Thank you very much, Mr. Chairman.
I'm just taking advantage here of a computer failure on the part of my colleague, who graciously offered us the opening slot to speak while he prepares his notes by hand from memory.
Development and Peace is the official international development agency of the Catholic church in Canada. We were founded in 1967 by the Catholic bishops, and we have two mandates. One is to support projects to fight poverty in countries of the south. The other is to promote awareness of development issues among the Canadian population. We're a membership-based organization, and we have approximately 13,000 members from coast to coast across Canada. We are currently active in 33 countries abroad, with approximately 200 partnerships in all the major continental regions: Latin America, Africa, Asia, and the Middle East.
I want to speak today about our education and public engagement campaign that focused on extractive industries, and particularly in support of Bill .
Every year we conduct a thematic campaign related to particular development issues. We follow several key principles that are part of the values of the organization, looking to guide the awareness of the public in this campaign on resource extraction and management. The principles behind this campaign include a recognition of the sacredness of the earth, the need to share resources in a peaceful and sustainable manner that benefits the common good and respects the human rights of all, and the right of people to have control over decisions that affect their lives and communities.
We've intervened on this concern on a number of previous occasions. Over the past several years we've maintained a focus on the actions of Canadian mining companies in the global south and the need for mining companies to carry out their operations in a socially and environmentally responsible manner. In order to ensure that Canadian mining companies respect Canada's commitment to international standards for human rights and environmental law, we strongly believe that Bill C-300 should be adopted. Although this bill does not contain all the measures that were recommended by the final report of the national round tables in March 2007, it is the strongest answer to date that has been proposed to solve the problems that the process was attempting to address. We feel that this is a good and necessary step in the right direction.
As you are all aware from previous testimony, Canada is a major player in the international extractive industry, with significant investments abroad. The Toronto Stock Exchange is the most active mining exchange in the world. In 2008, 60% of the world's mining and exploration companies were listed in Canada.
Most of the Canadian mining companies behave responsibly. Those companies not only drive prosperity here at home; they also provide jobs, opportunities, and other benefits in local communities abroad. Unfortunately, some other companies give little or no importance to the impact of their operations on the living conditions of people in the south. There are documented cases of egregious disregard by Canadian companies operating in many countries, and these have been presented in previous testimony to this committee, notably on May 25 by the , and on October 8 by Mining Watch Canada.
Development and Peace is not against mining or the extractive industries, but we are calling for these industries to be held to account. There should be some avenue of recourse--an open, democratic, and just means--for those companies that do not meet a certain and necessary standard of behaviour, having been given ample opportunity to do so, to accept certain consequences. We believe that the inherently higher risk, danger, and pollution of this industry must be accompanied by a higher standard of care, responsibility, accountability, and a necessary presence in the legislative framework of this country.
I'm here today to speak for our members and represent the voices of many of our partners in developing countries who would be in favour of this bill. It is not just Canadians who are calling for more legislation and legal mechanisms that ensure mining companies are held accountable for their actions in the global south. The issue of responsibility of Canadian companies in extractive operations is something that is consistently raised by our partners in the countries where we work. I'll give you a couple of examples.
In 2008, in Cerro de Pasco, a mining centre in the Peruvian highlands, where Development and Peace has been working for almost 25 years, a local group downloaded our materials for our action campaign, translated them into Spanish, printed them, and received more than 3,500 signatures on the action cards, as well as organizing street theatre, public seminars, and advocacy activities on the mining activities in their community.
The same year, 4,400 residents of Canatuan, a community in the southern Philippines affected by the activities of the Canadian mining company TVI, signed our postcards and urged us to continue to lobby our government to appoint an ombudsperson to monitor the activities of Canadian mining companies operating abroad.
In Honduras, the Entre Mares mine, a subsidiary of Goldcorp, has been using cyanide to extract gold from the mine. This process is less expensive for the company, but the local population pays the real price. This process has caused 14 streams and rivers to dry up, contaminating surrounding lands, and has led to increased disease among the inhabitants and their livestock.
