The Canadian Network on Corporate Accountability (CNCA) is calling on the Canadian government to move beyond corporate social responsibility measures that are strictly voluntary. It is asking the federal Government to regulate practices of Canadian Extractive companies operating overseas.

Canadian government involvement

The Government offers both political assistance (e.g. embassies and trade commissioners) and financial support (e.g. the Export Development Canada's project support and political risk insurance, Canadian Pension Plan, tax breaks) to Canadian extractive companies that operate abroad. Yet the Government has no regulatory mechanisms to ensure that these companies observe international human rights and environmental standards - standards that have been adopted by Canada. The Government expects companies to comply with these standards when operating abroad, but has no monitoring, verification or enforcement mechanisms to guarantee compliance. Instead, the Government continues to rely heavily on the willingness and capacity of host governments to hold Canadian companies accountable for their actions.

Problems with voluntary approach

Industry codes of conduct and other voluntary initiatives are problematic for several reasons. First, they only apply to those who chose to sign-on. To promote broad endorsement, voluntary initiatives usually reflect the lowest common denominator among participants. Most voluntary codes lack independent monitoring and verification systems, complaints tools and enforcement mechanisms. Moreover, the voluntary approach excludes binding mechanisms to hold companies accountable when there is evidence of environmental and/or human rights violations associated with their overseas activities.

Voluntary mechanisms may have some benefits, such as establishing standard-setting tools for companies or industry groups. However, they are not a substitute for state regulation. Voluntary codes of conduct cannot replace the legitimate function of international human rights law and environmental standards.

Recommendations

The Government must:

• Require Canadian companies operating internationally to meet clearly defined corporate accountability, international human rights and environmental standards, as a precondition for both financial and political assistance.

• Develop legislation to hold Canadian companies and their directors accountable in Canada when found complicit in human rights abuses and environmental destruction abroad.

• Develop robust Canadian-based monitoring, verification and compliance mechanisms to ensure that Canadian companies operating internationally meet clearly defined corporate accountability, international human rights and environmental standards.

• Promote the inclusion of human rights standards in World Bank policies and condition private sector lending on compliance with international human rights.