Introduction

Canadian resource exploration and extraction firms maintain a strong presence across Latin America, where projects can offer economic opportunities for governments, communities and individuals. However, 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. Reports of violence against opponents of projects, including targeted killings and criminalization of human rights defenders, cast a shadow over the economic promise and contributions made by Canadian resource extraction firms. These concerns are not unique to Canadian firms, but Canada’s global leadership in this industry presents an opportunity to lead efforts to reduce 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 human rights surrounding natural resource extraction in Latin America. Latin American human rights defenders from Honduras, Guatemala, El Salvador, Mexico, and Colombia provided the Subcommittee with first-hand accounts of the impact of resource extraction on their communities and the profound insecurity that followed.^[1] The Subcommittee invited the testimony of officials from Global Affairs Canada (GAC), including the Extractive Sector Corporate Social Responsibility (CSR) Counsellor and the Director General of Operations for Canada’s Trade Commissioner Service. The Subcommittee also heard from Mr. Pierre Gratton and Mr. Ben Chalmers from the Mining Association of Canada (MAC) and Mr. Andrew Cheatle from the Prospectors and Developers Association of Canada (PDAC). Subject matter experts Dr. Paul Haslam, Dr. Jeffrey Webber, Mr. Carlos Monge, as well as Mr. Shin Imai and Ms. Leah Gardner, co-authors of The Canada Brand: Violence and Canadian Mining Companies in Latin America (the Canada Brand), also appeared.^[2] The Canada Brand report, as well as a draft report co-authored by Dr. Haslam entitled Do Canadian Mining Firms Cause Social Conflict with Communities? Quantitative Evidence from Latin America,^[3] were repeatedly cited by other witnesses, including those from GAC and industry associations.^[4] The Subcommittee learned about international CSR guidelines and the roles that governments should play through the testimony of representatives from the Organisation for Economic Cooperation and Development (OECD) as well as the United Nations (UN) Working Group on Business and Human Rights.

This report begins by discussing the Canadian extractive industry’s presence in Latin America, including the extent to which benefits flow to the Latin American economy, and how such investment serves Canadian foreign policy interests. Discussion then turns to how resource extraction projects can negatively impact the natural environment and threaten the livelihoods of local communities, and the weaknesses of existing consultation and consent mechanisms. The Subcommittee learned that poverty and weak governance diminish communities’ ability to benefit from resource extraction projects, for example, by joining supply chains. Further, where employment is created, it can be precarious and even hazardous. This report then considers instances of human rights abuses committed by individuals and entities defending material interests in the project, including violence, harassment, expulsion, sexual violence and criminalization. A variety of actors carry out these abuses, including state military and police forces, but also private security and criminal organizations. The role of weak governance and pre-existing citizen insecurity are then discussed, with special emphasis on the cases of Honduras and Guatemala, where citizen insecurity and impunity prevail. This report briefly considers the availability of evidence of human rights abuses and addresses gaps in disclosure and transparency.

While some witnesses emphasized that social conflict and human rights abuses connected to Canadian companies “represent exceptions and not the rule,”^[5] others viewed human rights abuses associated with Canadian resource extraction projects as “an ongoing, systematic problem.”^[6] Mr. Duane McMullen, Director General of Operations for Canada’s Trade Commissioner Service, described GAC’s approach to addressing social conflict and human rights abuses as follows: “our role is to try to get to the bottom of how the various interacting factors are contributing to that. It's not a villain-victim situation necessarily. It's a situation that's broken, and how do we fix it?”^[7]

This report considers efforts made by Canada’s resource extraction industry to impose standards of responsible corporate behaviour, as well as critiques of these efforts. The report then discusses Canada’s 2014 extractive sector CSR Strategy, entitled Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada’s Extractive Sector Abroad (2014 CSR Strategy), including its diplomacy and development initiatives and its dialogue facilitation mechanisms, the Offices of the Extractive Sector CSR Counsellor (CSR Counsellor) and the OECD National Contact Point (NCP). This report also reviews sanctions available for non-compliance with standards set out in the 2014 CSR Strategy such as the UN Guiding Principles on Business and Human Rights. Witnesses identified multiple opportunities for improvement, including by establishing an office of an ombudsperson with investigative powers, and promoting awareness of the dialogue mechanisms established under the strategy. 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 creation of an Advisory Body on Responsible Business Conduct, a multi-stakeholder group of volunteers to advise the government and the Canadian Ombudsperson was also announced. The Advisory Body held its first meeting on 23 April 2018. It is now chaired by the Minister for International Trade Diversification.[8] It should be noted that the Canadian Ombudsperson is not yet operational, nor has its mandate been formalized via an Order in Council. The Government of Canada announced that such steps will be taken “as soon as possible,” although a date has not been provided.^[9]

In light of witness testimony, the Subcommittee makes six recommendations to the Government of Canada. These recommendations serve to enhance the implementation of Canada’s 2014 CSR Strategy and the effectiveness of its existing and newly created mechanisms. 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 corruption and impunity which allow human rights abuses to proliferate. The Subcommittee urges the Government of Canada to continue to enhance Canada’s response to human rights concerns surrounding resource extraction efforts. The Subcommittee also makes recommendations to strengthen Canada’s 2014 CSR Strategy as a whole, including by calling for a critical evaluation of existing CSR standards and compliance mechanisms, and prioritizing their promotion among communities that need them most.

The Government of Canada should be prepared to consult with international partners and to increase resources dedicated to Canada’s 2014 CSR Strategy in order to achieve these goals. The Government of Canada must continue to forge ahead in its efforts to promote and protect international human rights, including human rights abuses surrounding resource extraction projects in Latin America.

The Canadian resource extraction industry in Latin America

Canada is a global leader in resource extraction, an industry which is supported by the Canadian engineering, banking, geological and legal sectors, among others.^[10] Toronto is a global financial hub for the resource extraction industry.[11] Approximately 40% of overseas investment by Canadian extractive firms flows to Latin America,[12] where around 340 Canadian companies operate 930 projects in almost every country in the region.[13] According to Mr. Gratton, President and Chief Executive Officer of the MAC, the Latin American countries of greatest importance in terms of Canadian investment are Mexico, Chile, and Argentina, followed by Peru, Brazil, and the Dominican Republic.^[14] Recent estimates of the value of Canadian extractive firms’ investments in Latin America range from $78 billion to over $90 billion.^[15] Through the payment of local taxes and royalties, Canadian mining firms provide revenue for Latin American governments, which, in many cases, is much needed.[16] According to Mr. McMullen, some Canadian firms are by far the largest taxpayer in the countries in which they operate.[17]

In some Latin American states, Canadian private sector investment rivals Canada’s total development assistance spending.^[18] Mr. McMullen emphasized that Canadian private sector investment in resource extraction projects in Latin American countries is a “huge multiplier for Canadian policy objectives in the region” and is a “very powerful tool” to advance Canadian development objectives. Mr. McMullen stated that GAC’s overarching objective is to support the ongoing development of effective institutions, “which can provide security and protect the human rights of the people of Latin America, and distribute the economic benefits” created by resource extraction projects.^[19] Political, trade and development staff work together at Canada’s embassies in Latin America to help build capacity to manage resource extraction responsibly at both the local and national level. To do so, they engage with Canadian mining companies operating in the state.^[20]