Our partner, Caritas Tegucigalpa, has provided us with testimony regarding the state of the local environment and the health of the people in the communities surrounding the mine. The mine uses 80 million tonnes of water per year, enough to meet the needs of 20,000 inhabitants, or over half the local population. After having rung up significant profits when the price of gold was at its height in 2008, Entre Mares is now preparing to shut down the mine. Caritas Tegucigalpa is asking Entre Mares to decontaminate the water, reforest the land. It must pay the fines, taxes, and other money due to national and local governments that have accumulated over the years. The company will also have to ensure that people who were displaced have titles proving they own their new land.
Caritas Tegucigalpa and Development and Peace are convinced the company has the means to close the mine responsibly, but will it be willing to do so? If a Canadian legal framework on the social responsibility of mining companies had been in place, it would have been possible to protect the rights of the people of the Siria Valley and to prevent these human and environmental tragedies from being repeated.
I have a quotation here from His Eminence Cardinal Oscar Andrés Rodríguez Maradiaga, who is the archbishop of the archdiocese of Tegucigalpa, in Honduras, and president of Caritas Internationalis. His quote:
||The increasingly frequent conflicts in different parts of the world between mining companies and affected communities, as well as the growing efforts of civil society organizations to demand stricter regulation, more rigorous monitoring, more responsible and transparent practices, are a sign that we can no longer continue to adhere solely to the logic of the business market that operates on the principle of the less invested, the greater the profits.
||We must move towards a vision of Corporate Social Responsibility, which cannot be reduced to corporate voluntarism alone but must be complemented by a social responsibility regulated by the state and international organizations. Such a redefinition is urgent, as the depletion of natural resources has been substantially accelerated partly because of the growing demand for precious minerals.
The passage of Bill C-300 into law would be a step in this necessary direction.
I want to speak for a minute about our campaign. Many of you members have likely received our cards or perhaps a visit by members of Development and Peace on this issue of corporate social responsibility. Over 500,000 Canadian citizens have demonstrated support for this bill by signing our action cards and letters as part of our public engagement campaign. These cards have all been delivered to the government. Over 120 meetings with MPs in their local ridings have been organized by members of Development and Peace across the country to discuss this issue. Citizens in all your ridings are concerned about this issue and would like to see the government respond adequately to the recommendations on the round table process on corporate social responsibility. This bill is the response they are looking for.
Our presentation today is the culmination of years of work and support from members of Development and Peace and those who have signed these cards. On May 12 of this year, Development and Peace delivered 38 boxes with action postcards addressed to Prime Minister Harper and signed through our recent campaign in 2008-09. Our supporters called on the Prime Minister to implement legal mechanisms to hold Canadian mining companies accountable for their actions in developing countries.
This last delivery of cards brings the total number of cards and letters delivered by us to the Government of Canada to more than half a million over the course of our three-year campaign. We began in 2006 and continued through 2009, each year accumulating between 150,000 and 200,000 cards.
With the last submission of cards, we asked that the create an independent ombudsperson office, appointed by Parliament, that can receive complaints about the activities of Canadian mining companies, investigate complaints, make recommendations in an effective manner, and operate in a transparent manner.
However, the hope that the round tables generated turned to disappointment as a result of the lack of response on the part of government to this collaborative, consensus-based report. Development and Peace decided to extend its education campaign on mining for one additional year to push that these recommendations be put into place. While we now have a response from the government, a corporate social responsibility strategy, we feel that it is not sufficient to adequately balance the opinions of all the parties involved. The passage of would be a necessary step in the follow-up to this process.
We acknowledge that the CSR strategy constitutes the first steps in the implementation of the round table recommendations. It means that the government acknowledges the need for improvement in the behaviour of some extractive companies working abroad in developing companies. This is a good thing, but it is not enough. would fill an important gap between what was recommended by the round table report and the government's response.
