholders. The current Strategy promotes a more pro-active and preventative approach for the Office, with its insistence on companies reflecting their alignment with Government endorsed international CSR standards in their conduct and activities on the ground. The current Strategy also emphasizes the importance of facilitating problem resolution early on, with the aim of minimizing risks of escalation into conflict or harm, while creating opportunities for continuous company-community engagement and for participatory forms of development.^{Footnote 4} During the past year, the Counsellor has provided advice and assistance to an assortment of extractive sector stakeholders, on multiple occasions through a variety of means:

• 50 meetings with mining companies^{Footnote 5}
• 24 meetings with civil society organizations
• 18 meetings with academics
• 18 meetings with industry associations
• 15 meetings with mining CSR consultants and other support groups
• 9 meetings with foreign government offices and multilateral institutions
• 27 presentations on the Office’s role and government CSR expectations
• Participation in 14 externally organized outreach events
• 7 national and overseas media interviews
• Interactions with Canadian trade commissioners and Ambassadors on post

These meetings, presentations and interactions have allowed the Counsellor to explain and advise on Government CSR expectations and also gain a better understanding of the needs and concerns of a range of stakeholders that are affected by Canadian extractive activities abroad. This approach has led some stakeholders to pre-emptively seek the Counsellor’s advice in recognition of their own potential CSR issues or evolving problem situations. The Office also provides direct guidance and support to Canada’s trade commissioners and Embassy staff to help them become effective CSR advocates and ‘eyes and ears’ on the ground. In addition, the Office has begun to assess and track situations brought to its attention, interacting with stakeholders and interceding, when appropriate.

Over the period May 2015 to May 2016, the Office focused on four key areas of work:

1. Defining and clarifying the ways in which the Office would carry out its mandates
2. Planning and implementing a robust outreach and engagement program
3. Developing a nuanced and country-specific understanding of the challenges surrounding responsible mineral resource development for Canadian companies active abroad
4. Completing any unfinished work carried over from 2013

This Report to Parliament also highlights the challenges faced throughout the past year, and the next steps the Office expects to take in the coming year. A critical first year challenge revolved around the recruitment and retention of qualified staff. This remains an unresolved challenge going into the Counsellor’s second year. Looking forward, the Office will:

• Improve the transparency of the Office
• Complete and release a simplified index to the Government’s six endorsed international CSR norms and standards
• Continue to amplify its outreach activities, especially its  advisory and early intervention services
• Further clarify how the Office works and fulfills its mandate

The dynamic global context for Canadian extractive companies

The extractive sector remains a major focal point for Canadian investment abroad despite the continuing weakness of international commodity markets. Given both the positive and negative impacts that extractive activities can have on local communities and ecosystems, Canada has an ongoing responsibility to ensure appropriate oversight of Canadian businesses operating outside its borders, and to provide forms of constructive intervention and remedy when justified. The Office is a key implementing unit of the Government’s CSR Strategy for the Extractive Sector, “Doing Business the Canadian Way.” The Office  is committed to working collaboratively across stakeholder groups, including companies, civil society organizations at home and abroad, Canadian embassies, host country governments and local communities, for the purpose of promoting responsible Canadian business conduct and continuous improvement of company social and environmental performance.

Extractive activities face significant social and environmental challenges in almost all places where they are carried out; however, these activities also have a great potential for positive impact in the international development context. According to the 2016 UNDP report, Mapping Mining to the Sustainable Development Goals:

“When managed appropriately, [the mining industry] can create jobs, spur innovation and bring investment and infrastructure at a game-changing scale over long time horizons. If managed poorly, mining can also lead to environmental degradation, displaced populations and increased conflict, among other challenges. These attributes make the industry a major potential contributor to the SDGs. At the same time, if the mining industry does not participate or if individual companies engage in activities that contradict the goals, their achievement will be hindered.”

The Commodity Boom and its Aftermath

The high metals prices which characterized the commodity boom from 2002-2012 saw a massive upsurge in Canadian mining investments, developments and asset growth abroad.^{Footnote 6} As a result, both junior and senior Canadian mining firms were motivated to rapidly explore, develop and bring mines into production. Likewise host country governments, especially in developing nations, were not only anxious to get mining projects underway, but also to increase their share of the mines’ economic rents.^{Footnote 7} Producing mines generate royalty and tax revenues for national and local area governments. They often provide improved physical and social infrastructure for local communities and regions, local employment and business development opportunities, knowledge transfers and capacity building, etc. Rapid natural resource development also heightens the exposures of both communities and companies to social and environmental risks if engagement and due diligence processes are short-circuited or not undertaken in a systematic and responsible way.

With the recent downturn of commodity prices (2012-present), investment in Canadian mining assets abroad (CMAA) grew at a slower rate.^{Footnote 8} Irrespective of the slowdown, existing Canadian mining, oil and gas operations faced new challenges and had to manage increasing expectations from host governments and local communities in a declining market. In the face of economic uncertainty, the tensions which arise around extractive activities can be further complicated by pre-existing geopolitical conditions, when rule of law or corrupt practices are major issues, or when a host country lacks the capacity and institutional strength to exercise effective natural resource governance. Tensions may also be exacerbated by legacy issues, such as past community displacements, environmental damages, or other historical experiences that have yet to be redressed. All of these factors place additional demands on companies choosing to work in these environments; requiring an even greater duty of care and patience, more assiduous attention to engagement and relationship building, and a willingness to ‘take the long view’, rather than a short term perspective on project evaluation and development.