The human rights impact of resource extraction projects in Latin America

Social and environmental rights

Many countries in Latin America actively promote investment in their natural resources sector.^[21] However, according to Mr. Dante Pesce, member of the UN Working Group on Business and Human Rights, Latin American governments’ short-term focus on attracting investment, creating employment and increasing revenue has overtaken consideration of the social and environmental impacts of economic development.^[22] Mr. Carlos Monge, Latin America Director of the Natural Resource Governance Institute, commented that the collapse of oil prices and decreasing mineral commodities prices have in recent years created a “race to the bottom” through the erosion of social and environmental protection measures.^[23]

Mr. Jeffrey Davidson, Canada’s CSR Counsellor, informed the Subcommittee that the presence of resource extraction projects has raised critical concerns across Latin America, regarding consultation and consent, environmental degradation and health impacts, water use and quality, the protection of traditional livelihoods and sacred sites, competition for natural resources and land, local employment and decent work.^[24] Often, the communities most affected by resource extraction projects are indigenous or depend on agriculture for their livelihoods.^[25]

In his study on mining companies and social conflict in Latin America, Dr. Haslam, Professor at the University of Ottawa School of International Development and Global Studies, found that social conflict erupts in environments characterized by poverty and low levels of education, when traditional agricultural activities are disrupted by the mining project and where locals have a low capacity to adapt or benefit from the mining.^[26] Dr. Haslam added that, “where the state is not present to redirect benefits received from mining companies, locals typically see few if any of these benefits.”^[27] According to Dr. Haslam, “[a]s economic opportunities for people become scarcer in the presence of a mining project—meaning that agriculture options are harder, poverty is generalized, and state services are absent—the likelihood of social mobilization increases.”^[28] For the purposes of his study, Dr. Haslam defined “social conflict” as “anything that involves sustained mobilization of people” to effect social change.[29] Sustained mobilization could include, for example, a group of community members protesting in opposition to a mining project near the project property.[30]

Impacts on the natural environment and livelihoods

Witnesses from Latin America provided examples of the negative socio-economic impact of resource extraction projects on their natural environment and livelihoods. Mr. Arana Morales, President of the Xinca Parliament, which represents the indigenous Xinca people in Guatemala, explained, “as indigenous peoples, we have a very strong link to nature, because nature gives us life.”[31] He expressed concern that a resource extraction project would diminish his community’s livelihood: “we rely on agriculture for our livelihoods. We produce food, we have livestock, and we produce milk … they would like to set up mining, and leave us without land for agriculture.”[32]

Mr. Monge discussed how mining, and particularly open-pit mining, causes pollution and threatens “critical environmental services.”[33] He attributed mining-related deforestation of the Amazon Basin, an important carbon sink, to the acceleration of global warming.[34] According to Mr. Ben Chalmers, of the Mining Association of Canada, mining projects also increase competition for water.[35] According to Mr. Monge, mining “monopolizes water consumption in territories that are densely populated and where water is becoming a scarce resource precisely because of global warming.”[36] The contamination of water sources and groundwater was of profound concern to Mr. Monge as well as Mr. Bernardo Belloso, President of the Association for the Development of El Salvador, and Mr. Luis Fernando Garcia Monroy, Co-Founder of the Guatemalan organization called Youth Organized in the Defense of Life.[37] Mr. Garcia Monroy is a farmer from a village affected by a nearby mine. He became unable to sell his crops due to general fear of contamination. He and six of his counterparts survived an attempt on their life in 2013.^[38] He informed the Subcommittee of 90 families in Guatemala who were forced to leave their homes after explosives used in a mining operation caused cracks in the ground and landslides.[39] Mr. Monge noted that environmental standards are being lowered to allow mining projects in Peru, Bolivia, Colombia and Ecuador.[40]

According to Dr. Haslam, open-pit mines, which tend to have a larger ecological footprint, are one of the strongest predictors of social conflict, indicating a link between environmental impact and social mobilization.^[41] Mr. Arana Morales emphasized that conflict which has emerged from threats to livelihoods and the environment are growing.[42] Mr. Monge asked that the Government of Canada promote the strengthening of environmental standards in places where Canadian resource extraction firms operate, particularly to protect ecosystems which provide critical environmental services.[43]

Consultation and consent

Mr. James Cavallaro, former Commissioner at the Inter-American Commission on Human Rights (IACHR), an organ of the Organization of American States (OAS), explained that indigenous communities have the right to free and informed prior consent, after thorough consultations, when a project “has the potential to significantly alter the traditional lifestyles of indigenous and traditional communities.”^[44] This right is articulated in the American Declaration of the Rights and Duties of Man, the American Convention on Human Rights, the International Labour Organization’s Indigenous and Tribal Peoples Convention, 1989 (ILO Convention 169) as well as through domestic laws, and other international treaties or instruments, including the UN Declaration on the Rights of Indigenous Peoples. These instruments are applied in the case law of the Inter-American Court of Human Rights (the Court), and the decisions of the IACHR, which hears individual human rights complaints and refers cases to the Court.[45]

In practice, Mr. Garcia Monroy noted, consultations are either not implemented or are implemented selectively. In other cases, consultation results are not respected.[46] Mr. Monge told the Subcommittee that in Mexico, consultations are held regarding oil extraction projects, but not mining projects.^[47] He pointed out that it is not only indigenous communities calling for improved consultation processes and respect for the right to free, prior and informed consent.[48] Witnesses expressed concern for fairness and inclusivity in consultations and negotiations. Where negotiations occur, according to Mr. Gustavo Lozano of the Mexican Network of Mining Affected People, they occur in the context of a power imbalance between relatively well‑resourced companies and the affected communities. He noted that communities accept the terms of projects because “they have no other options,” but that the consent provided is not truly informed or free.^[49] Mr. Pesce expressed concern that companies’ consultation practices do not sufficiently consider vulnerable groups such as women, and assessed companies’ ability to identify and engage vulnerable groups as “quite weak.”^[50] Mr. Tarik Khan, Director General of the Central America and Caribbean Bureau at GAC, added that “certainly there can be a lot more involvement of women” in consultation processes, which might provide a clearer understanding of the impact of a project on a community.^[51]

Employment and economic development

Mr. Tyler Gillard of the OECD and Mr. McMullen emphasized that the extractive sector is a source of jobs, by creating employment directly and by sourcing goods and services from local businesses. They also emphasized that resource extraction projects create the opportunity to transfer skills to locals.[52] Mr. McMullen noted that Canadian mining firms create hundreds of thousands of “some of the best paid jobs.”[53] However, Dr. Webber, Senior Lecturer at the Queen Mary University of London School of Politics and International Relations, maintained that industrial-scale mining creates relatively few jobs per dollar invested, particularly compared to other industries that were less disruptive to the livelihoods of locals and the integrity of the natural environment.[54] In Mr. Khan’s view, there are challenges for “any rural community getting involved in the value chain when a company enters the community,” particularly for vulnerable members of the community, such as women.[55] He noted that there are further opportunities for women to work at all levels of the supply chain, and that GAC “encourage[s] companies to be equal opportunity employers as well for their actual operation itself.”^[56]

The Subcommittee learned that employment created by resource extraction projects can be precarious. Mr. Francisco Ramirez Cuellar, a Colombian labour lawyer, characterized working conditions on projects in Colombia as exploitative, or in some cases, akin to “quasi-slavery.”[57] Mr. Cuellar added that mining projects in Colombia do not implement basic health and safety protections.^[58] Mr. Monge described similarly precarious employment at resource extraction sites in Peru.^[59] Workers are often subcontractors who do not enjoy the protections of a union.^[60] They work on short term contracts or without a contract, for minimal pay and no benefits. This was of particular concern to Mr. Cuellar and Mr. Monge, given that some workers carry out hazardous underground work with heavy machinery.[61]