The Canadian government's response lacks teeth because it proposes voluntary action. It displaces the responsibility for irresponsible behaviour from mining companies to the governments of developing countries. In addition, the government's CSR strategy does not include strong sanctions for companies with damaging practices. Most importantly, there is no ombudsperson in the government's CSR strategy, as was recommended by the round tables; rather, there is a corporate social responsibility counsellor with limited functions, including hearing disputes and suggesting mediation if there is consent from all the parties. The position would be appointed by the Prime Minister's Office instead of by the Parliament of Canada.
There is no provision for an ombudsperson in , as private member's bills are not enabled to propose budgetary changes such as the creation of new positions. Development and Peace strongly urges the passage of this bill and strongly recommends that the government create a position of ombudsperson subsequent to the passage of the law, as was suggested by the round table report.
Yes, it's been a happy morning, having my computer fail me, but I'm very pleased to be here with you. I welcome the opportunity to share Amnesty International's views and recommendations with respect to .
Certainly for many decades the crucial global struggle to better safeguard and protect the human rights of women, men, and young people around the world has been very much focused on governments, both in the sense of governments being the ones who violate human rights and in the sense of governments being the ones who have to take action to protect human rights. However, in the past 10 to 15 years, there has been a multitude of ways in which the international system has recognized that it's vital to move beyond that sole focus on governments and to look at the various ways in which a range of non-state actors, certainly including companies, impact in very significant ways on human rights.
That's certainly very true when it comes to companies. On both sides of the coin, if they act responsibly, companies can in many important ways help promote and safeguard human rights and can strengthen human rights culture in the countries in which they operate; but when companies act in an irresponsible manner, we know only too well that their activities can and do, both directly and indirectly, cause or, at the very least, very significantly contribute to grave human rights violations.
Over the past decade, therefore, much has been done, a great deal of it in the broader context of trying to advance notions of corporate social responsibility. This takes us also into the realms of environmental protection and labour rights, for instance. To look at this issue of how to better ensure that we're getting the former company activities that will help promote human rights and avoiding the latter company activities that will cause or contribute to human rights violations, companies themselves have taken individual action, governments have launched some initiatives, and at the international level, initiatives like the UN Secretary General's Global Compact, work being done within the UN Human Rights Council, at the International Finance Corporation and other settings, things are being done as well.
What virtually all of those initiatives have in common are two significant shortcomings.
The first is that the human rights aspect of the various standards and principles that are being developed and adopted are, at best, vague, certainly almost always very general, and frequently even non-existent. For instance, the International Finance Corporation's performance standards, which are central to the government's new CSR strategy, are silent when it comes to human rights.
The second is that there is virtually nothing mandatory or obligatory about the expectation that companies will conform to these standards. The approach taken, rather, is to hope that companies will voluntarily choose to do so. As such, monitoring and enforcement mechanisms, where they exist, are generally weak and have no power to order or require companies to comply, but rather have power to suggest or advise.
In the broader human rights system, we've long learned that hopeful promises and voluntary commitments are not enough. It doesn't deliver the goods when it comes to protecting human rights. We, of course, want people, governments, to volunteer, but that doesn't get us to that end point of strong human rights protection. We know that only too well by looking at the international system. It's no different, and there's no reason it would be any different, when it comes to companies.
Much is at stake here. Company security forces, if not held to careful standards, can and do operate in ways--for instance, to dispel protests by indigenous communities in and around their operations--that lead to injuries and even the killing of protesters--the right to life at stake. Any irresponsible approach taken to how mining companies deal with their tailings and industrial waste may contaminate the local area and lead to serious violations of the right to health. Inappropriate use of company infrastructure by local security forces or failure to carefully monitor how company royalties are used by a government may simply exacerbate terrible wars and conflicts in regions where companies operate, again leading to civilian casualties.
So much is at stake, and clearly more is needed. That is why Amnesty International has so actively participated in all recent efforts to review and strengthen Canadian law, policy, and practice going back to 2005 when your subcommittee conducted its study. Certainly in 2006 we were an active participant in all cities that the round table process visited. We welcomed and endorsed the report prepared by the advisory group to that process and then, like many, waited anxiously for two years to see what the government's response would be.