Canadian owned or managed mining properties exist in almost every corner of the globe. As of 2014, there were 2,422 such properties, with many of the most significant properties located either in Latin America & the Caribbean (53% of CMAA) or in Africa (13.3% of CMAA).^{Footnote 9} These regions are also important target destinations for Canadian oil and gas exploration and investments. As a result, whether the projects focus on oil, gas or hard mineral extraction, significant Canadian investment is being channeled into an increasing number of countries. Many of the host countries are inexperienced with modern resource extraction, have limited natural resource governance capacity, and have high rates of poverty. Operating under these challenging conditions presents Canadian companies with high levels of reputational, operating and security risk.

Corporate/community conflict continues to be both likely and costly

Company-community conflicts resulting from extractive company activities continue to warrant concern. Company-community conflicts directly and negatively affect local populations, significantly diminish the ability of mining companies to serve as positive catalysts for broader based social and economic development, and can severely impact a company’s bottom line. Conflict often results in construction and production delays, and unanticipated increases in both capital and operating costs.

Despite continuing negative publicity raised by a range of civil society actors and the implementation of Canada’s CSR Strategy (2010 to present); Canadian companies continue to expose themselves to avoidable risks of conflict with local civil society groups and communities. This continuing reality highlights the importance of early stage sensitivity to social and environmental issues and of consistent community engagement and consultation throughout the lifecycle of a project. Local anxieties may relate to livelihood security; water availability and the potential for contamination; in-migration and influx of outsiders (both from within and outside of the country); impacts on women, children, indigenous populations and the elderly; potential loss of access to natural resources and a fear of physical relocation or new forms of development that may threaten the social fabric of a community or way of life. 

More and more, communities expect their concerns to be taken seriously and their voices to be heard. Project affected peoples expect to benefit from a mine, gas or oilfield presence, not to be harmed or irreversibly damaged by it. It is no longer sufficient for companies to undertake only environmental and social baseline and impact assessments. In high risk environments, fragile states, post conflict areas, and in remote areas where the only state presence might be security forces, human rights due diligence and impact assessments are critically important. Additional studies and planning efforts^{Footnote 10} will likely be required to minimize risks to communities and companies, to put in place effective social and environmental safeguards, and to ensure equitable benefit sharing with locally affected peoples over the project’s life.

About the Office of the Extractive Sector CSR Counsellor

The Office of the Extractive Sector Corporate Social Responsibility (CSR) Counsellor has a dual mandate to:

• Advise companies and other stakeholders on the implementation of CSR performance standards and guidelines endorsed by the Government of Canada; and
• Review the CSR practices of Canadian extractive (mining, oil and gas) companies operating outside Canada

The Office of the Extractive Sector CSR Counsellor was established by an Order in Council in March 2009.^{Footnote 11} The Counsellor acts as a special advisor to the Minister of International Trade known as the Extractive Sector Corporate Social Responsibility Counsellor. The first Counsellor, Dr. Marketa Evans, was appointed in October 2009.^{Footnote 12} On March 1, 2015 the Minister of International Trade announced the appointment of the current Counsellor, Mr. Jeffrey Davidson, who officially began his work in May 2015.^{Footnote 13} The Office is now situated in Ottawa, but also maintains a meeting place in Toronto, where many of the major mining companies are headquartered.

The Counsellor works under the terms established in the original 2009 Order-In-Council, but is guided by a mandate letter provided by the Minister of International Trade and by the Government of Canada’s Extractive Sector Corporate Social Responsibility Strategy. From 2009-2013, the Counsellor worked within the framework laid out in the Government’s initial CSR Strategy, entitled “Building the Canadian Advantage.”  In November 2014, an updated and enhanced Strategy was released, “Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada’s Extractive Sector Abroad”.^{Footnote 14} Mr. Davidson’s work is guided by the direction provided in the current Strategy.

To learn more about the Counsellor’s position and Mr. Davidson’s background and expertise please refer to Appendix A.  For a brief history and further explanation of the Government of Canada’s current CSR Strategy for the International Extractive Sector, please refer to Appendix B.

The Office’s approach

The Office has made, and will continue to make outreach, active listening, sharing of ideas, and understanding of real-world situations hallmarks of its approach. In so doing, the Office communicates a constant message regarding the vital importance of pre-emptive and continuous engagement and dialogue between companies, communities, local area governments, and other affected groups.

The Office engages on a regular basis with stakeholders including, but not limited to: project-affected people, Canadian mining, oil and gas companies, consultants and service providers, lawyers, civil society organizations, the academic community, host country governments and Canadian government departments in Canada and its missions abroad. The new relationship with the Trade Commissioners on post has been extended to include the diplomatic corps, especially the country Ambassadors, opening up direct lines of communication between the Embassies and the Counsellor.^{Footnote 15}

The Office has been able to develop and foster positive relationships with this wide range of actors, allowing the Counsellor to stay informed, monitor concerns and emerging situations around specific projects, and conduct early intervention to foster and facilitate dialogue, problem solving, and agreement making.