Mr. Pesce noted that engagement with unionized workers is not sufficient to meet due diligence standards. He found that, at the operational level, multinational companies have weak grievance mechanisms that are not well understood even by strong unions, and that in some cases, information is not available in the local language. He cautioned that information, and the ability to engage meaningfully with the management of a multinational corporation would be even less available to subcontractors and those living far away from cities.^[62]

Community services and infrastructure

Witnesses emphasized that where state and local authorities are characterized by weak governance and fragile institutions, there is an expectation that resource extraction firms will step in to fill the void, and failure to meet these expectations will fuel social conflict. Mr. Gratton told the Subcommittee that the absence of the state is “one of the biggest problems,” because, “if communities don’t feel the government’s providing them with a voice, companies have to fill that void.”^[63] Mr. Davidson explained that Canadian companies are often expected to contribute to the delivery of basic services, including roads, water, electricity, health care and education.^[64] Mr. Cheatle, of the Prospectors and Developers Association of Canada, and Mr. Chalmers noted that almost all companies take concrete measures to improve the daily lives of locals.[65] The scale of projects will reflect the resources and size of the company in question.^[66] Many junior exploration and mining firms “are not in this for the long term,” and can “claim poverty.”^[67] Ultimately, Mr. Davidson stated, “companies cannot replace local governments, which need to be responsible for the delivery of public services, as well as other areas of governance, including the administration of justice, local democracy, and public security.”^[68]

The repression of dissent

The potential for creation of wealth, opportunities or other benefits, particularly in a context of scarcity, elicits “passionate interests in favour [of] and against [extractive] project[s].”^[69] Those who seek to defend the benefits they receive from extractive projects, including state and non-state actors, have in some cases resorted to violence against opponents of a project. State institutions have been used to stifle dissent, including security forces, the judiciary and in some cases legislation.[70] Human rights abuses against protestors have included targeted killings of high profile human rights defenders.[71] Dr. Haslam observed that, in most cases, human rights abuses and violations are not instigated directly by the companies involved in the project.^[72] Mr. Gratton asserted that countries “which have had decades of civil strife, if not outright civil war, weak governance, and high levels of distrust, stand out for much of the controversy in those troubling examples we read about.”^[73] While human rights violations and abuses are generally prosecutable crimes where they occur, weak states, or states with an overriding material interest in the presence of resource extraction projects, may not take necessary steps to ensure accountability.^[74] In addition to testimony about violence and criminalization,[75] the Subcommittee received testimony indicating that Honduras and Guatemala, which face serious deficits in security and governance, were outliers.[76] These two cases are discussed in detail below.

Neither Dr. Haslam nor the authors of the Canada Brand report, Mr. Imai and Ms. Gardner, set out to confirm or repudiate particular allegations that Canadian companies were involved in human rights abuses.^[77] Even so, the Canada Brand report noted that “it is fair to inquire not only whether the company was directly involved, but also whether the company contributed to a community context where violence and criminalization could occur.”^[78] Mr. Imai, Ms. Gardner and others focused not on causation but on whether a firm was complicit in human rights abuses, by directly or indirectly enabling or facilitating abuses or by exacerbating pre-existing issues which give rise to human rights abuses.^[79]

Violence, targeted killings and criminalization of human rights defenders

The authors of the Canada Brand report described “a prevalence of violence and criminalization resulting from state and private security force interventions” in response to protests led by affected community members and human rights defenders.^[80] The Canada Brand report found that, from 2000 to 2015, there were 34 violent conflicts involving 28 Canadian mining companies, both large and small, in 13 different Spanish-speaking Latin American countries.^[81] The protests recorded were often part of a larger mobilization against a project, but also included community reactions to events such as cyanide spills and labour disputes.^[82] Instances of documented violence and criminalization were geographically widespread. Injuries were suffered in all 13 countries studied. Criminalization occurred in 12 countries and deaths occurred in 11 countries.^[83] The Canada Brand report found that, in the context of protest or clashes related to mining, 13 people were killed, eight of whom were activists opposed to the projects, and five of whom were police officers, government officials or mine workers. The report also found that, of 363 people injured in the context of protest, two-thirds were activists or community members opposed to the projects.^[84] Physical injuries ranged from minor injuries to permanent disability.^[85] Of 44 deaths documented by the Canada Brand report, 30 deaths were classified as “targeted.”^[86]

Mr. Pesce described a dynamic of distrust of state authorities, and particularly police or military authorities, which intensifies as one moves further away from a capital city, or in situations of ongoing violence or war. He noted that, in these circumstances, indigenous communities in particular “don’t trust anyone with a uniform to be on their side.”^[87] He described the expectation “that the police show up when the companies need them to show up, but not when the regular citizens need the state to be there for them,” leaving the impression that the police and army are “subcontractors” of large extractive operations.^[88] The Canada Brand report notes that, in some cases, Canadian companies demanded the intervention of police and armed forces, who then responded disproportionately to protestors.^[89] Latin American human rights defenders shared some of their experiences with the Subcommittee. In Colombia, labour organizers have been subject to “illegal pressures” by the military, including expulsion and reprisals against family members of protestors.[90] Mr. Monge expressed his concern that Peruvian police forces were equipped with military gear, and enjoyed impunity with respect to human rights violations.[91]

The Subcommittee heard that it is a “standard practice” in Latin America to aggressively pursue local human rights defenders and union leaders through the justice system.[92] Mr. Pesce noted that this approach is taken “not all the time, not at all locations,” but happens so frequently that it creates “the general perception … that the judiciary is also co‑opted and captured by the commercial or economic interests.”^[93] The Canada Brand report found 709 cases of criminalization, including legal complaints, arrests, detention and charges across 13 countries, between 2000 and 2015.^[94] Furthermore, the report found many instances of mass arrests occurring during demonstrations, and that laws were implemented in a manner that discouraged protest. At other times, protest leaders and their allies become the targets of “baseless” criminal charges.^[95] Of the 13 countries studied, criminalization and legal complaints were most prevalent in Mexico, which accounted for 42.3% of warrants and legal complaints, and 13.2% of arrests, detentions, and charges.^[96] Mr. Monge asked that the Government of Canada’s representatives in Latin America work to reverse legislation and policies that enable the criminalization of legitimate protest.^[97]

In other cases, human rights abuses were carried out by non-state, or unidentified actors. Mr. Lozano reported the unattributed deaths or disappearances of 54 Mexican individuals who denied mining firms access to their land.[98] Mr. Belloso and Ms. Gardner discussed the 2009 killings of at least four outspoken opponents to mining projects in El Salvador.[99] One human rights defender was eight months pregnant and carrying a two-year old child when she was killed.[100] The influence of criminal organizations in a region surrounding a resource extraction site can further increase the prospect of violence and insecurity for local communities. Mr. Gillard noted, “there is a huge degree of criminality involved” in many regions of Latin America. He provided an example of a criminal organization in Colombia pressuring indigenous communities to accept or protest against extraction projects under threat of violence.[101] Extraction firms risk contributing to this dynamic if they pay illegal rents and taxes to criminal organizations, as Mr. Gillard reported was the case in Colombia,[102] or by otherwise fostering relationships of convenience.[103]

Human rights abuses, insecurity and impunity: the cases of Honduras and Guatemala