While we do recognize and acknowledge that the government's new CSR strategy is a step forward, we are fundamentally disappointed with it with respect to the two key challenges I just mentioned earlier.
The first is the issue of standards. The new CSR strategy essentially takes up existing standards, the International Finance Corporation's standards, for instance, that I referred to earlier and a number of others that, combined, really give no more than scant or selective attention to human rights. The round table recommendation had called for new standards, very explicitly incorporating Canada's international human rights obligations.
The other concern is on the level of enforcement. The CSR strategy, of course, doesn't take up the call for strong, meaningful oversight and enforcement; gone is the idea of an ombudsman; gone is the idea of a tripartite compliance review committee. Instead, we have a CSR counsellor whose powers are really to advise and guide, and only to investigate if all are in agreement and with no real powers to sanction.
Bill offers Parliament an opportunity to move ahead on the human rights front, and as I say, it's very much needed. As such, Amnesty International certainly welcomes this initiative and calls on Parliament ultimately to pass it. There are ways in which we might have urged for it to be stronger, but we think it is the right step forward.
It's the right step forward when it comes to standards. It is so important that Bill calls for the development of international human rights standards, for instance, based on treaties that have been ratified by Canada, based on customary law. This is a crucial dimension that we think absolutely has to be key to any initiative in this area. We think that Bill C-300 moves us forward in a meaningful way when it comes to enforcement as well. The power and responsibility given to ministers to launch investigations when there are concerns about a company possibly falling short of these new standards and the associated possibility of that having implications for eligibility for EDC financing, for assistance from government diplomats and trade officers, and even of being a possible target for CPP investing, is all crucial.
So why not? What are the possible objections to a new approach that puts Canada's human rights obligations front and centre and endeavours to ensure there will be compliance with those standards? Most often what we hear is a fear that requiring Canadian companies to live up to what are sometimes described as cumbersome human rights obligations puts Canadian companies at a competitive disadvantage. Companies from other countries, goes the argument, don't have to live up to those obligations; forcing Canadian companies to do so costs money and means they can't compete.
In Amnesty's view, that is both overstated and shortsighted and it is ultimately irrelevant. It is overstated in that it is hard to imagine how putting in place measures to ensure that company personnel don't mistreat or even summarily kill protesters, or safeguards to avoid the possibility of company infrastructure being misused by government security forces to mount sorties in the region that would lead to civilian casualties is somehow so onerous and costly as to tip the balance between profit and loss.
Further, it overlooks and ignores the many ways that regard for human rights actually boosts a company's position, improves its reputation, ensures that there's a good relationship with the local population, and helps ensure stronger rule of law, all of which is beneficial in many ways to company operations and means that it is less likely that company will ultimately be a target, for instance, for boycotts or protests.
This argument is shortsighted in that it assumes that CSR improvements would somehow begin and end with Canada, that no other country is doing similar things or is likely to follow suit. Canada shouldn't shirk leadership but rather rise to it. We also should not assume that leadership is lonely at this point. Many countries are moving forward on this front. Canada can't be, shouldn't be, at the end of the line. We must be among the leaders and work persistently, bilaterally and multilaterally, to press others to adopt stronger laws and policies.
Lastly, as I said, this argument is irrelevant, as Parliament must ultimately recognize that Canada's international human rights obligations are on the line here. Human rights obligations do not only mean that government officials and agencies themselves must refrain from human rights violations. More is at stake. Governments are obliged to ensure that individuals, including individuals abroad, are protected from abuses at the hands of those over whom the government has some jurisdiction and authority. That is certainly the case with companies, which, after all, are incorporated under and regulated by federal and provincial laws and regularly benefit from various forms of government assistance and support. The government is obliged to act here.
Amnesty therefore very much believes Bill should be supported. It conveys the very important message that business can be good for human rights, but also that human rights can be good for business.
