Canada's National Contact Point (NCP)

Annual Report 2006

Introduction

The OECD Guidelines for Multinational Enterprises is an instrument of the Organization 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 2005 - June 2006).

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 government departments are active in this area, through activities such as information dissemination, facilitation of dialogue among interested parties 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 thirty-nine national governments on what constitutes appropriate corporate behaviour. The business community in Canada is promoting CSR as well, with an increasing number of enterprises adopting codes of ethical 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 societies 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.

2005 Parliamentary Report on Corporate Social Responsibility

In June 2005, the Subcommittee on Human Rights and Development of the Standing Committee on Foreign Affairs and International Trade (SCFAIT) submitted a report to Parliament entitled Mining in Developing Countries and Corporate Social Responsibility. The report emphasized that a greater role for government is warranted to ensure that Canadian companies have the necessary knowledge, support and incentives to conduct activities abroad in a socially and environmentally responsible manner. Two of the report's ten recommendations referred to the Canadian NCP and the OECD Guidelines. The first recommendation relating to the NCP called on the government to "clarify, formalize and strengthen the rules and the mandate of the Canadian NCP and increase the resources available to the NCP to enable it to respond to complaints promptly, to undertake proper investigations, and to recommend appropriate measures against companies found to be acting in violation of the OECD Guidelines." The second recommendation called on the government to "work with like-minded countries to strengthen the OECD Guidelines, first by clearly defining the responsibilities of MNEs with regard to human rights, second by making compliance with international human rights standards obligatory, and third, by working toward establishing common rules of evidence."

The NCP actively participated in the drafting of the Government of Canada response to the SCFAIT report which was tabled October 17th, 2005. In response to the first recommendation on the mandate of the NCP, the Government of Canada made clear that it expects Canadian companies operating abroad to abide by the laws and policies of the countries in which they operate, while host governments are responsible for monitoring compliance with local laws. The response also indicated that it is clear that the drafters of the OECD Guidelines did not intend the NCP to play an investigative or quasi-judicial role in settling disputes. Rather, the intention was to establish an NCP-led process to facilitate a positive and constructive dialogue between multinational enterprises and those affected by their operations with a view to finding solutions to problems. Finally, the Government of Canada agreed that more can be done in Canada to strengthen the implementation of the OECD Guidelines for MNEs and indicated that strategies under consideration include establishing a mechanism to consult more formally with stakeholders, more systematic and frequent promotion of the Guidelines with the business community, and clarifying the rules and mandate of the NCP.

In response to the second recommendation, the government agreed that while it is necessary to clarify the responsibilities of MNEs with regard to human rights, in its view the OECD is not the best place for such clarification to take place. The government, in collaboration with like-minded countries, will however encourage the OECD to closely monitor and contribute to the work of John Ruggie, the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, and where possible, incorporate emerging conclusions into the ongoing work of the Investment Committee. The response then went on to emphasize that the Guidelines offer an important vehicle to influence corporate conduct as it relates to human rights, and can be used more effectively in this regard. They can be used as a tool to engage companies and NGOs on human rights issues and in identifying best practices, especially in countries where the human rights protections of host governments are weak. The NCP can offer a forum for dialogue between companies and stakeholders. Furthermore, regular NCP meetings offer an important opportunity for NCPs to share best practices and engage in peer learning with respect to how human rights issues can best be handled within the existing framework of the Guidelines. Finally, the Government did not agree with the Committee's recommendation that the human rights aspects of the Guidelines should be made obligatory and that NCPs should work toward establishing common rules of evidence as any movement toward making the Guidelines binding or more legalistic in nature would be contrary to the original intent of the drafters.

The Government is currently organizing a series of National Roundtables on CSR and the Canadian Extractive sector in developing countries over the course of 2006 to further examine issues related to CSR and the OECD Guidelines. Representatives of Canada's National Contact Point are providing input into the development of these Roundtables and will participate in the events.

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.

Canada's NCP is an interdepartmental committee of the federal Government. It comprises representatives from a number of departments, including Department of Foreign Affairs and International Trade, Industry Canada , Human Resources and Social Development Canada, Environment, Natural Resources, Finance and the Canadian International Development Agency. The diversity of the issues covered by the Guidelines and the broad spectrum of public interest (business, labour, NGOs) in Canada underscores the importance of structuring the NCP in this way. Other departments and agencies participate in NCP activities as well. Export Development Canada is a frequent participant in NCP meetings and communications. NCP representatives exchange communication frequently and meet as required, depending on the issues at hand. The role of NCP Chair rests with the Investment Trade Policy Division of the Department of Foreign Affairs and International Trade.

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 and high commissions 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.