Witnesses representing the Canadian mining industry, Canadian civil society, and Latin American human rights defenders focused their attention on violence surrounding opposition to resource extraction projects in Honduras and Guatemala, both of which are facing a protracted public security crisis, with high degrees of corruption, criminality and impunity.[104] Mr. Rick Craig, Executive Director of the Justice Education Society, commented that Honduras risks evolving into a “narco-state,” while Guatemala has “pulled back from the brink.”[105] Mr. Gratton noted that at least two MAC members have “walked away from investments” in Honduras and Guatemala due, at least in part, to local instability.^[106]

Honduras

In May and June of 2016, the Subcommittee studied the situation of indigenous human rights defenders in Honduras, whose security was threatened due to their opposition to resource extraction projects, including Canadian projects.[107] In Mr. Cavallaro’s assessment, “Honduras faces serious challenges in citizen security, the criminal justice system, corruption, indigenous rights, and other areas. The grave situation constitutes a crisis that has dragged on since the 2009 coup.”^[108] After the 2009 coup, a large number of concessions for resource extraction and hydroelectric projects were granted across the country, and, according to one witness, were concentrated on indigenous lands.^[109] Other land reform efforts led to “massive inequalities.”^[110] Mr. Cavallaro reported “threats, police abuse against demonstrators, police abuse against people who oppose extractive processes, and killings of people who are engaged in opposition to extractive processes.”^[111]

One witness told the Subcommittee that “Honduras has the highest number of murders of human rights defenders and environmental defenders in the world.”^[112] From 2010 to 2015, at least 109 environmental and indigenous activists as well as farmers were murdered. Among those killed was Berta Cáceres, a high-profile indigenous rights activist and Coordinator of the Civic Council of Popular and Indigenous Organizations of Honduras (COPINH). She led resistance against the construction of a hydro-electric project by a Honduran company.^[113] According to Mr. Cavallaro, Ms. Cáceres’ death was emblematic of “issues that repeat themselves in Honduras.”^[114] First, he noted, the context of her death was one of “tension and conflict with an extractive industry.” She was jailed and had received 33 threats to her life and health prior to her death, including from municipal authorities of the communities neighbouring the project, private security contractors employed by a resource extraction company, the military police and Honduran military special forces units.^[115] These threats were made despite the fact that she was the beneficiary of rulings issued by the IACHR, which required the Honduran state to provide protection to Ms. Cáceres. This point was emphasized by Ms. Berta Zúniga Cáceres, her daughter and also a member of COPINH.^[116] Finally, Mr. Cavallaro noted, there was an initial effort to discredit Ms. Cáceres and put into question the motive for her murder.^[117] Witnesses concluded that Ms. Cáceres’ murder was a targeted killing.^[118]

Mr. Cavallaro noted that, “[i]t is easy unfortunately and even believable in Honduras to blame ordinary crime for what are in fact paid, targeted killings of activists, prosecutors, and judges. That is because violence and homicide is so widespread and so uncontrolled.”^[119] Mr. Cavallaro noted that the use of private security guards is common in Honduras, and they are used to intimidate indigenous activists. He estimated that there are approximately 60,000 private security guards in Honduras, compared to approximately 14,000 police. Control over private security guards, who often work with the support of police, is “quite lax” even though they are armed and are known to use lethal force.^[120] While some individuals were convicted of the murder of Berta Cáceres, witnesses maintained that the directing minds behind the murder have not been held accountable.^[121] Witnesses emphasized that impunity is the norm in Honduras and that the justice system and national police have lost the public’s trust.^[122] Mr. Cavallaro expressed great concern for judicial autonomy, noting that judges and prosecutors have been dismissed, threatened and killed.^[123]

Guatemala

According to Dr. Haslam, “the Guatemalan case represents a particularly low level of governance, which is problematic for human rights.”^[124] In Mr. Craig’s assessment, Guatemala is facing a generalized public security crisis, which, while improving, remains “a major battle.”^[125] The Canada Brand report concluded that Guatemala is an outlier in terms of physical violence. Four extractive projects in Guatemala accounted for 27.3% of deaths, 50% of disappearances, 22% of injuries, and 73.3% of instances of sexual violence that occurred in 13 Latin American countries over the course 15 years.^[126] According to Dr. Webber, the rule of law is so weak in Guatemala that it is “highly questionable” whether those responsible would ever face accountability in Guatemala’s justice system.^[127] Mr. Garcia Monroy informed the Subcommittee that a judge had offered money to his organization, Youth Organized in the Defense of Life, to drop charges against the head of security for a local mine. That individual managed to leave Guatemala in 2015 despite being in police custody.[128]

Ms. Gardner described ongoing conflict surrounding a Canadian-owned mine in Guatemala, which began in 2011. For the period between 2013 and 2015, she found credible reporting on seven deaths related to unrest and police intervention around the mine, including three targeted killings. On one occasion, mine security personnel shot six farmers and one student after they peacefully assembled at the mine. Ms. Gardner recounted the abduction of four indigenous leaders who were observing a local election, the targeted killings or attempted killings of local activists who were involved in organizing referendums, and killings and harassment of staff of a local NGO providing legal support to local communities who were involved in lawsuits against the mining company.^[129]

Documentation and transparency

Dr. Haslam noted that despite the “significant number” of problematic cases across Latin America, there was a “surprising lack” of generalizable evidence linking extractive activities with social conflict and human rights abuses.^[130] Though, as Mr. Lozano pointed out, “every situation is unique,”^[131] the Canada Brand report’s authors argued that “the individual cases from Latin America need to be seen in the light of a larger global pattern. A closer look at individual cases may also reveal hints of connections that need to be investigated further.”^[132]

Both Dr. Haslam and the authors of the Canada Brand relied on reports by local NGOs and the media for their analysis.^[133] The authors of the Canada Brand also reported on accounts of social conflict disclosed by publicly-traded Canadian parent companies, which are subject to disclosure requirements under provincial securities legislation.[134] The Canada Brand’s authors noted that, without a budget to conduct their own investigations, such reporting was essential.[135] Witnesses expressed concern about insufficient public reporting.^[136] Disclosures “rarely included biographical information or total numbers of those affected by violence,” and often, where protests or blockades were reported, associated violence was not disclosed.^[137] At the federal level, Mr. Imai and Mr. Monge recommended that the Government of Canada explore expanding the Extractive Industries Transparency Initiative (EITI) to include social and environmental impacts.[138] The EITI is a global standard adopted by 51 countries, including Mexico, Guatemala and Peru, that focuses on fiscal and legal transparency regarding natural resources.[139] Canada is an EITI supporting country and is currently represented on the EITI Board.[140]

Private sector corporate social responsibility initiatives

Witnesses agreed: “doing things responsibly is good for business.”[141] Mr. Gillard explained that responsible business practices help protect the security of mining operations and the supply chain, stating that a

lack of effective community stakeholder engagement can jeopardize and create operational risk for companies, and project shutdowns. From a supply chain perspective, issues around criminal organizations could create legal liabilities as well as affect strategic access. Indeed, it is profitable in the long-term.[142]

Mr. Cheatle emphasized that the extractive sector has “been very engaged in how [it] can work with government, local communities, and civil society to improve relationships and reduce social conflict.”[143] Mr. Gratton agreed, stating that “Canada’s mining industry, with the help of its government, is contributing to raising standards around the world, something we should be proud of.”^[144] Dr. Haslam found that, in Argentina, Brazil, Chile, Mexico and Peru,^[145] Canadian firms were better at avoiding conflict than firms of other nationalities, particularly in poorer communities.^[146] Locally owned firms had a 5% to 7% probability of being involved in a social conflict. Foreign non-Canadian firms had a 27% to 28% probability of being involved in social conflict, and Canadian firms had a 21% probability.^[147]

