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The Trust Spiral

Restoring faith in the media

Dear Prudence

A life of exuberance and eccentricity

Who’s Afraid of Alice Munro?

A long-awaited biography gives the facts, but not the mystery, behind this writer’s genius

All That Glitters

What corporate social responsibility is not

Pearl Eliadis

Corporate Social Responsibility and Canada’s Role in Africa’s Extractive Sectors

Edited by Nathan Andrews and J. Andrew Grant

University of Toronto Press

320 pages, hardcover, softcover, and ebook

As John Lennon put it, imagine there’s no countries. Well, not no countries, exactly, but perhaps only facsimiles of states that bargain away bits of their sovereignty to international global governance actors, including transnational corporations. In exchange, they harvest revenues and, hopefully, the sustained wealth generated by activities like exploration, mining, and drilling on their territory. Legitimacy-hungry transnationals, for their part, require their golden ticket to operate — their social licence. They get it through activities that “count” as corporate social responsibility and responsible business practices.

In fact, many of these activities look an awful lot like the sorts of things governments are supposed to do. That is a central theme that thrums through Corporate Social Responsibility and Canada’s Role in Africa’s Extractive Sectors. Think of social licence as a private-sector version of Rousseau’s social contract. It’s more than the formal permission to operate in a host country; it confers some traction on the climb to ethically higher ground by placating the folks back home and helping to secure the goodwill of mining-affected communities. With a wave of the social responsibility wand, transnationals, especially the larger ones, are transformed from mere economic agents to powerful social and political actors. They are not alone in their endeavours, because they exist in thick networks of global governance alongside international and regional trade organizations, industry associations, NGOs, the OECD, the UN, and a host of other stakeholders.

All these governance actors and stakeholders place significant pressure on African countries to constrain their own sovereign policy space, argues Wilfrid Laurier University’s Paula Butler. In discussing CSR and local procurement rules, she details the role of Engineers without Borders Canada and other NGOs that have helped to facilitate the entry of transnationals into African countries. While these groups have developed productive relationships with companies, they tend to lack comparable relations with the mining-affected communities themselves.

Butler’s chapter is one of twelve in Corporate Social Responsibility, which emerged from a 2016 workshop at Queen’s University. It features ­senior and junior academics who assess CSR and its relationship to foreign policy, international development, and human security. Its editors, Nathan Andrews and J. Andrew Grant, of the University of Northern British Columbia and Queen’s, respectively, have deliberately rejected a binary debate throughout the volume, moving beyond the good corp–bad corp approach toward a more nuanced discussion. The sheer scale and complexity of Canadian extractive activities make a compelling case for a more granular treatment of the entire sector, they argue. In fact, Canadian-headquartered mining companies hold assets in thirty-six African countries. According to Nketti Johnston-Taylor of the University of Calgary, they are active in forty-three African countries altogether, making Canada a dominant face of the sector throughout the ­continent.

Whitewashing the inequities of mining through corporate social responsibility.

Henry Sandham / The Century Illustrated Monthly, 1883 / Wikimedia Commons

Here we must sound an obligatory refrain of “of course”: Each company is different, of course. And, of course, CSR standards have evolved and expanded considerably over time. The scope and quality of CSR practices also vary considerably, of course. The extent and genuineness of any company’s stakeholder engagement tend to track its size — depending on whether it is large, mid-tier, or junior. And, of course, each country is distinct, with its own legal and political cultures. Generalizing about Africa or even sub-Saharan Africa is, of course, a fraught exercise.

Get beyond the refrain, though, and we can trace the genesis of the governance giveaway by mineral-rich countries in exchange for CSR swag to the structural adjustment programs and deregulation of the 1990s, especially the World Bank’s Strategy for African Mining, issued in 1992. Jason J. McSparren, who holds a PhD in global governance, describes it as “an export-led development plan that encouraged African governments to overhaul national mining legislation.” It provided generous incentives for exploration and helped reduce “government intervention in the sector.” Many governments responded to the neo-liberal policies by opening their borders to foreign investment, including from Canada. In 2016, Africa was the global region with the largest presence of Canadian assets outside the Americas — some $28.6 billion worth.

