Paul Hohnen Sustainability Strategies

This article was published in Ethical Corporation on April 20, 2009.

Sustainability: Extracting the best from Canadian Miners?

Canada is the latest country to announce a CSR strategy. Paul Hohnen assesses its strengths and weaknesses.

While some elements have an ‘old wine in new bottles’ flavour about them, the overall package provides a welcome sectoral focus that should help respond to recent criticisms that not all Canadian miners are as responsible as others.

Entitled ‘Building the Canadian Advantage: A Corporate Social Responsibility (CSR) Strategy for the Canadian International Extractive Sector’, the measures are intended ‘to help Canadian mining, oil and gas companies meet and exceed their social and environmental responsibilities when operating abroad.’

The Canadian strategy consists of two main elements: enhanced policy guidance on responsible business practices and (some) upgraded institutional capacity.

On the policy side, the strategy’s articulation of its current range of initiatives and investments provides a valuable insight into the Canadian approach to CSR.

While there are various references to human rights, community and transparency issues, the passing references to climate change, biodiversity and toxics issues will doubtless have disappointed many critics of the sector.

Rather than create a new CSR framework for the sector, the government has plumped for the greater use of a number of existing initiatives, which it judges as offering value in improving the capacity of developing countries to manage and benefit from the development of minerals and oil and gas.

In particular it plans to promote the use of the International Finance Corporation Performance Standards on Social & Environmental Sustainability, the Voluntary Principles on Security and Human Rights, and the Global Reporting Initiative (GRI), which boasts a special sector supplement on mining.

Reference is also made to the importance of the OECD Guidelines for Multinational Enterprises, the Extractive industries Transparency Initiative (EITI), and the work of UN Special Human Rights Representative, John Ruggie.

At the institutional level, the strategy will involve increasing governmental capacity at a number of levels.

A new ‘Office of the Extractive Sector CSR Counsellor’ will be established to help resolve social and environmental issues relating to Canadian companies operating abroad.

This will build in existing work, including by the Canadian International Development Agency, to provide assistance to foreign governments in improving capacity to manage natural resource development in a sustainable and responsible manner.

The government will also support the creation of a ‘Centre of Excellence,’ under the auspices of the Canadian Institute of Mining, Metallurgy and Petroleum , whose role will be to serve as a ‘one stop shop’ in providing CSR related information to the business sector and civil society.

While many details of the strategy’s implementation remain to be defined, and number of broad observations can be made.

The first relates to the focus of the strategy. The extractive sector is key to the Canadian economy. Due to Canada’s favourable laws, over 75 percent of the world’s exploration and mining companies are based in Canada.

Canadian mining and exploration companies account for 43 percent of global exploration expenditures.

At around $79.3 billion in 2007, mining and energy investment is the third-largest component of Canadian direct investment abroad.

While this fully justifies priority attention as a sector and should help to raise CSR awareness both within Canada and across the sector, it invites questions as to how the government plans to assess the effectiveness of the strategy, and plans for addressing other sectors of the Canadian economy.

The association of the Centre of Excellence with a mining body misses an opportunity to enhance its independence and objectivity.

Then there is the issue of policy consistency. As part of the G8, Canada pledged itself in 2007 to a number of measures to promote more responsible business practices worldwide.

Apart from those in relation to the extractives sector (which the current strategy appears to address), there were clear statements about the importance of three governmental instruments.

Two of these — the ILO Tripartite Declaration and the UN Global Compact — receive no mention, and the third, the OECD Guidelines for Multinational Enterprises, receives only passing reference with no clear sense of how it might be used.

In one respect, the Canadian Strategy could prove historic. By addressing a specific sector it offers the opportunity to address the issues most material to that sector.

On the other hand, by grounding a national CSR strategy by focusing on, and housing it within, a single sector, it could be perceived as an effort to improve the image of Canadian Foreign Investment.

It now remains to be seen how performance on the ground will change.

Amsterdam-based, Paul Hohnen consults, speaks and writes on sustainability and CSR issues. Hohnen is a member of Ethical Corporation’s Advisory Board. www.hohnen.net