The NCP is currently in the process of updating the Canadian NCP website to increase transparency regarding the submissions received and the implementation of specific instances.

b) Promotion with Social Partners
The Canadian NCP is pursuing a more strategic approach in the promotion of the Guidelines with the business community. More 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

As previously mentioned the Canadian NCP is providing input into the development of the "Canadian National Roundtables on CSR and the Canadian Extractive Sector in Developing Countries" which will be taking place over the course of 2006.

The NCP has also been providing support and advice on the OECD Guidelines and to the Canadian Government Working Group on the Democratic Republic of Congo in their development of a strategy on corporate social responsibility (CSR) in the mining sector.

Canada's Trade Commissioner Service includes CSR as an important aspect of its promotional activities. Guidelines brochures are made available to companies that participate in trade and investment promotion missions abroad. Training material has been developed to illustrate to trade and investment promotion staff how the promotion of CSR (including the Guidelines) can be integrated into the delivery of the core services provided to Canadian companies operating abroad.

Canadian missions abroad attract many Canadian firms interested in expanding their international business operations. As a result, missions are an excellent vehicle for the promotion of the Guidelines in cooperation with the business community. As mining is the single largest sector of Canadian foreign investment in the Americas, our embassies in this region are particularly focussed on incorporating CSR-relevant information, including references to the Guidelines, in the briefings they give to their Canadian clients. They also communicate the Government of Canada's commitment to CSR to both Canadian and local business audiences, and ensure that host governments are aware of their CSR initiatives.

In February 2006, the Canadian Embassy in Ghana held a CSR Seminar in Accra. The seminar, which drew over 40 participants, focused on CSR in the mining sector -- the largest sector for Canadian investment in Ghana.

Industry Canada continues to promote the OECD Guidelines as part of its suite of CSR activities to strengthen the capacity of Canadian businesses to develop and use CSR practices, tools, and knowledge to achieve positive social, environmental and economic performance results. For example, in last Sustainable Development Strategy, the Guidelines were used to help shape departmental commitments for the next three years. Commitments include: broadening and deepening CSR promotion to make the CSR approach more mainstreamed; developing the knowledge base with respect to CSR tools, voluntary standards, best practices, and data bases, and; augmenting CSR reporting by industry. A variety of actions are being pursued to help meet these commitments. Industry Canada is currently developing its new Sustainable Development Strategy and is examining new commitments that will improve its approach to promoting CSR.

Environment Canada is actively collaborating with the private sector, academics, non-governmental organizations and other government departments to explore CSR principles and policies that encourage and support corporate sustainability leadership and are broadly aligned with the principles of the Guidelines. These activities are outlined in Environment Canada's Sustainable Development Strategy and include: ascertaining where the business case for environmental and social performance is strong and seizing opportunities to advance CSR when they arise; encouraging, advancing and recognizing CSR best practices; developing and disseminating CSR tools, reporting approaches and domestic and international voluntary standards; and, supporting the development of human capital and human resource skills to strengthen CSR expertise.

Export Development Canada (EDC) meets frequently 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. During the course of these discussions and by its undertakings to promote the Guidelines through its web site, the distribution of the NCP's Guidelines brochure, speeches, and other communications vehicles, EDC supports the NCP's efforts to promote the recommendations of the Guidelines within the Canadian exporting and investing community.

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. The Department of Foreign Affairs and International Trade provides information sessions on the Guidelines for overseas trade officials. The provision of Guidelines information is also a part of human rights training for government officials preparing for overseas postings. Industry Canada continues to promote the Guidelines as part of its work activity to improve the coordination and advancement of corporate responsibility and sustainability within federal activities (e.g., federal sustainable development strategies). This also involves working in international fora, such as the OECD, and domestic conferences to improve the Department's knowledge and understanding of CSR and related practices. Industry Canada works closely with a number of other federal departments to build more cooperation and collaboration on the promotion of CSR practices. This interdepartmental group collaborates closely with the NCP.

Environment Canada works closely with other federal departments on the development and implementation of projects to support and advance CSR principals and practices relevant to the Guidelines. This includes the administration of a memorandum of understanding between the departments of Natural Resources, Industry, Foreign Affairs and International Trade and Environment for collaboration on projects that specifically relate to: development and dissemination of information that supports CSR and sustainability decision-making; increasing understanding of the business value of CSR and sustainability; and, development and dissemination of information on the use of CSR and sustainability tools to a broad range of companies.

The Canadian International Development Agency is promoting the Guidelines through internal knowledge networks comprised of officials working in private sector development and governance. The Guidelines are also being mainstreamed in work on conflict prevention and on poverty reduction in fragile states. CIDA raises awareness of the Guidelines among its partners and stakeholders in the private and other sectors through participation in outreach events across Canada, e.g. International Development Days. CIDA has supported initiatives to encourage sustainable business practices among local or foreign enterprises in developing countries with a view to supporting a positive contribution by the private sector to poverty reduction.

