Frequently Asked Questions on due diligence legislation

Canada already expects companies to voluntarily respect human rights when operating abroad. The proposed Human Rights and Environmental Due Diligence legislation would make this obligation a legally enforceable reality. Development and Peace – Caritas Canada is supporting the model legislation from the Canadian Network for Corporate Accountability (CNCA), The Corporate Respect for Human Rights and the Environment Abroad Act, as a way of achieving effective corporate accountability for Canadian companies who operate overseas.

The CNCA model legislation specifies that human rights include the right to a safe, clean, healthy and sustainable environment, which is a right recognized by 80 per cent of UN member nations.

They are complementary. We need both due diligence legislation to require companies to prevent and remedy harm by helping impacted people access Canadian courts AND an empowered Ombudsperson who can effectively and independently investigate complaints.

Many potential abuses would be prevented by placing the legal obligation on Canadian companies to assess the risks of human rights and environmental abuses before engaging in a project.

By ensuring that the mitigation of the risk of harm is continually monitored and that harmed communities have access to justice in Canada, we ensure that communities’ rights are not denied because of governance issues in their home countries.

By placing the burden of action on Canadian companies, we alleviate the pressure on vulnerable communities to stand against multinational corporations on their own.

Canada’s constitutional division of powers – which outlines what issues the federal government can make laws about, and what issues the provincial and territorial governments can make laws about – means that the CNCA’s model legislation (a federal law) currently only applies to the overseas impacts of Canadian companies. The CNCA is exploring this question. 

The CNCA’s model legislation creates a commissioner (a public officeholder) whose role it is to ensure that companies comply with the law’s reporting requirements and that these reports are publicly accessible on a website. The commissioner would be able to fine a company if they do not report.

If harm does occur, the impacted person or community, or an interested party such as a non-governmental organization, would have the right to file a civil suit in Canadian courts. If a serious harm is caused by a Canadian company bound by the law, its subsidiaries or subcontractors, or its affiliates, the court can order remedies (see below).

In a criminal case, the state has the role of advancing the case and the burden of proof is very high. In a civil case, it is the plaintiff who brings the case and moves it forward. A plaintiff has more agency and more information throughout the process in a civil proceeding.

To learn more about the difference between civil and criminal cases in Canada, see this Department of Justice summary.

Canada is party to the United Nations Guiding Principles on Business and Human Rights (UNGPs), which are a set of guidelines for States and companies to prevent, address and remedy human rights abuses arising from business operations. It is a useful articulation of the expectations of states and companies to respect human rights but lacks an effective enforcement mechanism.

Canada is also a member of the Organization for Economic Co-operation and Development (OECD) and has agreed to promote the OECD’s Guidelines for Multinational Enterprises, which provide similar non-binding guidelines that would encourage responsible business conduct that would be in line with applicable laws and internationally recognized standards.

See the Government of Canada’s page on Responsible Business Conduct for more information.

Canada’s approach to business and human rights is outlined in its Corporate Social Responsibility Strategy. For a critique of the shortcomings of the strategy and recommendations for its improvement see this page on the CNCA’s website.

Human rights should be protected by effective laws and access to remedies in the country in which the harm occurs, in the country in which the company is registered, and at an international level. Human rights abuses, and specifically abuses against human rights and environmental defenders, occur where gaps exist between the recognition and implementation of human rights, or between how jurisdictions enforce them. These gaps may exist for a number of reasons, including political or economic pressure, discrimination, corruption, or a weak rule of law or weak justice system.

While our partners work with local communities to seek law and policy reform in their jurisdictions, we can ensure that Canada is not permitting, supporting, or ignoring human rights abuses by Canadian companies.

As a financier and facilitator of Canadian companies’ overseas activities (through pension plan investments and diplomatic support, for instance), the Government of Canada has a duty to ensure that these corporations respect human and environmental rights wherever they operate. This is especially important when international trade agreements include investor state dispute resolution provisions that deter countries from passing or enforcing strong labour and environment laws.

The CNCA model legislation specifically addresses this concern by including a company’s business relationships within its definitions. Suppliers and subsidiaries are included among business relationships.  

Canadian companies are expected to respect human rights wherever they operate. This expectation does not disappear even if a foreign government or a state agent is involved or linked to the business activity. A company should not be able to profit from violence, whether through private security or local police, nor should a company turn a blind eye if local laws contribute to rights violations. Under due diligence law, a company would be required to ensure people are not being harmed, an obligation which calls for training and oversight.

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