Firms face different challenges in managing concerns according to their size, measured by the market value of the company’s outstanding shares (market capitalization).^[148] According to Mr. Pesce, junior companies face difficulties because they are more heavily reliant on the governments of host countries for information or other forms of assistance. He cautioned that junior mining companies are more reliant on local authorities to understand with whom they should engage and how to do so, and that these authorities are perceived by locals as highly corrupt or incompetent.^[149] Dr. Haslam found that junior firms in Argentina, Brazil, Chile, Mexico and Peru were less associated with social conflict than mid-size firms.^[150] He hypothesized that growing firms have difficulty managing their growing impacts on communities and the environment.^[151] Mr. Davidson noted that major companies can “run into problems” when their operations are micro‑managed from headquarters based on a limited understanding of the conditions at the firm site.^[152] Dr. Haslam agreed, stating that

effectiveness depends on having good people on the ground with the authority to take decisions important to the community and that can affect key aspects of the project. In reality there is often a governance gap between what is decided at the head office and what is implemented on the ground.^[153]

To illustrate the progress made by the resource extraction industry in responding to human rights concerns, witnesses from PDAC and MAC described their CSR plans to the Subcommittee. In 2004, MAC established its Towards Sustainable Mining (TSM) initiative.^[154] The TSM initiative involves site level performance evaluation, independent verification of performance and public reporting, and is overseen by a national multi-stakeholder advisory panel.^[155] MAC members that violate the TSM standards face removal from MAC and “a bad name,” but no other consequences.^[156] While participation in the TSM initiative is mandatory in respect of members’ Canadian facilities, it is not mandatory for their international operations.^[157] Nevertheless, some MAC members still apply TSM in both their Canadian and international projects.^[158] The TSM standards are being implemented at the national level in Argentina, as well as in Finland and Botswana, largely as a result of the efforts of Canada’s Trade Commissioner Service.^[159]

According to Mr. Gratton, the standards of good practice promoted in the TSM do not include expectations that companies contribute to local infrastructure, as such services should be provided by the host state. As he explained, the primary demonstration of social responsibility is maintaining high standards and involving local stakeholders in projects, protecting the environment and protecting workers.^[160]

MAC also requires its members to implement the Voluntary Principles on Security and Human Rights (the Voluntary Principles).^[161] The Voluntary Principles were established in 2000 by the American and British governments, in collaboration with representatives from the extractive and energy sectors and NGOs. The Voluntary Principles guide companies “in maintaining the safety and security of their operations within an operating framework that encourages respect for human rights.”^[162] This includes guidance on operational risk assessment, and interaction with public security forces and private security contractors.^[163] MAC requires members to implement security management systems that are consistent with the Voluntary Principles.^[164]

In 2009, PDAC introduced guidelines entitled e3 Plus: A Framework for Responsible Exploration which members are encouraged to follow.^[165] The e3 Plus principles include “Adopt Responsible Governance and Management”; “Respect Human Rights”; and “Engage Host Communities and Other Affected and Interested Parties.” The guidance also provides three toolkits in the areas of social responsibility, environmental stewardship, and health and safety.^[166]

Critiques of private sector corporate social responsibility strategies

Dr. Haslam explained that industry CSR codes “need to be specific, measurable, with reporting and third party verification to be effective as a self-governance mechanism.”^[167] Witnesses outside the extractive sector industry questioned the effectiveness of industry initiatives such as TSM or e3 Plus on extractive companies’ operations abroad. Despite “openness and willingness” on the part of the Canadian extractive industry to adopt CSR codes of conduct, Mr. Pesce found a lack of evidence of actual implementation of these standards on the ground, as well as an inadequate understanding of the challenges associated with implementation.^[168]

The authors of The Canada Brand argue that CSR codes “suffer from deeper structural problems related to the fact that they are voluntary and unenforceable. They have no mechanism for investigation, companies cannot be sanctioned and victims cannot be compensated.”^[169] For example, they noted that despite optimism surrounding their implementation, the Voluntary Principles have been largely ineffective. Amnesty International, one of the founders of the Voluntary Principles, withdrew from the multi-stakeholder founding group in 2013 due to the “failure of the initiative to develop robust accountability systems for member companies.”^[170] Mr. Gratton conceded that the adoption and implementation of CSR initiatives among Canadian mining companies in Latin America is “a work in progress.”^[171]

The Government of Canada’s extractive sector CSR Strategy

The Government of Canada’s 2014 CSR Strategy outlines the standards to which it holds Canadian corporations as well as various mechanisms it uses to promote CSR among Canadian extractive firms operating abroad, including in Latin America.^[172] Canadian development assistance programs aim to address the root causes of social conflict near extractive projects such as weak governance and economic inequality.^[173]

The 2014 CSR Strategy enhanced the Government of Canada’s first CSR Strategy, launched in 2009 after roundtables with industry representatives including PDAC and MAC.^[174] According to the 2014 strategy, the Government of Canada is committed to helping the Canadian extractive sector understand and implement CSR best practices by promoting and advancing CSR guidance; fostering networks and partnerships; facilitating dialogue towards dispute resolution; and strengthening the environment affecting responsible business practices.^[175]

Mr. Cheatle referred to the 2014 CSR Strategy as a “model of progress.”^[176] In Mr. Davidson’s assessment,

[o]f all of the OECD countries that serve as home for extractive companies with international interests, Canada has taken, in my opinion, the most progressive and aggressive approach to promoting and attempting to assure responsible conduct and respect for human rights by its own companies.^[177]

Nevertheless, the Subcommittee heard that there remains “opportunity for improvement”^[178] in the strategy’s implementation. Mr. Davidson noted that Canada faces obstacles in fully addressing this issue “given the scope and scale of Canadian [extractive] activity, and the constraints and limitations of the mechanisms [Canada has] in place.”^[179] As a result, the government has “to operate on the presumption that companies are working in good faith ... [and] rely oftentimes on others to bring difficult situations to [its] attention….”^[180]

Diplomacy and development initiatives

As outlined by the 2014 CSR Strategy, the Government of Canada engages in various diplomacy and development initiatives to address human rights abuses surrounding natural resource extraction in Latin America. GAC trains its diplomats to recognize potential issues with Canadian extractive projects abroad. According to Mr. McMullen: “We expect our diplomats to speak up when they see something they think is not right.”^[181] He also noted, however, that GAC does not keep records of issues noted by diplomats.^[182] Diplomats are trained to advise extractive project leaders on good governance practices, and can also seek advice from Canada’s CSR Counsellor and other GAC officials.^[183] Diplomats are also expected to “bring polarized factions together” to find solutions to potential problems surrounding Canadian extractive projects abroad.^[184] Mr. Imai stated that Canadian embassies in Latin America “have to step up and take a bigger role in terms of monitoring what their companies are doing.”^[185]

Dr. Webber expressed the view that Canadian diplomats prioritize the promotion and facilitation of Canadian mining investment over the adverse impacts this investment could have on local communities.^[186] Dr. Webber recommended that, in its diplomacy initiatives, the Government of Canada ensure that it respects “the expression of popular will from the grassroots, not just Latin American governments, which aren’t always representative of the Latin American populations….”^[187] Ms. Zúniga Cáceres illustrated this concern, criticizing the role of Canadian diplomats in developing Honduran legislation which allowed problematic resource extraction projects to go forward.[188]

