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CSR in Natural Resource Development: The Good, the Bad, and the Ugly

This presentation explores Canada's approach to corporate social responsibility (CSR) in natural resource development. It discusses the "good, the bad, and the ugly" case studies of CSR practices in Canada, highlighting the importance of reporting, monitoring, and accountability in implementing CSR strategies. The presentation also addresses the need for a proper forum for complaints to be heard and the role of CORE (the Canadian Ombudsperson for Responsible Enterprise) in addressing human rights abuses involving Canadian companies operating abroad.

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CSR in Natural Resource Development: The Good, the Bad, and the Ugly

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  1. Corporate Social Responsibility AND natural RESOURCE DEVELOPMENT: the Good, the Bad and the Ugly • Presented by Frank Sur, Partner, GowlingWLG (Canada) LLP • IAKL – September 21, 2019

  2. Introduction • Canada has a unique system of developing natural resources compared to the rest of the world • This presentation will focus on • Canada’s approach to corporate social responsibility (CSR) in natural resource development • The “good, the bad and the ugly” case study of CSR practices

  3. Overview of Corporate Social Responsibility Practices in Canada • Canadian Government defines CSR as voluntary activities that go beyond legal requirements • In November 2014, Canadian Government announced CSR Strategy “Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada’s Extractive Sector Abroad” (the “2014 CSR Strategy”) • 2014 CSR Strategy • Promotes Canadian values and ethical standards for all Canadian companies abroad • Primary audience is oil and gas, minerals and other natural resource extraction

  4. CSR Mechanisms • Tools provided by Canada in Connection with CSR • Provides diplomatic support for CSR initiatives to Canadian Companies operating abroad • Appointment of CSR Counsellors who act provide support and guidance on CSR issues • Access to Canada’s National Contact Point for dispute resolutions • Rewards companies that adhere to CSR Guidelines through diplomatic support and penalizes companies that violate CSR Guidelines by withdrawing diplomatic support • Creation of CORE, the Canadian Ombudsperson for Responsible Enterprise, tasked with investing allegations of human rights abuses involving Canadian companies operating outside the country

  5. CASE STUDIES • The Good • Canada has stringent assessment and permitting procedures for natural resource extraction • Many Canadian companies have internal policies and guidelines to address social and environmental issues abroad and at home • Canadian government maintains public list of companies that responded to 2014 CSR Strategy

  6. The Bad – Nevsun and Tahoe Resources • Earlier this year, Supreme Court of Canada heard arguments for whether a Canadian mining company can be sued in Canada for alleged human rights abuses abroad • NevsunResources • Canadian Company called Nevsun Resources operating Bisha mine in Eritrea • Refugees allege they were conscripted into mandatory military service to work for state controlled entities under contract with Nevsun to build gold, copper and zinc mine under inhumane conditions • Issue whether Canada would be proper forum to hear the case

  7. The Bad – Nevsun and Tahoe Resources • Trial courts were unwilling to hear the case stating claim should be brought where alleged breaches occurred • British Columbia Supreme Court rejected Nevsun’s calls to dismiss because there was real risk the refugees would not get fair trial in Eritrea • Decision appealed to Supreme Court of Canada • Since then, 80 more plaintiffs have joined with similar allegations • The case is still being considered

  8. The Bad – Nevsun and Tahoe Resources • Tahoe Resources • Prior to Nevsun, decision dismissing a claim by seven Guatemalan men alleging they were injured by security forces hired by Tahoe Resources, a British Columbia company, was overturned by the British Columbia Court of Appeal citing unfairness to the plaintiffs on getting fair trial in Guatemala • Supreme Court of Canada refused to hear Tahoe Resources’ appeal • Earlier this year, American Silver (which acquired Tahoe Resources) settled with the plaintiffs and publicly apologized to victims and community

  9. The Ugly – HudbayMinerals • Hudbay Minerals • Eleven Guatemalan women were allegedly gang raped by security personnel hired by Hudbay Minerals at nickel mining project in El Estor • Maya Q’egchi community had opposed project from the beginning, arguing the concessions granted violated rights over ancestral land • Lawsuit has been ongoing since 2007 • Forum issue resolved with Hudbay withdrawing motion to have lawsuit heard in Guatemala • Landmark case – first time Canadian court allowed foreign plaintiff to seek justice in Canada for incidents alleged to have occurred abroad

  10. LESSONS • Cases demonstrate fundamental flaw in 2014 CSR strategy • Even with guidelines, proper mechanism to monitor still required • Reporting, monitoring and accountability are key • Proper forum for complaints to be heard still missing • In January 2018, Canadian government announced $6.8 million over six year to create CORE (the Canadian Ombudsperson for Responsible Enterprise)

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