The Labour Program of Human Resources and Social Development Canada is a member of the Canadian NCP with particular interest and expertise with respect to the labour principles. The Program manages Canada's participation in the International Labour Organisation (ILO) and promotes respect for the ILO Declaration on Fundamental Principles and Rights at Work which embodies the following fundamental principles and rights: freedom of association and effective recognition of the right to collective bargaining, the elimination of all forms of forced or compulsory labour, the effective abolition of child labour, and the elimination of discrimination in respect of employment and occupation. These principles are part of the OECD Guidelines and are also included in the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy. Finally, the Program promotes labour rights through the negotiation of labour agreements with Canada's Free Trade Agreement partners.

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. Often such inquiries are about the nature of the Guidelines and their possible application in certain situations. The media made a number of inquiries in the past year as well mostly related to the Standing Committee on Foreign Affairs and International Trade report on Mining in Developing Countries and Corporate Social Responsibility and the Government of Canada response to the report. As well, the Guidelines are occasionally raised in the public's correspondence with Ministers.

Submissions

a) An international labour union submitted a complaint to the NCP on January 25, 2005 concerning the operations of a Canadian multinational enterprise in a non-adhering country. The international union was acting on behalf of a local union. The unions alleged that the company, through its handling of a labour dispute with its employees, had violated recommendations of the Guidelines chapter on Employment and Industrial Relations. The international union met with the NCP to present its concerns. The NCP has also been in contact with the company to get its side of the story. Information relating to the labour dispute has also been obtained from Canada's mission in the non-adhering country. The mission was informed that a process was being undertaken by an office of the Department of Labour to get the company and the local union to sign a Memorandum of Understanding with the agreed final decisions/settlements, in order to resolve this matter. In light of this local process underway, and the fact that the union workers returned to work, the NCP decided that it would be inappropriate for Canada's NCP to seek the participation of the parties in a dialogue in an alternative forum. The NCP sent a letter to both parties in November 2005 informing them of the NCP decision.

b) In August 2005 the NCP received letters from a coalition of NGOs requesting that the NCP investigate the operations of an international company incorporated in Canada in a non-adhering country. The NCP sent a reply letter to each of the NGOs informing them that the NCP's primary function is to play a facilitative or mediating role in resolving problems and not carry out investigations. We also relayed that that NCP had informed the company of the communications the NCP had received from Canadian NGOs and that the company expressed a willingness and interest in meeting with these NGOs to discuss their operations in the non-adhering country . In November 2005 the NCP facilitated a meeting between the company and interested NGOs to provide parties with an opportunity to present their points of view and to objectively discuss the issues at hand in a non-confrontational forum. Following the meeting, the NCP offered to host a follow-up meeting between the company and the NGOs, but the NGOs felt that this would not be necessary since there was now adequate contact between the company and their groups.

Implementation in Specific Instances

a) A coalition of Canadian NGOs submitted a complaint to the NCP on May 16, 2005 concerning the operations of a mining company in a non-adhering country. The company is incorporated in a Canadian province. The complaint was submitted on behalf of community groups affected by the mining operation. The NGOs and a representative of the affected communities met with the NCP to present their submission. Following intradepartmental and interdepartmental consultation, including close contact with the Canadian Mission in the non-adhering country, the NCP determined that the submission was relevant to the Guidelines and decided to seek agreement from company and the NGOs to participate in an NCP facilitated dialogue on the issues raised in the submission which are relevant to the Guidelines. In the Fall of 2005, following discussions with the NCP, both parties agreed to participate in the dialogue at the end of January 2006. In early January 2006 the NGOs pulled out of the process in disagreement over the set terms of reference for the meeting, specifically the need to maintain "confidentiality". In response to this action the NCP sent the NGOs and the company letters in February 2006 indicating that the NCP remains open and willing to facilitate a dialogue consistent with the Guidelines should the NGOs wish to reconsider their decision. Furthermore, the NCP encouraged the company to continue to independently pursue ongoing dialogue with communities affected by their operations with a view to resolving outstanding issues. Finally, in line with the Government of Canada's expectation that Canadian companies observe the OECD Guidelines for MNES in their operations abroad and operate transparently and in full consultation with the host government and local community, the Canadian NCP indicated an intention to maintain an interest in the company's operations and to keep up to relevant developments related to the company's community development plan and Environmental Impact Assessment work.

Concluding Remarks

The OECD Guidelines for Multinational Enterprises continue to be a central element of the Government's approach to promoting corporate social responsibility, domestically and internationally. The interdepartmental structure of the NCP facilitates the promotion of the Guidelines within the Government and with departmental constituencies, including business, labour and NGOs. The NCP looks forward to new opportunities in the coming year to promote the Guidelines.