Governmental watchdog soon to investigate Canadian companies abroad

On January 17, 2018, the Government of Canada (Government) announced two new initiatives to strengthen Canada’s approach to responsible business conduct for Canadian companies operating abroad, namely, the creation of an independent Canadian Ombudsperson for Responsible Enterprise (Ombudsperson) and a multi-stakeholder Advisory Body on Responsible Business Conduct (Advisory Body). These initiatives are founded on the Government’s commitment to advance human rights by supporting Canadian companies in operating responsibly and improving access to remedy for alleged human rights abuses arising from Canadian company operations abroad. The Government will soon be clarifying how these entities will operate. In the meantime, here are the highlights.

Canadian Ombudsperson for Responsible Enterprise

The Ombudsperson’s mandate will be to investigate allegations of human rights abuses arising from Canadian corporate activity abroad. This person will operate with a budget that allows him/her to conduct independent investigations, be appointed through an order-in-council that will determine the specifics of the mandate and the related responsibilities and carry out his/her duties full-time for a term of up to five years.

For the moment, based on the information provided by the Government, we do not know if complaints can be submitted from other countries or only from Canada. The process for submitting a complaint will include an appeals process to ensure that companies accused of abuses are treated in a clear, predictable and transparent manner.

As part of the Ombudsperson’s mandate and investigative powers, he/she will among other things have the ability to:

  • undertake collaborative fact-finding;
  • initiate independent fact-finding, even without the submission of a complaint;
  • report throughout an investigation; and
  • made recommendations to parties involved in the complaint, as well as to the Government.1

If a company refuses to cooperate in the process, the Ombudsperson can recommend denial or withdrawal of certain Government services (e.g., trade advocacy support and the financial support of Export Development Canada) as an interim measure or as a final recommendation.

Multi-stakeholder Advisory Body on Responsible Business Conduct

The Advisory Body will comprise experts in civil society and industry and will report to the Minister of International Trade. Its role will be to advise the government on the effective implementation and further development of its laws, policies and practices addressing the social responsibility of Canadian companies operating abroad, in particular with the creation of new laws and regulations. The Advisory Body will help the Government determine the Ombudsperson’s mandate and investigative procedures.

Members of the Advisory Body will participate on a voluntary, non-paid basis. They will meet four times annually, but may hold additional meetings as necessary.

Consequences for Canadian companies

The Government’s initiative will not impose new obligations for Canadian companies operating abroad: they are already legally held to respect applicable human rights and Canadian laws and are encouraged to operate in compliance with international corporate social and environmental responsibility standards, such as the Guiding Principles on Business and Human Rights2 and the OECD Guidelines for Multinational Enterprises 3.

The purpose of creating the Office of the Ombudsperson and the Advisory Body is to implement a complaint and independent investigation process for Canadian companies operating abroad that violate existing human rights standards. Although the international standards are not mandatory for Canadian companies, the Ombudsperson’s investigations and recommendations will be made public, which could damage the reputation of Canadian companies. The Government is also considering imposing sanctions for companies found to have violated international standards, such as withdrawing trade advocacy support or making them ineligible to government financial support.

While the Ombudsperson’s mandate will initially focus on the mining, oil and gas and garment industries, it is expected that the mandate will be expanded to add new business sectors in its second year.

The Government announced that both entities will take office as soon as possible, but did not give a specific date for the adoption of the order-in-council.

The authors wish to thank law student Antoine Bourget-Rousseau for his help in preparing this legal update.

Footnotes

1 Responsible business conduct abroad, http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/faq.aspx?lang=eng (consulted on January 18, 2018).

2 Office of the United Nations High Commissioner for Human Rights, Guiding Principles on Business and Human Rights, HR/PUB/11/4, 2011, http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf.

3 OECD, OECD Guidelines for Multinational Enterprises, OECD Edition, 2011, http://dx.doi.org/10.1787/9789264115439-en.