In accord with the current Extractive Sector CSR Strategy, “Doing Business the Canadian Way” the Counsellor has invested most of the Office’s energy and attention in advisory services, early detection work and constructive interventions. This methodology emphasises the importance of identifying and resolving disputes in their early stages. The Office is strategically positioned to be able to work constructively with all parties to help them:

• identify the critical issues that may be dividing them
• converge on common interests that provide a basis for dialogue
• find solutions or remedies and reach agreements

Similarly, the Counsellor determined that the office’s resources would be more efficiently utilized when directed towards prevention - advising companies on the implementation of good practices at operating sites, and providing guidance on how to predict and react to situations that could potentially turn into disputes, escalate into conflict, or just be avoided.

Given the 799 mining companies^{Footnote 16} headquartered in Canada, with over 2,000 properties spread across 105 countries, the efficient use of the Office’s resources is key to successful oversight and promotion of responsible business conduct with Canada’s extractive sector companies working overseas.^{Footnote 17} Applying the advisory and early intervention approach to relationship building and problem solving, the Counsellor has been able to begin to work with companies and affected stakeholders to address existing or emerging issues or concerns.

Formal mediation in more complex cases (especially those involving legacy issues or multiple stakeholders) may be better served by Canada’s National Contact Point (NCP) which has a formalized dialogue and dispute resolution mechanism based on the OECD Guidelines for Multinational Enterprises.

Retrospective on the current Counsellor’s First Year

Over the period from May 2015 to May 2016, the Office focussed on four key areas of work:

1. Defining and clarifying the ways in which the Office would carry out its mandates^{Footnote 18}
2. Planning and implementing a robust outreach and engagement program
3. Developing a nuanced and country-specific understanding of the challenges surrounding responsible mineral resource development for Canadian companies active abroad
4. Completing any unfinished work carried over from 2013

1. Defining and Clarifying the Mandate. The Government’s updated 2014 CSR Strategy outlined a shift in approach and provided additional measures to strengthen the promotion of responsible oil, gas and mining activities outside of Canada. The Minister’s mandate letter to the new Counsellor (May 20, 2015) reflected and reaffirmed the aims of the updated CSR Strategy, including a push toward more pro-active promotional and preventative approaches to working with the industry, including early detection and remediation of emerging problems, as well as a more aggressive effort to help companies ensure that their policies and practices are aligned with Government endorsed international norms. This involved the Office crafting an approach:

• that would be collaborative, not adversarial in nature; this was done. 
• that is evidence-based; this has begun 
• that reflects an understanding and sensitivity to all stakeholder concerns; this has been demonstrated to be achievable. 
• that is set up and able to work the middle ground, fostering dialogue, finding solutions and remedies to problem situations that address the common needs and interests of all parties; this has yet to be fully tested.

The formal review function of the Office remained on the books, but it was not invoked during the year.  The Counsellor screened five situations brought to his attention which were all raised by the Trade Commissioner Service Post Support Unit, the Trade Commissioners on post, or the Ambassadors. In all cases, the Counsellor decided to take a closer look, with the aim of determining whether any of the situations posed potential significant risks, and whether any follow-up actions, assessments or interventions might be justified.^{Footnote 19}

The Counsellor also received three requests for assistance from individuals; all of which were acted on. The Office researched each of the three requests. This allowed the Counsellor to better understand each situation, determine if there was an immediate risk to nearby populations, and to develop a course of action appropriate to the specific scenario. In all of these cases, the Counsellor’s conclusions were shared with the parties involved.^{Footnote 20}

These screens and the responses to requests for assistance became an important part of the Counsellor’s effort to define and clarify the ways in which the Office could have the greatest positive impact and implement its mandate most effectively for:

• improving company CSR and company-community engagement practices and
• facilitating the resolution of existing or emerging problem situations between companies and project affected people or communities

Should a company’s conduct or activities come into question or become a cause for concern, the company must be able to demonstrate that its practices are aligned with the Government’s endorsed international CSR norms or that the company is already involved in good faith efforts to improve its practices and resolve those issues which gave rise to the cause for concern. If the company is unable to do so, and is not willing to commit to improving its practices, then the Counsellor under the updated Strategy is able to recommend to the Trade Commissioner Service the denial or withdrawal of trade advocacy support. This recommendation can also be made should a company refuse to cooperate with the Office in its advisory or review processes. The authority to recommend consequences added a new dimension to how the Office can implement its mandate; the Counsellor has not as yet had the need to make such recommendations.  

The Strategy provides additional support to the Office with its designation of Trade Commissioners on post as CSR advocates and “eyes and ears” on the ground. This also led to a need to work more closely with Embassy staff, especially the Trade Commissioners and Ambassadors Part of the Counsellor’s time was devoted to training, supporting, and advising diplomatic staff on CSR related issues.

To facilitate the ability of stakeholders to understand what alignment with CSR standards means practically, the Office initiated work on a simplified index to the Government’s endorsed international CSR standards.^{Footnote 21} The index is being organized around key themes and issues relevant to a project’s life cycle, with references to the specific sections of the standards which address the theme or issue. The aim of the project is to create a tool that will enable stakeholders to more easily access the most important and pertinent principles and practices embedded in the standards without having to read over 1000 pages of text and accompanying guidance notes that comprise the standards.

The clarification of this shift in approach and the Government’s current expectations relating to responsible business conduct in the extractive sector has created a more fulsome and productive foundation for engaging with stakeholders and promoting the continuous improvement of social and environmental practices and performance at project sites.