First of all, I want to express my sincere thanks to both Amnesty and Development and Peace for their enormous support in moving Bill to this stage and hopefully beyond.
Sometimes we sit here inside of some kind of objectivity bubble and talk about human rights. We talk about all kinds of initiatives at the UN and various other places. We don't actually get a feeling for what this is like on the ground.
Last week I talked to a man from Guatemala who had seven bullet holes in him, apparently courtesy of--I won't get into the facts--a Canadian mining company.
Again last week I talked to the former environment minister for Argentina, who talked about the ugly face of Canadians in Argentina and how it's actually destroying our reputation with that country.
I'd like you, Mr. Casey, but also Mr. Neve, to give Canadians examples of where mining operations in particular have gone wrong, whether it's Guatemala, Honduras, Papua New Guinea, Argentina, or Chile, where it is your personal experience, or the experience of your organizations, to give witness to those things.
The second question, if you can answer it, is to make the linkage between those particular companies, those particular issues, and Canadian financial support of those companies.
I wonder if you could possibly start, Mr. Casey.
Thank you to our guests for their presentation today and for lending a voice to human rights, both here in Canada and abroad. I applaud the work they've both done, not only in their interventions here but in connecting with Canadians about the importance that we as a country demonstrate in walking the walk. We are the country of Mr. Humphrey's UN Declaration of Human Rights, which everyone around this table is proud of and, as Canadians, we should all be proud of. But it matters little if we don't actually get behind those words and do something.
One of the things that have disturbed me is the lack of coherence when it comes to human rights protection. I say “coherence” because I'm not going to get into the invectives and the cleavages that might be attractive in this debate. I'll give you the example of the Congo, from last spring.
We have 75% of the population living on a dollar a day. We have Canada's reach, through its mining intervention, responsible for about $300 billion in assets. We have people making money off this, in other words, and that's what companies do. No one's going to challenge that thesis. So when you look at these equations, a dollar a day--and by the way, the amount of money that the Congolese government receives from mining is about 60% or 70% of their budget. Yet when you look at the revenues they derive, it's about 5% of what comes out of the mining industry, so 95% goes, I guess, for operations, but probably a little bit to profit.
I think what people are looking for is some coherence. What is our responsibility? I see , as many of us would like to see, doing a little more. The tripartite approach is something that we would like to see, but Mr. McKay can't do that because it's a private member's bill.
So I hear from those who say, well, the voluntary approach is what we're doing and that's okay--and we're probably going to hear that from the EDC. Then I see the results of what I just laid out, a disproportionate redistribution of wealth but also the outcomes. And I won't get into that. People can read it for themselves, and I just hope that they get into it.
I'm not giving a speech; I'm laying some facts out, Mr. Goldring. I think it's a matter of people understanding that we do have a responsibility here.
I'll start with Mr. Neve. Do you see whether there is any other way, other than legislation, to ensure that human rights are actually going to happen? Do you know of any other jurisdiction or any attempt through voluntary methods to ensure that human rights are protected, and if so, where?
Thank you, Mr. Chairman, and thank you to the members of the committee for inviting me to speak to you today about Bill and the impact it would have on the Canadian companies EDC serves if we were to be included in it.
I am here today both as Senior Vice-President for Legal Services and as the executive responsible for CSR. As such, I have worked on CSR issues both on the policy level as well as in the context of the transactions I have worked on as a lawyer.
As I’m sure you already know, EDC provides financing, insurance, and risk management solutions to help Canadian exporters and investors succeed in the global marketplace. Our mandate is to support and develop Canada’s export trade and Canadian capacity to engage in that trade, and to respond to international business opportunities. In this way, we work to ensure that Canadians have a level playing field when competing against exporters from other countries.
In our opinion, including EDC in Bill C-300 would put Canadian companies at a significant disadvantage to exporters from other countries and severely inhibit EDC's ability to support Canadian companies and apply our CSR procedures and processes. Let me state clearly, however, that EDC supports the intent of Bill C-300 and shares the belief that Canadian companies should conduct their business in a socially responsible manner, no matter where in the world they operate. However, we believe that the best way to both promote human rights and ethical conduct and to improve environmental conditions related to projects around the world is by working with companies to proactively help them build their capacity in a responsible manner. Where there are established and clear international standards, we hold companies to these standards often in challenging environments.