Corporate social responsibility encompasses an ever-expanding range of glittering projects and initiatives that sweeten deals in developing countries. There is no single global norm for good behaviour, but rather a maze of national strategies, best practices, frameworks, initiatives, and guidelines: the UN Global Compact (2000); the Voluntary Principles on Security and Human Rights (2000); the Extractive Industries Transparency Initiative (2002); the UN Guiding Principles on Business and Human Rights (endorsed in 2011); the OECD’s Guidelines for Multinational Enterprises (2011) with guidance on disclosure, employee and industrial relations, human rights, the environment, and bribery (2011); and the OECD Due Diligence Guidance for Responsible Business Conduct (2018). There are also sustainable development frameworks, the Africa Mining Vision, and processes for conflict minerals, like the Kimberley Process Certification Scheme for diamonds. Canada has two separate mechanisms for conflict resolution, both toothless, and guidance is provided by Global Affairs Canada’s CSR Standards Navigation Tool: 124 pages on environmental, governance, and labour standards and applicable human rights for extractive companies operating abroad.

Considering the range of CSR projects and initiatives, it’s little surprise that Corporate Social Responsibility is an expansive book — one that gives voice to numerous African studies scholars. Collectively, it is careful in the conclusions it draws; one suspects this caution is linked to the litigation risks involved in writing about large ­transnationals and alleged malpractice. Indeed, events in the first two decades of Canadian CSR activities do not make for pleasant reading.

Consider a suppressed 2009 study. Paid for by the Prospectors and Developers Association of Canada, and uncovered by MiningWatch Canada and the Toronto Star, it found that Canadian companies accounted for one-third of the 171 companies identified in “incidents” involving mining and exploration companies over the previous decade. Canadian firms have also been associated with attacks on activists and local artisanal miners, the displacement and dispossession of villages, unpaid compensation for expropriation, degraded land, corruption, and forced labour. It is, as former Supreme Court justice Ian Binnie once observed, an “undistinguished record.”

Aware of this record, Ottawa did what Ottawa does: it commissioned reports and consultations, resulting in a call for mandatory CSR standards and an ombudsperson to address complaints. Instead of going the mandatory route, the government under Stephen Harper unfurled a voluntary strategy in 2009, titled Building the Canadian Advantage and billed as “a CSR strategy for the international extractive sector.” Arguably, this national strategy was better than nothing, although some argue voluntary standards may actually do harm because their very existence can pre-empt legislative change. Regardless, although the 2009 strategy created the Office of the Extractive Sector CSR Counsellor, the overall exercise was panned by civil society as ineffective.

Five years later, the Conservatives updated the strategy, rebranded as Doing Business the Canadian Way: A Strategy to Advance CSR in Canada’s Extractive Sector Abroad. (Given how the “Canadian way” was working out for several African countries, the title was somewhat tone deaf.) Jeffrey Davidson, who served as CSR counsellor from 2015 to 2018, wrote the foreword to Corporate Social Responsibility. He underscores the internal contradictions in policy and practice at the time, as well as the conflicting information about what was really happening on the ground and what it meant. The 2014 strategy did contain a threat to withdraw “economic diplomacy” measures for corporate misbehaviour, but it was a weak one: as long as companies remained at the mediation table, government benefits would continue to flow, no matter what human rights abuses had occurred. Moreover, withheld diplomacy will rarely affect companies that do not significantly rely on the government in the first place, argue Uwafiokun Idemudia, W. R. Nadège Compaoré, and Cynthia Kwakyewah.

Canadian CSR strategies claim that they go “over and above legal requirements,” a boast imbued with truthiness. Except for anti-corruption measures in Canada, which are legislated, there are few statutory standards for corporate human rights and environmental violations overseas, nor is there a binding mandatory complaints process. Companies can bravely go where no Canadian laws have gone before with very little effort indeed.

There are also numerous “governance gaps” between business interests, on the one hand, and human rights, development, and environmental responsibilities, on the other. As this book shows, companies are subject to binding national rules in their host countries; in Canada and in international law, however, legally binding norms are little more than unicorns. These governance gaps cannot be addressed simply by minding them: they are yawning chasms. (It is actually perplexing that this otherwise well-researched volume does not discuss a most significant contribution on the role of legal norms, Penelope Simons and Audrey Macklin’s The Governance Gap: Extractive Industries, Human Rights, and the Home State Advantage, from 2014.)

It is difficult to overstate the resistance to mandatory rules in the extractive sectors, even among progressives. In fall 2018, I attended a meeting of “global Canadian leaders” in Montreal, which promised a deep dive into concrete ways to strengthen open societies and liberal democracies around the world. In one breakout session, I found myself in a group that included a Captain of Extractive Industry, an International Man of Corporate Mystery, and a prominent Public Policy Guru, among others. As we introduced ourselves, I said I’d love to discuss the role of Canadian extractive industries and how companies could show leadership by accepting a legal framework for their overseas activities instead of lobbying ferociously against transnational justice. The Policy Guru leaned forward and said I was being “condescending.”