2. Outreach and Engagement. The Office, while engaging with “traditional” stakeholders, (i.e. companies, industry associations, academics and civil society organizations) has broadened the scope of engagement to include host country government agencies, Trade Commissioners and Ambassadors on post, country based civil society organizations, and industry support service companies in line with the current Strategy (see above). Much of the outreach earlier in the year focused on introducing the Counsellor to stakeholder groups, explaining the role of the Office and Government of Canada expectations as reflected in the current CSR Strategy, and on listening to the issues and concerns of the various stakeholder groups. Much of this information was delivered through presentations made at various public conferences. More effective engagement was built around small group and face-to-face meetings which enabled the Counsellor and the stakeholders to express concerns, share information, and build relationships more openly and directly.  

Most of the Counsellor’s attention has been focused on outreach to extractive companies of all sizes, although the Counsellor found that the larger companies were typically more open to engagement with the Office.

During the past year, the Office has also interacted directly with Ambassadors, Trade Commissioners and other Embassy staff posted in Argentina, Chile, Colombia, Peru / Bolivia, Costa Rica / Nicaragua / Honduras, Guatemala, Ghana, Sudan / Eritrea, Tanzania, Venezuela and South Africa. The internal outreach also included various regional and thematic civil service units within Global Affairs Canada, across the political, trade and development sections, with Natural Resources Canada’s Mining and Minerals Division, and with Export Development Canada’s Corporate Social Responsibility unit.

The Office’s outreach over the course of the year translated into “in-reach”  when mining companies and Ambassadors on post began to initiate contact with the Office to share their own concerns relating to specific issues or situations they were facing, often requesting the Counsellor’s input and advice. By the end of the year, the Office had become not only a promoter of responsible conduct, but also a shared resource for companies, Embassies, and even some civil society groups seeking to ensure responsible social and environmental practices and performance in the extractive sector.

Please refer to the subsequent section for a list of some of the meetings, outreach activities and events that the Counsellor engaged in.

3. Understanding country-specific issues. The Office made three country visits, targeting a number of representative country environments in Latin America and Africa all of which have high concentrations of Canadian exploration and mining activity. The countries included Peru (June 2015), Tanzania (February 2016) and Ghana (February 2016).  During the visits, the Counsellor met with representatives of civil society, a cross-section of Canadian extractive companies, central and local government officials, country based CSR practitioners and consultants, and with Canadian embassy staff (mainly the Ambassadors and Trade Commissioners).  A principal objective in all cases was for the Counsellor to get a better sense of the country’s critical social and environmental issues, the presence of any high risk situations, and the key challenges faced in ensuring a responsible extractive resource sector. The Counsellor also participated in events and meetings that were organized to explain the Canadian Government’s approach to promoting and supporting responsible business conduct and improved social performance of Canadian companies operating abroad.

Two aspects of the Counsellor’s visit to Tanzania were of significant interest:

• The Counsellor and the Embassy’s Trade Commissioner visited an exploration project site operated by a Canadian junior exploration company. 
• The Embassy organized a national Forum on Artisanal and Small Scale Mining held in Dar Es Salaam (see the media report referred to below).

The site visit highlighted an important issue and challenge faced by many mining companies exploring or operating in Tanzania. In order to be able to proceed with the project’s development^{Footnote 22}, the Canadian company would have to find a solution to the illegal encroachment and occupation of the property by artisanal miners, almost all of whom had migrated into the area from other parts of the country. Meetings with local government authorities, the local community council, the project management team and senior executives allowed stakeholders to share ideas on possible ways forward. The objective was to identify possible solutions that would potentially meet the needs of all parties, including the artisanal miners. The Counsellor’s presence provided the pretext for holding these discussions.^{Footnote 23} The Forum focused on what has become a critical national issue – the unregulated growth and expansion of artisanal mining activity across the country. It was attended by a wide range of civil society organizations, consultants, companies, the World Bank, the state mining corporation, Ministry officials, and Miners’ federations. The Forum provided a neutral space for facilitated discussions around creating legal opportunities for artisanal mining and for addressing the deteriorating social, economic and environmental situation that “illegal” operations were contributing to. The Forum also opened a door for a much needed and more inclusive national conversation on the topic, with a focus on ground-up rather than top-down approaches for identifying workable and constructive solutions. 

Gaining a better country-specific understanding of CSR issues, meeting with host country government and non-government stakeholders, as well as with the Canadian companies in country, and participating in CSR themed meetings and events are crucial elements of the Office’s evolving approach. These interactions also better positions the Office to respond to calls for assistance or to address in-country issues or situations involving Canadian companies if they occur.

4. Completing unfinished work. The Office had two pieces of unfinished business. One required the drafting of the Office’s final report on the formal review of its last case (2013) involving New Gold’s Cerro San Pedro mine in Mexico. The report had to be completed on the basis of extensive notes prepared in 2013; a draft has been sent to the two parties involved with the review for their comments. The report will be finalized and released on the Office’s website after comments are received and reviewed.

