Some argue that the expansion of industry responsibility for human rights is disastrous to the business model, but most players realize profits at the expense of corrupt behaviour, environmental degradation or in violation of human rights are no longer tolerable.
The Fenix nickel mine that once belonged to a subsidiary of Hudbay Mineral Inc., a Canadian mining company, has been involved in multiple lawsuits, in El Estor, Guatemala. “Today, a social license (by businesses) is slowly becoming a norm, particularly for mining companies who need acceptance from local communities in order to carry out their extractive processes,” writes Penny Collenette. (ADRIANA ZEHBRAUSKAS / NYT)
Back in the day, business simply required a legal license to operate. The “corporate veil” was rarely pierced as management expected to run its operations with little outside interference.
But times have changed and the business model has been forced to reach out, not only to stakeholders, but to civil society. The concept of voluntary corporate social responsibility grew simultaneously with the growth of global supply chains as consumers became aware that cheaper goods often meant the cost of individual safety or health.
In addition, rapid development by multinationals without respectful community consultation led to murder, violence and protests. Today, a social license is slowly becoming a norm, particularly for mining companies who need acceptance from local communities in order to carry out their extractive processes.
Some will argue that the expansion of industry responsibility is disastrous to the business model itself. But most realize profits at the expense of corrupt behaviour, environmental degradation or in violation of human rights are no longer tolerable.
To that end, three consultations regarding the role and activities of corporations, both at home and abroad, are under discussion in Ottawa.
Previous efforts have failed, but the expectations are high for the appointment of an independent ombudsperson for the extractive sector. Long championed by John McKay, MP for Scarborough Guildwood, the anticipation is that the office will be well resourced and have strong investigatory powers.
Secondly, activists are urging the Canadian government to adopt a national action plan regarding the interrelationship of business and human rights. Nearly 40 other countries are developing or have already developed plans to support the UN inspired guiding principles espoused by global governance guru John Ruggie of Harvard’s Kennedy School.
His multiyear study brilliantly resets global links by noting that it is a state’s duty to protect human rights, a corporation’s responsibility to respect human rights and a moral obligation on the part of all actors to provide access to justice and remedies to those whose rights have been violated.
Finding justice for victims is very difficult for both jurisdictional and governance reasons. Corporations often operate in countries with fragile democracies that do not respect the rule of law, while victims are unable to find a court with jurisdiction to hear their allegations.
Finally, the government must prevent corruption in its $20 billion per year procurement industry. According to a recent report, fraud in the procurement process ranks at 33 per cent, making it a major concern. This too has implications for human rights.
Just before the 2015 election, the Harper regime brought down the hammer on corporate transgressions of bribery and fraud. Strong guidelines were issued to ban corporations from bidding on government contracts for up to 10 years if they were found to have contravened legislation, such as the Corruption of Foreign Public Officials Act.
However, enforcement of these guidelines is difficult, time consuming and expensive to investigate, while fraud can spread like an octopus over multiple jurisdictions, making it difficult to pinpoint.
In addition, officials often lack resources. Speakers at a recent Ottawa conference expressed frustration that a number of high profile terrorism-related investigations diverted personnel and money from corporate crime examinations.
Is there a solution? Possibly.
The government is considering the use of deferred prosecutions agreements (DPAs), which are in place in the U.S. and the U.K., and more recently in France. A DPA does not replace a criminal prosecution, but rather acts as an additional tool for prosecutors.
Under the scheme, a corporation that has been charged must adhere to certain conditions, which may include significant fines, as well as independent monitoring, for a prescribed amount of time. If the business complies, charges will be withdrawn. If they don’t, the charges remain.
The idea of a company “getting off the hook” is repugnant, but there may be potential advantages. A DPA allows a company to carry on, saving the jobs of employees. It also reduces the blame for innocent employees as a company’s reputation is likely to take a hit.
Generally, offences that result in bodily harm, affect public safety or national security are ineligible for DPAs. Any crime that violates human rights should similarly be excluded.
Too often human rights concerns have been shoved out of the way in the busy intersection of business, law and politics. We can’t do that any longer. It’s time to put human rights in the driver’s seat. It’s time to give human rights a big green light.
Penny Collenette is an adjunct professor of law at the University of Ottawa and was a senior director of the Prime Minister’s Office for Jean Chrétien.