GAC funds development assistance programs that aim “to build local and national capacities to manage resource extraction responsibly and in full accordance with human rights norms.”^[189] This development assistance addresses some of the root causes of human rights abuses surrounding natural resource extraction in Latin America, including weak governance and economic inequality. As outlined by Mr. McMullen:

Though best results are achieved on the ground, one project, community, and company at a time, we also recognize that the best solution is that these countries themselves develop effective governance capacity. Helping governments in the region build this capacity for the sustainable management of natural resources is a priority for us and in line with Canada's new feminist foreign policy agenda.^[190]

Some projects funded by GAC focus on issues which reach beyond the extractive sector. For example, Mr. Craig led a project to strengthen the justice systems in Honduras, Guatemala and El Salvador, particularly by professionalizing police services. This project was funded through Canada’s Anti-Crime Capacity Building Program.^[191] Other projects are designed specifically to strengthen locals’ ability to benefit from existing resource extraction projects. For example, projects under GAC’s Andean Regional Initiative in Bolivia, Colombia and Peru focus on building institutional capacity to plan and implement sustainable development investments. They also provide training and technical assistance on CSR best practices, and support local initiatives aimed at promoting sustainable community development.[192]

As such, the Subcommittee recommends:

Recommendation 1 – Reducing Negative Impacts of Resource Extraction Projects and More Evenly Distributing their Benefits

That the Government of Canada support development partners that enable locals to benefit from resource extraction projects and mitigate their potential negative social and environmental impacts, particularly among indigenous and agriculture-oriented communities, women, and other vulnerable groups. The Government of Canada must also focus its diplomatic efforts on spreading the benefits and reducing negative impacts of private sector resource projects, including by enhancing efforts to document social conflict connected to resource extraction projects as well as the host government’s response.

Recommendation 2 – Ending Impunity for Human Rights Abuses by Prioritizing Good Governance

That the Government of Canada continue to support multilateral and development partners focused on combatting corruption, crime and impunity in Latin American host states, including by professionalizing police forces and strengthening justice systems. The Government of Canada should also leverage its diplomatic relationships to engage with host governments to address systemic causes of corruption and impunity.

Standards, sanctions and mechanisms of the CSR Strategy

As part of the Government of Canada’s commitment to promoting and advancing CSR guidance, the 2014 CSR Strategy encourages corporate adherence to international standards including the Voluntary Principles, the UN Guiding Principles on Business and Human Rights (the UN Guiding Principles) and the OECD Guidelines for Multinational Enterprises (MNEs) (the OECD Guidelines).[193]

Co-sponsored by Canada, the UN Guiding Principles were unanimously endorsed by the UN Human Rights Council in 2011.^[194] They are based on a three-pillar framework: the state duty to protect against human rights abuses by third parties, including business; the corporate responsibility to respect human rights; and greater access to victims to effective remedy, both judicial and non-judicial. The UN Working Group on Business and Human Rights is charged with the UN Guiding Principles’ promotion and implementation.^[195]

The OECD Guidelines are non-binding recommendations for responsible business conduct addressed by governments to MNEs operating in, or from, adhering countries. According to Mr. Gillard, 48 governments have adhered to the OECD Guidelines, spanning approximately 85% of global foreign direct investment and a large share of global trade.^[196] The OECD Guidelines cover topics such as human rights, labour practices, environment, and corruption. The human rights chapter is consistent with the UN Guiding Principles.^[197]

The 2014 CSR Strategy included two “dialogue facilitation mechanisms” designed to assist in the resolution of disputes between communities and Canadian extractive companies. The first mechanism is an NCP, which is required of governments that adhere to the OECD Guidelines. The NCP serves to promote the OECD Guidelines among MNEs and contribute to the resolution of disputes arising from alleged non-compliance with the OECD Guidelines.[198] The second mechanism is the Office of the CSR Counsellor, which has a mainly preventative role and is offered to parties at the early stages of a dispute. More complicated cases that require formal mediation are referred by the CSR Counsellor to the Canadian NCP.[199] Until the end of his mandate in May 2018, the CSR Counsellor provided frank advice and made recommendations to the Minister of International Trade, to whom he reported directly.^[200] The Office of the CSR Counsellor employed two junior technical staff and functioned with “limited administrative and budgetary support.”[201] On 17 January 2018, the Government of Canada announced the establishment of a the Office of the Canadian Ombudsperson, as well as a multi‑stakeholder Advisory Body on Responsible Business Conduct.[202] The functions of the Office of the CSR Counsellor will be folded into the mandate of the Canadian Ombudsperson. The functions of Canada’s NCP will not cease.^[203] The functions, strengths and weaknesses of Canada’s NCP as well as the Office of the CSR Counsellor are discussed in more detail below.

Canada’s National Contact Point under the OECD Guidelines for Multinational Enterprises

Canada’s NCP is an inter-departmental committee including, at present, GAC, Environment and Climate Change Canada, Innovation, Science and Economic Development Canada, Employment and Social Development Canada, Indigenous and Northern Affairs Canada, and Finance Canada.^[204] According to Mr. McMullen, the inter-departmental nature of the NCP provides “access to a broad range of resources, expertise, and experience, whether it is on issues of environment, labour, human rights, tax, or indigenous rights.”^[205]

In accordance with the OECD Guidelines, the Canadian NCP has a dual function. First, it promotes and encourages adherence to the OECD Guidelines among Canadian businesses.^[206] Second, it hears cases, known as “specific instances,” that can be brought by anyone, although they are typically brought by NGOs, trade unions, or individuals whose rights under the OECD Guidelines have been affected.^[207] Generally, Canada’s NCP deals with issues relating to MNEs operating in Canada, as well as Canadian MNEs operating in countries that do not have their own NCP.^[208]

Submissions to NCPs are first reviewed to determine whether they merit further examination based on the Guidelines. If the submission qualifies, the NCP offers a “forum for discussion,” which can be professional mediation or a dialogue process; in all cases, stated Ms. Kathryn Dovey of the OECD, “it’s very much a non-judicial exercise.”^[209] The NCP reports publicly cases after they are closed.^[210] The average adjudication process takes 12 months: three months for the initial review of the case’s merits, six months for the mediation process, and three months to close the case.^[211]

Mr. Pesce praised the Canadian NCP as “best in class.”^[212] Mr. Imai and Ms. Gardner, however, took issue with the fact that the Canadian NCP, “unlike other OECD NCPs in participating states,” does not engage in the investigation of a complaint. As a result, if both parties refuse to engage in mediation, the case is closed without further investigation.^[213] This was demonstrated by a 2015 NCP case that involved a Canadian subsidiary of a Chinese state-owned mining company. The Canadian subsidiary refused to participate in the NCP process. Mr. Imai and Ms. Gardner concluded:

The only sanction available to the NCP was to suggest that in the future, the Canadian government may take into consideration the lack of participation in the process, in deciding whether the Canadian embassy would provide support to China Gold. Since the parent company was a Chinese state-owned enterprise, it would not need any diplomatic support from the Canadian embassy. Thus, the sanction mentioned by the NCP was meaningless.^[214]

The Office of the Extractive Sector Corporate Social Responsibility Counsellor

As previously noted, the functions of the Office of the Extractive CSR Counsellor will eventually be folded into the mandate of the Canadian Ombudsperson.[215] According to Mr. Davidson, the Office of the CSR Counsellor took a “proactive and preventative approach to promoting good practice and minimizing the risk of conflict around extractive projects.”^[216] The CSR Counsellor’s duties include public speaking engagements, meeting with companies and other stakeholders to explain and promote Canada’s CSR objectives, and contacting companies directly if a situation at a project site comes to his attention.^[217] The Office of the CSR Counsellor also served as a resource on CSR good practice for companies, government representatives and civil society, which includes responding to requests for advice from these stakeholders regarding specific situations.^[218] Mr. Davidson expressed his desire to see a hybrid approach, with more resources put towards a preventative mechanism, as well as stronger regulatory and judicial oversight mechanisms.[219]