The Office had also worked with the Mining Association of Canada’s International Social Responsibility Committee participating in a series of workshops to explore the topic of “building a better grievance mechanism.” This resulted in the co-financing of a project to develop a design and implementation guide on site level grievance and community response mechanisms for the resource development industry. The development of the Guide came to fruition in 2015. The Counsellor wrote the “Foreword” for the publication.^{Footnote 24}

Outreach - Meetings, Presentations, and Media Publications

The Counsellor’s outreach during his first year consisted of:

• Participation in 14 externally organized outreach events
• 7 national and overseas media interviews
• 50 meetings with mining companies^{Footnote 25}
• 24 meetings with civil society organizations
• 18 meetings with academics
• 18 meetings with industry associations
• 15 meetings with mining CSR consultants and other support groups
• 9 meetings with foreign government offices and multilateral institutions
• 27 presentations on the Office’s role and government CSR expectations
• Screening 5 situations and concerns involving Canadian oil, gas or mining companies which have been brought to its attention
• Responding to 3 individual(s’) requests for assistance to help resolve concerns or outstanding issues

Select Outreach Events:

• Emerging International, Transnational and Domestic Law Issues in the Relationship between Extractive Industries and Indigenous Peoples, International Law Research Program, University of Waterloo, June 25, 2015.
• Sustainable Development Minerals Indicator 2015 (SDMI) Conference, University of British Columbia, July 14, 2015.
• 15th Risk Mitigation and CSR Seminar, Canada-South Africa Chamber of Business, Toronto, September 30, 2015.
• Global Energy, Mineral and Markets (GEMM) Dialogue – Innovations in Implementation, Vancouver, Oct 14-16, 2015.
• “Mining: We Must Talk / Il faut se parler” Symposium, Justice, Peace and Integrity of Creation initiative of Missionary Oblates of Mary Immaculate with Saint-Paul University, Ottawa, November 19, 2015.
• Natural Resources and Conflict: A Guide for Mediation Practitioners, United Nations Publication Launch, Institute for the Study of International Development McGill University (ISID) and UN Environment Programme (UNEP), Montreal, November 26, 2015.
• Exploration Round Up – Association of Mineral Exploration of British Columbia (AME BC) Annual Convention, Vancouver, January 18 – 20, 2016.
• CSR Forum on Artisanal and Small-Scale Mining, Dar-Es-Salaam, Tanzania, February 4, 2016
• Canada Side Event Panel on CSR, Mining INDABA, Cape Town, South Africa, February 8, 2016.
• Alternative Mining Indaba 2016, Economic Justice Network of South Africa, Cape Town, South Africa, Feb 9-12, 2016
• Developing Community Consent Frameworks, World Bank Good Governance Event, Prospectors and Developers Association of Canada (PDAC) Annual Convention, Toronto, March 6, 2016.
• CSR Side Events, Prospectors and Developers Association of Canada (PDAC) Annual Convention, Toronto, March 6-9, 2016.
• Module on CSR Corporate Issues, Mining Finance Course, University of Western Ontario Faculty of Law, London, April 7, 2016.
• “Embracing CSR to Enhance Businesses' Reputation,” Ontario Bar Association Seminar on the Importance of Corporate Social Responsibility in the Environmental Context, Toronto, April 14, 2016,
• “Corporate Social Responsibility. Governance Frameworks and Human Security: Examining Canada’s Role in Africa’s Natural Resource Sectors”, research workshop at Queen’s University, Kingston, May 3-4, 2016.
• IFC Sustainability Exchange - Infrastructure and Resources, International Finance Corporation, Washington, D.C., May 25-26, 2016.

Media Reports:

• Mining Weekly, Davidson says revised measures on way to deal with worst-case CSR scenarios, May 13, 2015
• Stakeholders Magazine (Peru), Comunidad y empresa deben trabajar de la mano, interview with Jeffrey Davidson, July 21, 2015
• IPolitics, Ottawa’s new mining watchdog vows to make his mark, August 14, 2015
• Mineral Exploration, Raising the bar – The Government of Canada has unveiled a new Strategy to encourage responsible behaviour abroad, Fall 2015
• Business News (Ghana), Canada lends support to promote sustainable mining, February 24, 2016.
• The Citizen (Tanzania), Foreign Investors ponder fate of small communities, February 17, 2016.
• Kingston Whig-Standard (Ontario), Canadian companies ‘try to do the right thing’, May 8, 2016.

Canadian Oil, Gas, Mining and Industry Service Companies (1-on-1 meetings):

Angkor Gold Corporation, Asanko Gold (Ghana), Aura Minerals, Banro Corporation, Barrick Gold, Centerra Gold, Dundee Precious Metals, East Africa Metals, El Dorado Gold, Excellon Resources, Fio Corporation, Goldcorp, Gran Tierra Energy, Hudbay Minerals, Kinross, Lundin, Nevsun Resources, Oceana Gold, Pan-American Silver, Pershimco, Roxgold, Semafo, Sherritt International, Silver Standard Resources,  Torex Gold Resources, Toronto Stock Exchange (Compliance and Disclosure), Wentworth Resources, Windiga Energy, Yamana Gold  

Company Participants in Small Group Meetings:

Alicanto Mining Corporation, Asanko Gold (Ghana), Banro Corporation, Bear Creek Mining Corporation, Capstone Resources, Chirano Gold Mines (Ghana), El Dorado Gold, First Point Minerals, Geotech Airborne (Ghana), Goldcorp, Golden Star (Ghana), Great Panther Silver, Handeni Gold (Tanzania), Hudbay, Inca One Metals, Kabanga Nickel (Tanzania), Kinross, Minera Antares Peru, Montan Mining Corporation, Newgold, Novagold, Pacific NorthWest LNG, Pan American Silver, Pan American Silver (Peru), Revelo Resources, RoxGold, Silver Standard, Silver Standard (Peru), Superior Copper Corporation, Teck Resources, Tembo Gold (Tanzania), Torex Gold, Wentworth Resources

Civil Society Organizations:

Above Ground, Ali-Douglas Research Network (Zimbabwe) - Artisanal and Small Scale Mining Africa Network, Benchmarks Foundation (South Africa), Canadian Business for Social Responsibility, Canadian Executive Service Organization, Canadian International Resources and Development Institute (CIRDI),  CooperaAccion (Peru), Devonshire Initiative, Ethics Without Borders, Federation of Canadian Municipalities, Grupo de Dialogo Peru, Grupo Faro (Peru), Haki Madini (Tanzania), Innovations for Poverty Action (IPA) (Peru), International Corporate Responsibility Roundtable (US), Mining Shared Value – Engineers without Borders Canada, Observatorio Ciudadano (Chile), Oxfam International Extractive Industries Global Team (US), Resolve (US), Search for Common Ground, Socios Peru (Centro de Colaboracion Civica), Solidaridad (Tanzania), Solidaridad (Netherlands), UNICEF Canada, United Steelworkers (Canada), World University Services Canada

Academic Communities:

CIRDI project group, Ecole Polytechnique de Montreal; Groupe de recherche sur les activités minières en Afrique and Centre interdisciplinaire de recherche en développement international et société (CIRDIS), Institute for the Study of CSR, Ryerson University, Toronto; McGill Research Group Investigating Canadian Mining in Latin America (MICLA), McGill University, Montreal, Programme de Renforcement de la gouvernance du secteur extractif en Afrique de L’Ouest, Université du Québec à Montréal (UQAM) 

Industry Associations:

Association of Mineral Exploration B.C. (AME BC), Canadian Institute of Mining, Ghana-Canada Chamber of Commerce, Ghana Chamber of Mines, IBRAM (Brazilian Mining Association), Metallurgy and Petroleum (CIM), Mining Association of Canada (MAC), OLADE (Latin American Energy Association), Sociedad Nacional de Mineria, Petroleo Y Energia (Peru), Prospector and Developers Association of Canada (PDAC), Responsible Jewelry Council (UK), World Gold Council (Conflict Free Gold Standard) (UK)

CSR Consultants and other support groups:

Acorn International (US), Centre for Responsible Mineral Development, Estelle Levin Ltd (UK), LKL International Consulting Inc., MacCormick, RePlan-Environmental Resources Management, Shinglespit Consultants Inc, Social Capital Group (Peru), Stratos, Sustainalytics, Synergy (UK and South Africa), The Friday Group, The Social Practice Council, Triple R Alliance, Wayne Dunn & Associates  

Foreign Government Offices and Multilateral Institutions:

Ghana: Minerals Commission; Ministry of Petroleum

Peru: National Office of Dialogue and Sustainability, Ministry of the Environment, Ministry of Energy and Mines, Ministry of Agriculture and Risk (National Authority of Water), Ministry of Culture; Ombudsman Peru

South Africa: Council for Scientific and Industrial Research – Natural Resources and the Environment Unit

Tanzania: Handeni District Commissioner, Handeni Resident Mines Commissioner, Handeni District Police,  Nyasa Village Council

USA: US Department of State Bureau of Democracy, Human Rights and Labour; International Finance Corporation and Multilateral Investment Guarantee Agency Compliance Advisor Ombudsman (CAO)

Challenges and Next steps

The Office of the Extractive Sector Corporate Social Responsibility Counsellor is an evolving story. The first year consisted of reviving, reshaping, and revitalizing the Office after being dormant for over one year. The Counsellor is under no illusions regarding the implementation challenges that remain to be addressed.  What the Office was able to demonstrate during its first year in operation is the added-value that can be generated through its advisory mandate. 

A number of short term challenges and tasks that will need to be addressed are discussed below.

1. Completing the work of establishing a functioning Office in Ottawa. In re-establishing the Office, new support staff had to be identified and hired. This proved to be more difficult than originally anticipated. Hiring from within the civil service did not work out. Consequently, the Counsellor had to find and recruit support staff from outside the system. Finding and retaining externally recruited and qualified staff became a major administrative challenge for the Office. Staffing needs were met on a temporary basis using casual employees; this has been a stop gap measure. For the Office to become fully operational and effective, the Office needs to be properly resourced. This means secured staff and a defined budget.
2. Defining what makes an extractive company ‘Canadian’. There continues to be some uncertainty in terms of determining criteria for establishing the Canadian identity of a company. There are explicit qualifying criteria that determine a company’s eligibility for Canadian Trade Advocacy Services (TAS).^{Footnote 26} The application of this definition by the CSR Counsellor would cut out a large number of Canadian companies (especially juniors) who do not apply for Trade Commissioner support. Canada Revenue Agency has a broader definition which considers a company ‘Canadian’ based on where and when it is incorporated.^{Footnote 27} Other factors to consider are company self-identification, public perception, listing on the TSX and location of a company’s headquarters. The Office believes that it must be prepared to pay attention to any company that is perceived to be “Canadian”, whether through self-identification or public perception.^{Footnote 28} This will likely increase the potential company client base of the Office dramatically, and supports the case for strengthening the Office and expanding its resources.