Still, I thought that Nevsun Resources would be an illustrative example. In late 2014, three Eritrean workers sued Nevsun in British Columbia, claiming they were subject to forced labour and torture when building a mine in which the Canadian-based company held an interest. (I was familiar with the case, as I had been part of an NGO that supported the plaintiffs.) Numerous preliminary motions had caused years of delay in Canada, and recourse before the dysfunctional Eritrean courts was not an option. As I mentioned this, a sullen silence fell over the group. Our co-facilitator tried to move things along: Surely this sort of thing was more within the purview of states, not corporations?

Nevsun fought hard to prevent the case from being heard at all in Canada, a fight that it lost twice. A decision from the Supreme Court is pending on fundamental questions, including whether bedrock international human rights prohibitions against practices like torture and slavery can ground legal responsibilities for transnationals. The case is being watched closely around the world, but it receives scant mention in the Andrews-Grant book. (One contributor, Charis Enns, does mention that Nevsun failed to uphold voluntary CSR principles in its operating sites, despite pronouncements to the contrary in corporate reports.) But the point is that corporations do their best to keep this sort of thing away from Canadian eyes and Canadian courts.

In January 2018, the Liberals raised hopes that we were getting closer to a regulatory framework with teeth when the minister of international trade diversification, François-Philippe Champagne, announced a new position: the Canadian ombudsperson for responsible enterprise, to be known as CORE. This role would take the form of an arm’s-length watchdog with investigative powers. The government has also established a multi-stakeholder advisory body on responsible business conduct to advise the minister. Julia Sánchez, an alternate member of the advisory body, was initially enthusiastic. In the Johnston-Taylor chapter, Sánchez is quoted as saying CORE is a “really momentous” global first.*

Here, the story gets interesting. Jim Carr replaced Champagne as minister, and the corporate lobby got going. The early promises fizzled. It would take sixteen months to name the first ombudsperson, who was hired as a special adviser to the minister and not a fully independent officer or agent of Parliament. Almost two years later, CORE still lacks mandatory, binding powers to handle complaints. In protest, the entire contingent of fourteen civil society and labour union representatives resigned from the advisory body in July 2019, including Sánchez. Only government and industry representatives remain. The disillusionment is shared by others. “If you ask me about my frame of mind in relation to CORE today,” Alex Neve, head of Amnesty International Canada and former vice-chair of the advisory body, said over the phone, “it would be ‘deeply disappointed.’ ”

Responsible Canadian companies do exist, and this book includes positive stories and contributions. But the points of light appear dim before the sombre spectre of repeated studies that fail to find overall improvements for mining-affected communities in sustained economic development or better livelihoods. Indeed, criticisms by Canadian civil society about inadequate transparency, efficacy, and enforcement present a serious challenge to the legitimacy of the Voluntary Principles on Security and Human Rights, argues the University of Sheffield’s Charis Enns.

Yet maybe we have been asking ourselves the wrong questions all along. CSR and its attendant “shared value opportunities” may simply have traded “bloated weak states [for] small weak states that were unable to monitor and check malpractice by [transnational corporations] and control corruption,” writes Johnston-Taylor, a political scientist who grew up in Sierra Leone. The real issue may not be whether particular companies, policies, or projects are good or bad — or even whether CSR has worked. It may be that CSR has actually displaced state accountability for basic social goods like human rights, development, and environment protection — that it has actually undermined the formation of fully functioning democracies.

On the whole, Corporate Social Responsibility and Canada’s Role in Africa’s Extractive Sectors invites us to look at deeper structural problems and reframe many of the issues around CSR. As Bonnie Campbell, a professor at the Université du Québec à Montréal, puts it:

If one takes a longer-term perspective, the central issue is not only to determine how mining activities can be developed in a sustainable manner, but, above all, how mines, minerals, and metals can contribute to the economic and social development of the regions and countries concerned in a more sustainable and equitable manner.

Most Canadian companies are not designed for intergenerational equity. They operate overseas through tangles of affiliates designed to sidestep legal responsibility. A Canadian board of directors is under no legal duty to consider any interests other than those of the corporation itself, according to the Supreme Court. Recent changes to federal law mean that residents of mining-affected communities a world away may be considered, but they don’t have to be.

From this vantage point, social licence acquired through CSR no longer looks very golden. By ­placing corporations directly into contact with communities they do not represent — and with people to whom they are not fully accountable — CSR and related principles may well increase the reputational risks for governments and companies, the likelihood of conflict, and possibilities for long-term social and economic disruption.

The print edition of the November issue suggested Johnston-Taylor interviewed Sánchez directly. In fact, they quoted her from an existing source. The magazine regrets any confusion.

Pearl Eliadis went on three UN missions to Rwanda in the aftermath of the 1994 genocide. She practises law in Montreal.

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