In his role as CSR Counsellor, Mr. Davidson visited six Latin American countries: Peru, Honduras, Guatemala, Panama, Argentina and Colombia. These visits included consultations with relevant stakeholders as well as project site visits to learn “how different Canadian companies address social and environmental issues and impacts, how they build relationships with local communities and government authorities, and how local stakeholders and impacted peoples perceive and respond to their presence.”^[220] In Colombia, Mr. Davidson’s office coordinated and moderated a multi-stakeholder dialogue on the roles and responsibilities of government, civil society and the extractive sector in post-conflict reconciliation and peacebuilding.^[221] In Honduras, Mr. Davidson and the Canadian ambassador met with community representatives, NGOs, the national human rights commissioner and project site managers to find solutions to potential disputes between communities and Canadian extractive companies.^[222]

As previously stated, the CSR Counsellor was also empowered to review allegations against Canadian extractive sector companies and the responses of the company involved. Participation in the review process was voluntary and required express written consent from the parties. The Counsellor’s website indicates that the Review Process:

emphasizes dialogue and constructive dispute resolution. It is about people with different views and interests working together to find mutually acceptable solutions to resolve disputes or issues. The Office of the CSR Counsellor is a third party neutral in disputes. This means that we help people find solutions, but we do not take sides.^[223]

Mr. Davidson informed the Subcommittee that the Office for the Extractive CSR Counsellor has had six requests for review, all of which were completed before the 2014 departure of Canada’s previous CSR Counsellor, Dr. Marketa Evans.^[224] Of the six requests for review, three were terminated after the companies withdrew from the dispute resolution process.^[225] While praising the CSR Counsellor’s efforts in engaging with corporations, Dr. Haslam noted that the 2014 CSR Strategy did not provide the CSR Counsellor with the requisite “disciplinary instruments” to be truly effective.^[226]

Recommendation 3 - Maintaining the Preventative Role of the Extractive Sector CSR Counsellor

That the Government of Canada ensure that the preventative and educational aspects of the role of the Extractive Sector CSR Counsellor, including meetings with industry and other stakeholders in Canada and in Latin America to promote Canadian CSR mechanisms, are maintained under the office of the Canadian Ombudsperson for Responsible Enterprise.

Assessing the past effectiveness of Canada’s CSR Mechanisms

Mr. Pesce expressed concern about the lack of coherence and clarity between the various international, national and corporate CSR mechanisms, which can cause confusion on the ground and become “the perfect excuse for inaction.”[227] Furthermore, he emphasized the need for harmonization of Canadian dispute-resolution mechanisms in line with the UN Guiding Principles, as well as improved monitoring of extractive companies' operations abroad. He also stated that the 2014 CSR Strategy should be clearer in its expectations of extractive companies, particularly regarding human rights due diligence. He suggested that Canada engage in sharing best practices with other OECD countries to continue to make progress in this area.^[228]

Under the 2014 CSR Strategy, Canadian extractive companies receive incentives for compliance and repercussions for non-compliance.[229] Compliance incentives include enhanced diplomatic support through the Trade Commissioner Service. Non-compliance, including non‑participation in the dialogue facilitation procedures of the CSR Counsellor and the NCP, may result in withdrawal of Trade Commissioner services and access to funding from Export Development Canada on the advice of the CSR Counsellor to the Minister of International Trade.^[230] Witnesses noted that sanctions are only applied when a firm is not acting in “good faith.”^[231] Mr. McMullen stated that Canada makes “aggressive use” of this sanction function “to lever and encourage good faith efforts by firms to work with impacted parties to remedy problems.”^[232] To date, the Government of Canada has sanctioned one company under this mechanism, although it has “threatened sanction to many companies to help encourage their good faith efforts to resolve issues.”^[233]

Canada’s use of sanctions for non-compliance is “unique in the world”^[234] and has been hailed by John Ruggie, author of the UN Guiding Principles on Business and Human Rights, as “globally leading.”^[235] However, Dr. Webber argued that the 2014 CSR Strategy’s consequences for non‑compliance do not go far enough “in holding Canadian companies accountable for their activities abroad, precisely because the maximum penalty is a displacement of diplomatic support. It’s a voluntary schema.”^[236]

The Subcommittee learned that communities affected by Canadian extractive projects may be unaware of the existence of the OECD NCP and the Office of the CSR Counsellor. Ms. Dovey, for example, conceded that the OECD NCP is a “lesser-known mechanism” despite its potential to mediate and resolve complex disputes.[237] The Office of the CSR Counsellor has not received a request for review of a dispute between communities and a Canadian extractive company since 2013.[238]

Mr. Pesce recounted an experience training union leaders in Latin America and finding that they were unaware of the Canadian grievance mechanisms available to them. He noted that these were workers from strong unions, which indicates that this lack of awareness is likely more pervasive further down the supply chain and away from the larger subsidiaries. Mr. Pesce emphasized that if workers and communities are unaware of mechanisms available to them, then those mechanisms fail regardless of their effectiveness when actually used.^[239]

Some alleged victims of human rights abuses surrounding natural resource extraction in Latin America have sought redress through the Canadian court system rather than the CSR mechanisms that Canada has established. For example, three lawsuits have been filed against Canadian extractive companies in British Columbia and Ontario by affected indigenous communities in Latin America. Thus far, the courts have found that they have jurisdiction to hear these cases despite the fact that the alleged abuses occurred outside of Canada.^[240] Seeking redress in Canadian courts is difficult for affected communities given the amount of time and expense involved in the judicial process.^[241] This stands in stark contrast to the non-judicial and less formal NCP and CSR Counsellor mechanisms.

Mr. Cheatle had expressed his desire for the establishment of a multi-stakeholder advisory committee to “provide recommendations to government on the design and functions of the ombudsperson's office, and other options for how the Government of Canada could facilitate access to remedy.”^[242] According to Mr. Cheatle, before the Government of Canada can engage on meaningful reform, it “should firmly establish the facts regarding alleged community conflict, and… a rigorous analysis of the existing mechanisms for remedy should also be undertaken” in order to identify “any real versus perceived gaps within the existing [remedy framework]….”^[243]

As such, the Subcommittee recommends:

Recommendation 4 – Critically Evaluating Past Performance of Canada’s Extractive Sector CSR Strategy

That the Government of Canada, in collaboration with Canada’s existing and new CSR mechanisms, as well as relevant officials from Canada’s Trade Commissioner Service, proactively assess the clarity and coherence of CSR standards with which the private sector is expected to comply. The Government of Canada should also critically evaluate the effectiveness of existing sanctions for non-compliance with CSR standards and strengthen sanctions where possible. This evaluation should be accompanied by a a comprehensive and authoritative account of human rights concerns connected to resource extraction projects in Latin America and how they have been addressed to date.

Recommendation 5 – Prioritizing Awareness of Canada’s CSR mechanisms

That the Government of Canada prioritize raising awareness of the different services of the OECD National Contact Point and the Canadian Ombudsperson for Responsible Enterprise, particularly among the most vulnerable groups affected by Canadian resource extraction.