Next Steps

1. Improving the transparency of the Office. The Office will improve transparency throughout the next year in order to make sure that relevant stakeholders and the Canadian public are aware of the office’s activities on a consistent basis. This will be accomplished in the following ways:

• Through monthly updating of the Office’s website which is currently being reworked^{Footnote 29}
• Through the posting of Country Trip Reports  on the website

The extent of the Office’s outreach and engagement should be a matter of public record; however certain kinds of meetings that fall within the domain of early stage advisory around emerging issues would have to be treated confidentially. Similarly, preliminary screening and assessments may be based on confidential information provided by one, or both, of the parties. Any reports written or conclusions reached should only be released with the consent of the parties. It is this degree of care that will allow for early detection and then intervention to realize positive outcomes for the involved parties. Situational analyses based on publicly available information, and country Trip Reports which are meant to share the Counsellor’s observations regarding issues and challenges surrounding responsible mineral resource development may be shared. Should the Office take on formal reviews, then the final report of a review would be made public.

2. Completing the simplified index to the Government’s six endorsed norms. The Office is currently preparing a document which amalgamates the information laid out in the six international CSR standards endorsed in Canada’s 2014 CSR Strategy.^{Footnote 30} The six documents and their associated guidance notes have a combined total of about 1000 pages which some companies, especially at the junior and middle-tier levels, may find challenging to fully grasp. The amalgamated document that the Office is preparing is expected to assist all stakeholders, including companies, Embassy staff and civil society groups in their understanding of how the principles and practices embedded in these standards address critical themes, issues and activities relating to project evaluation, development, operation and closure. The index to the standards is being organized on a thematic basis which will enable users to quickly see what the standards have to say about a particular theme, issue or activity. During the coming year, a draft guide will be circulated for comment and piloted with selected user groups, with the aim of making it publicly available before the end of the year.  

3. Amplifying outreach and prioritizing advisory and early intervention services. The Office will build upon the successes it demonstrated during the past year through consistent outreach to civil society, the private sector and Canadian embassies and trade commissioners. This means:

• continuing involvement in industry, academic and international discussions relating to responsible business practices in the extractive sector, and to the improvement of existing or development of additional norms and standards
• promotion of good practice and the role of the Office through participation in national industry and civil society events and conversations
• strengthening relations with individual companies, trade commissioners and other  with whom the Counsellor has already connected with
• extending  country visitation to additional states where Canadian companies have a significant presence or where high risk environments or situations demand attention
• reaching out to organizations and groups with whom the Counsellor has yet to engage both within and outside of Canada   

The scope of country trips will be expanded to include field visits to Canadian company exploration sites or operations and communities affected by company activities. This will allow the Counsellor to see how well companies are managing issues and challenges on the ground, and how communities affected by their activities perceive their impacts. Proactive outreach allows the Counsellor to better understand specific in-country circumstances, the sentiments and desires of civil society actors and companies on the ground,  to provide CSR guidance to companies and to the trade commissioners who consistently interact with them, and to facilitate conversations and problem solving between parties in country when warranted.

The Office will maintain its open door policy to companies, academics, civil society groups and individuals who wish to engage with office, and will continue to invite companies to share their issues, concerns and challenges with the Counsellor. Outreach will continue to be a hallmark of the Counsellor’s approach as it opens the door to pre-emptive counselling and early intervention.

4. Continuing the process of clarifying the direction and work of the Office. An outstanding critical aspect of the Office’s mandate that remains to be clarified is its formal review process for complaints lodged with the Counsellor. The creation of a formalized non-judicial dispute resolution mechanism and process was a major focal point of the Office during its first 4 years of operation (2009-2013). There are some ambiguities of purpose and focus between the 2009 Order in Council (OIC) which originally established the Office and the 2014 CSR Strategy which has provided the Office with additional guidance and tools. These ambiguities, especially the balance between advisory and formal review functions, will need to be resolved. This may have to be clarified at the policy level in the coming year, including a definition of whether the principal focus of the Office of the Extractive Sector CSR Counsellor should be:

1. promotional and advisory, working with companies and other affected stakeholders to improve social and environmental performance and responsible practice on the ground, and pro-active and preventative based on early detection, screening and intervention to facilitate problem solving
2. formal review of complaints, fact-finding, and facilitated dispute resolution
3. some form of both

Appendix A

Background on the Extractive Sector CSR Counsellor

The Counsellor is appointed as a Special Advisor to the Minister of International Trade, for a term of three years. The position of the Counsellor is equivalent to that of an Assistant Deputy Minister. The Office has benefited from significant support and expertise provided by Global Affairs Canada (the former Department of Foreign Affairs, International Trade and Development (DFATD)), Natural Resources Canada and the former Canadian International Development Agency (CIDA), now integrated into Global Affairs Canada. While the Office greatly benefits from this support, the Office’s operations lie outside of the department’s bureaucracy.

Biography of the Extractive Sector CSR Counsellor

Jeffrey Davidson is Canada’s current Extractive Sector CSR Counsellor. He has been involved with mining and mineral resource development for the past 35 years as a project engineer, policy and program advisor, consultant, community worker and professor. His career has been almost equally divided between the university (17 years) and the mining industry (14 years) with another 4 years in the Mining Policy Unit of the World Bank. His career focus from the start has been on finding ways of bridging the social and technical divide between community concerns and company interests, specifically with extractive activities.

