Canada’s extractive sector is a global leader, and Canadian companies have made significant investments in Latin America, which is rich in oil, gas and mineral deposits. Extractive projects in the region offer economic opportunities for governments, communities and individuals. In some Latin American states, Canadian private sector investment rivals Canada’s total development assistance spending. Still, investment has not come without its challenges. For some of the most vulnerable groups, notably indigenous communities and communities dependent on agriculture, the potential benefits of resource extraction projects can be outweighed by negative impacts on their natural environment and livelihoods. In addition, many who have opposed extractive projects have been the target of violence, including killings, as well as criminalization. These events cast a shadow over the economic promise and contributions made by Canadian resource extraction firms.

While these concerns are not unique to Canadian extractive projects in Latin America, Canada’s position as a major player in the industry provides an opportunity to lead the charge in reducing social conflict and the risk of human rights abuses. In September and October of 2017, the Subcommittee on International Human Rights of the House of Commons Standing Committee on Foreign Affairs and International Development (the Subcommittee) undertook a study of the human rights impact of resource extraction firms in Latin America. The study considered strategies adopted by the Government of Canada and the private sector to prevent social conflict and mitigate the risk of human rights abuses. Over the course of this study, the Subcommittee heard from Latin American human rights defenders, representatives from Global Affairs Canada (GAC), Canadian extractive sector representatives, subject matter experts, and representatives from the Organisation for Economic Cooperation and Development (OECD) and the United Nations (UN).

Latin American indigenous leaders and human rights defenders informed the Subcommittee of the negative impacts these projects have had on their natural environment and livelihoods, including deforestation, contamination of water sources and forced displacement. The Subcommittee also learned that indigenous communities affected by extractive activities are often not adequately consulted ahead of a project’s implementation. Witnesses reported that many affected community members are unable to benefit from employment in extractive projects, and those that do gain employment can face precarious and often exploitative working conditions. Opponents to extractive projects, including human rights defenders and indigenous community members, have been the victims of violence and criminalization, and perpetrators of these abuses are often not held accountable.

Weak governance capacity or a lack of will to uphold social and environmental standards can compound negative environmental impacts and result in the uneven distribution of the benefits of a project. Rampant corruption and impunity in some host states allows for the repression of those who oppose extractive activities. The Subcommittee heard that Guatemala and Honduras in particular have high incidences of social conflict and human rights abuses related to extractive projects. Witnesses did not attribute responsibility for human rights abuses directly to Canadian companies, but did emphasize that some companies may have enabled these abuses.

The Canadian resource extraction industry and the Government of Canada have made efforts to impose standards of responsible corporate behaviour. The Mining Association of Canada has established the Towards Sustainable Mining initiative, which outlines environmental, safety and health, labour and human rights standards that members are required to follow. The Government of Canada implemented the Extractive Sector Corporate Social Responsibility (CSR) Strategy in 2009, followed by the Enhanced CSR Strategy in 2014. The current CSR Strategy promotes international CSR standards, such as the UN Guiding Principles on Business and Human Rights; outlines two dialogue facilitation mechanisms, the Extractive Sector CSR Counsellor and the OECD National Contact Point; implements penalties for companies that do not comply with accepted CSR standards; and summarizes the Government of Canada’s diplomacy and development initiatives to promote the respect for human rights in communities affected by extractive activities. Despite these efforts, witnesses questioned their effectiveness and identified multiple opportunities for improvement.

After the conclusion of testimony, the Government of Canada announced the creation of the Office of a Canadian Ombudsperson for Responsible Enterprise (Canadian Ombudsperson) “authorized to investigate allegations of human rights abuses arising from Canadian corporate activity abroad,” including, but not limited to, the activities of the mining, oil and gas sector. The announcement included that the role of the Extractive Sector CSR Counsellor will be folded into the office of the Canadian Ombudsperson. An Advisory Body on Responsible Business Conduct, a multi-stakeholder group including members from civil society and industry, will also be created to advise the government on responsible business conduct and to shape the mandate of the Canadian Ombudsperson.

In light of witness testimony and subsequent developments, the Subcommittee makes six recommendations to the Government of Canada. These recommendations serve to enhance the implementation of Canada’s existing Extractive Sector CSR Strategy as well Canada’s new mechanisms to promote responsible enterprise. The Subcommittee recommends that the Government of Canada use its diplomatic and development partnerships first to address negative social and environmental impacts of resource extraction projects, while more evenly distributing benefits, and second, to achieve reductions in the corruption and impunity that allow human rights abuses to proliferate. The Subcommittee also recommends measures to ensure that human rights concerns surrounding resource extraction projects in Latin America remain a priority. This includes preserving unique elements of the Office of the Extractive Sector CSR Counsellor, and appointing officials with a deep understanding of these issues.

The Subcommittee recommends that the Government of Canada review three elements of its CSR Strategy. First, it should improve the clarity and coherence of the CSR standards promoted and the roles of the dialogue facilitation mechanisms. Second, the Government of Canada should raise awareness of the services of the OECD NCP and the Canadian Ombudsperson among the most vulnerable groups affected by Canadian resource extraction. Finally, the Government of Canada should evaluate the effectiveness of existing sanctions for non‑compliance with accepted CSR standards, including through a comprehensive account of human rights abuses and Canadian responses to date.

The Subcommittee’s recommendations to the Government of Canada are intended to be part of a multi-faceted response to human rights abuses surrounding natural resource extraction in Latin America. In any response, every effort must be made to ensure that Canadian companies favour a “race to the top” approach that prioritizes respect for human rights and best governance practices in their extractive activities abroad.