Creating the Office of an Ombudsperson

There was broad agreement among witnesses from industry and civil society that the Government of Canada should establish an office of an ombudsperson with greater investigative powers than the CSR Counsellor and the NCP.^[244] According to Mr. Davidson: “[An ombudsperson] would mean more dedicated resources, a better implementing architecture for carrying out the mandate that currently exists, and a stronger architecture that provides the ombudsperson or the counsellor with more resources to work with.”^[245] Mr. Cheatle agreed, stating that an ombudsperson would have more investigative powers and “a slightly sterner role” than the CSR Counsellor, who he viewed as operating primarily in the area of prevention.^[246] However, witnesses offered different perspectives on what mandate or powers an ombudsperson should have. As previously stated, the Canadian Ombudsperson is not yet operational, nor has its mandate been formalized via an Order in Council. The Government of Canada announced that such steps will be taken “as soon as possible,” although a date is not provided.^[247] The discussion to follow will compare the mandate and powers which the Government of Canada has proposed to provide the Canadian Ombudsperson with the hopes and concerns witnesses expressed regarding the establishment of such an office.

Mr. Gratton and Mr. Cheatle recommended that a CSR ombudsperson’s purview should extend beyond the extractive sector to all sectors.^[248] Mr. Gratton noted that this would demonstrate that “Canada is truly committed to promoting business and human rights.”^[249] If the Government of Canada follows through on its announcement, the Canadian Ombudsperson would initially focus on complaints regarding the mining, and oil and gas industries, as well as the garment industry, but would cover other sectors after the first year.^[250] Mr. Gratton cautioned that an ombudsperson with a mandate to cover a wide variety of sectors would require additional resources for an expanded role.^[251]

As announced, the Canadian Ombudsperson will be mandated to address complaints related to allegations of human rights abuse(s) arising from a Canadian company’s operations abroad. According to publicly available information regarding this new mechanism, the Canadian Ombudsperson may choose to direct complaints to the NCP for mediation, but will have the mandate to conduct investigations, make recommendations to companies, monitor implementation of those recommendations, and report publicly throughout the process. The Canadian Ombudsperson would have the authority to recommend sanctions for companies found to be involved in wrongdoing, which remain unchanged from the 2014 CSR Strategy (namely, the withdrawal of trade advocacy and future Export Development Canada support). In addition to responding to complaints, the Canadian Ombudsperson would be empowered to investigate cases on their own initiative, and would have the power to compel witnesses and documents.^[252] Mr. Gratton emphasized that the primary purpose of an ombudsperson “should not be focused on assigning blame or castigating one party or another, particularly since in many cases, conflicts may not be the result of intentional or deliberate action, nor due to a single party. Rather, the focus should be on resolving those conflicts.”^[253] Mr. Cheatle held that an ombudsperson should also protect “responsible companies and Canada’s reputation against frivolous or vexatious claims.”^[254]

The Canadian Ombudsperson announced by the Government of Canada would have discretion to undertake independent fact-finding as well as joint investigations.^[255] Mr. Gratton and Mr. Cheatle took the view that an ombudsperson should carry out investigations via a joint fact-finding process.^[256] Such a process would involve a neutral party bringing together the complainant and the alleged instigator of the conflict to: “(a) reach agreement on the nature of the conflict; (b) find agreement on how to investigate it; (c) get agreement on who should conduct the investigation; and (d) a determination of appropriate remedies.”^[257] According to Mr. Gratton, joint fact-finding works as it brings both parties together at the beginning, “thus creating ownership of outcomes and reducing polarization.”^[258] An independent fact-finding process, in Mr. Gratton’s view, would be counterproductive as independent findings without consultation from relevant stakeholders would likely not be recognized by either party.^[259] Mr. Imai and Ms. Gardner rejected this idea. Ms. Gardner emphasized that the office of an ombudsperson “has to be neutral and appear to be neutral to be effective.”^[260] In Mr. Imai’s view, involving extractive companies in the investigative process would slow down the investigation if these companies denied or contested the accusations against them. He impressed upon the Subcommittee the value of independent fact-finding whereby an ombudsperson could pursue an investigation without requiring approval from the parties to the case.^[261]

As such, the Subcommittee recommends:

Recommendation 6 – Appoint a Canadian Ombudsperson for Responsible Enterprise

That the Government of Canada follow through on its promise to appoint a Canadian Ombudsperson for Responsible Enterprise as expeditiously as possible, and ensure that the appointee has deep knowledge of the human rights concerns regarding Canadian resource extraction projects.

Conclusion

The Canadian extractive sector is a global leader, representing a large share of Canada’s foreign investment, particularly in Latin America. Canada has a long history of engagement with the countries of Latin America and has fostered a good reputation in the region.[262] However, reports of human rights abuses and social conflict in local communities situated near Canadian extraction projects places Canadian firms’ – and Canada’s – reputation at risk.

Maintaining Canadian investments in the region is important for continuing to foster relationships with host states and contributing to much-needed economic development.[263] However, corporations should under no circumstances take advantage of local conditions, such as weak governance and enforcement capacity, to increase profits at the expense of human rights. As emphasized by Mr. Pesce, corporations must apply the same standards as they do in Canada to all of their operations abroad, regardless of the host state environment.[264]

Extractive companies that choose to invest in developing countries with weak institutions and diminished rule of law face unique risks and challenges. The private sector and the Government of Canada have acknowledged this reality by developing CSR mechanisms to advise corporations on best practices and resolve disputes when they arise. Despite these efforts, instances of social conflict and human rights abuses surrounding Canadian extraction projects abroad have persisted. Dr. Haslam noted that CSR initiatives are merely management tools which can secure community support. They are “not a panacea” and do not address the underlying grievances or human rights abuses perpetrated against opponents of a project.[265] With this in mind, the Subcommittee has recommended that the Government of Canada focus its development and diplomacy initiatives in Latin America on addressing the root causes behind human rights abuses surrounding natural resource extraction, including unequal distribution of benefits, lack of effective regulation, and systemic corruption.

Witnesses referred to elements of Canada’s 2014 CSR Strategy as “best in class”[266] and “unique in the world.”[267] However, concerns were repeatedly raised regarding its effectiveness as well as gaps in its implementation. Several witnesses recommended the creation of an office of an ombudsperson with the authority to investigate instances of social conflict and human rights abuses surrounding Canadian extractive firms operating abroad, and the Government of Canada announced the creation of the office of a Canadian Ombudsman shortly after the completion of testimony. However, the conversation does not end there. The mechanisms within Canada’s 2014 CSR Strategy may not be being used to their fullest potential, as vulnerable groups are simply not aware of them. For example, both the CSR Counsellor and the OECD NCP have mediated relatively few disputes when compared to the prevalence of conflict surrounding Canadian extraction projects. Witnesses also expressed concern regarding the coherence of Canada’s CSR strategy with other international and internal standards, and the effectiveness of existing sanctions for non-compliance with accepted CSR guidance. The Government of Canada must ensure that existing and new CSR mechanisms address these issues.

As the Canadian Ombudsperson’s mandate has the potential to extend beyond the resource extraction sector, the Subcommittee believes that human rights concerns surrounding resource extraction in Latin America must remain high on the agenda. Therefore, it is important to maintain the preventative and educational aspects of the role of the CSR Counsellor in the new mandate of the Canadian Ombudsperson, and to ensure that appointees have a deep knowledge of the human rights concerns surrounding resource extraction.

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. Such a dynamic response is needed given the complexity of the problem and the involvement of numerous stakeholders, including civil society, Canadian extractive firms, and local governments. 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.