At both McGill (1984-1995) and later at Queen’s (2011-2015) universities, he taught courses on mineral industry economics, mineral policy evolution, and on the social, environmental and ethical dimensions of mining practice. Almost all of his years in the industry concentrated on community engagement and relationship building, conflict resolution, social risk and performance assessment. He served as the site-level community relations and sustainability manager for Placer Dome Latin America at its Las Cristinas gold project in southern Venezuela (1996-2000) and later for Energy Resources of Australia at the highly controversial Ranger open pit uranium operation (2006-2007), working directly with both indigenous and non-indigenous communities. He also had the opportunity to work on regional (with Placer Dome) and global (with Rio Tinto) practice teams  and technical evaluation groups providing social due diligence and social performance support and assessment for projects in Australia, Chile, Costa Rica, the Dominican Republic, Mongolia, Niger, Peru, South Africa, the United States, and Zimbabwe.

When Mr. Davidson joined the World Bank Mining Policy Unit (2001-2005), he coordinated and grew the Communities and Small Scale Mining knowledge sharing initiative. He co-managed the design and development of the World Bank – International Council on Mining and Metals (ICMM) Community Development Toolkit.  He also worked on country mining sector projects in Romania, Mongolia, Mozambique and Nigeria.

During his career, Mr Davidson has also advised First Nation and Inuit communities in Quebec on impact assessment and mitigation, and on agreement making with mining companies. In 2013, he participated with 13 other legal and civil society professionals to write a book in layman’s language on Mining Contracts: How to Read and Understand Them, under a Creative Commons license to help non-specialists understand how contracts are negotiated and “what they say.”

He is a graduate of Columbia University (New York), Montana School of Mines and McGill University (Montreal), with degrees in mining engineering and cultural geography.

Appendix B

Background on the Government of Canada’s CSR Strategy for the International Extractive Sector

In March 2010, the Office of the Extractive Sector CSR Counsellor was opened in response to stakeholder calls for balanced, effective conflict resolution between Canadian extractive sector companies and project-affected stakeholders overseas. These calls came from both industry and civil society during the National Roundtables in 2006. Civil society organizations expressed a hope that the CSR Counsellor’s Office would contribute to positive change on the ground; industry saw the Office as “a positive step towards further enhancing our [industry] CSR commitments” and the review process of the Office was described as a “valuable forum for parties to engage in constructive dialogue and work through differences.” The Office of the Extractive Sector CSR Counsellor was established as one of the four pillars of Canada’s CSR Strategy for the Canadian International Extractive Sector called “Building the Canadian Advantage” in 2009.^{Footnote 31}

The emerging 2009 Strategy was not only a response to stakeholder concerns, but also sought to improve the competitive advantage and reputation of Canada’s extractive sector companies operating overseas by enhancing their ability to manage social and environmental risks. The Strategy was formally reviewed and re-evaluated in 2013 and 2014 by Canada’s Department of Foreign Affairs, Trade and Development (DFATD) in collaboration with Natural Resources Canada (NRCan). An array of industry and civil society organizations were invited to comment on the initial experience, and share thoughts on how the Strategy could be improved.

The Strategy was consequently updated and enhanced, with additional guidance provided to the Office of the Extractive Sector CSR Counsellor. It was released November 2014. The current Strategy includes a number of significant enhancements and shifts in work focus, including: 

• An expanded list of endorsed CSR standards and norms (from four to six) and explicit referencing of  two Canadian industry association CSR frameworks
• Designation of Canada’s Trade Commissioners working at Canada’s missions abroad as in-country advocates for CSR and as “eyes and ears” on the ground
• A more concentrated focus on promotion of good practices, early detection of problem situations and constructive interventions on the part of the Counsellor to help reduce the risks of conflict escalation and identify solutions
• Authority given to Canada’s National Contact Point (NCP) and to the Counsellor to recommend the withdrawal or denial of Government economic and trade advocacy support for non-cooperating companies.

The enhancements had major implications for the way the Office carried out its year one mandate.

The Guidelines endorsed under the current 2014 Strategy are:

1. The International Finance Corporation (IFC) Performance Standards on Social and Environmental Sustainability (2012 version) for extractive projects with potential adverse social or environmental impacts^{Footnote 32}
2. The Voluntary Principles on Security and Human Rights for projects involving private or public security forces (2000)^{Footnote 33}
3. The Global Reporting Initiative for extractive sector CSR to enhance transparency and encourage market-based rewards for good CSR performance (2011 G3 reporting guidelines)^{Footnote 34}
4. The OECD Guidelines for Multinational Enterprises (2011 version)^{Footnote 35}
5. The United Nations Guiding Principles on Business and Human Rights (2011)
6. The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (2012, 2^nd edition)

Contact Us

The Office of the Extractive Sector CSR Counsellor
Government of Canada
111 Sussex Drive, R2-101
Ottawa, Ontario K1A OG2 Canada
Tel: +13432036735    
Fax: +16139441130
Email: csr-counsellor@international.gc.ca
Visit: www.international.gc.ca/csr_counsellor-conseiller_rse