I think it is important to note, though, that our experience confirms that the international community is struggling with how companies can integrate human rights issues into their daily global business practices, and currently there is no consensus on internationally recognized human rights standards for financial institutions to apply. However, I'm pleased to say that EDC is a very active participant in the international dialogue in this area. For example, EDC is a main sponsor of—and I will be a participant in—an expert meeting next week with John Ruggie, the special representative of the UN Secretary General on business and human rights, entitled “Opportunities and Challenges of Using Corporate Law to Encourage Corporations to Respect Human Rights”.
At EDC, leading-edge corporate social responsibility policies and procedures guide our activities every day. Over the past decade, we have worked hard to develop one of the world’s most comprehensive CSR programs among export credit agencies. EDC has been evolving its CSR standards consistent with international best practices. Our corporation actively supports a number of international commitments, including the Equator Principles, which only two other export credit agencies have signed on to. Being an EDC customer means that your transaction will be seen as having met some of the highest standards applied by any export credit agency.
For our corporation, CSR isn’t about checking boxes; it is an integral part of how we operate and is an ongoing process with our customers. EDC conducts CSR assessments when our support is in relation to sensitive markets or projects in order to ensure that the project and company in question meet our CSR requirements. If there are areas in which we believe a company is not up to those requirements, EDC gives direction and advice to the company on how they should improve. If a company does not meet our strong requirements after this, they will not receive EDC support.
By engaging with companies in this way, EDC is able to provide a balanced approach to CSR: to help build the CSR capacity of Canadian companies as well as ensure that they meet the internationally recognized standards we apply, while still providing the financing and insurance solutions they need to succeed on the international stage. We believe Bill C-300 would severely jeopardize our opportunities to engage with Canadians this way.
Including EDC in this bill and imposing compliance standards, several of which standards are, as noted earlier, still in the process of being defined and agreed upon by the international community, would require EDC to exit a relationship with any Canadian company the moment a CSR violation has been determined. This approach has at least two direct negative impacts. First, it restricts us from working with the Canadian company to remedy the issue and improve their standards; and second, we believe it will mean they won't access capital from EDC in the first place.
We believe that the uncertainty caused by the application of this bill and the standards would also impact other lenders’ willingness to provide financial intermediation to Canadian companies. If this happens, the void left by the Canadian companies will be filled, more than likely, by other international players with less regard for CSR.
Let me explain how this would occur. According to the wording of this bill, if a determination is made that a company has breached the guidelines during the period of a loan or an insurance policy with EDC, EDC would be required by the bill to terminate that loan or policy whether or not EDC has the right to do so under the contract. Therefore, we would have no ability to work with the company to have them remedy the situation in question.
Secondly, EDC cannot allow itself to be in the position of being required by the bill to terminate our support without having the right to do so under the contract. Our experience tells us, however, that Canadian companies, as well as other lenders, would be unwilling to accept such an EDC right in the contract, as its application would be out of their control and in the hands of a third party. That means that if Bill C-300 becomes law, EDC's ability to provide lending and insurance as well as to apply our rigorous CSR standards to projects and companies in the extractive sector will be seriously compromised. And given that the bill captures all business activity with a connection to the extractive sector regardless of size or product, all Canadian businesses along the supply chain would be negatively impacted by EDC's forced departure from the market.
The significance of this departure would be deeply felt here in Canada. In 2008, for example, EDC facilitated $27.4 billion of exports and investments in the extractive sector. EDC's support in this sector helped generate $21.4 billion in Canadian GDP and sustain 139,000 Canadian jobs in communities across the country.
EDC enables Canada to be a leader on CSR without tilting the playing field against Canadian companies. What we do at EDC is reviewed and regularly benchmarked, including by the OAG. To impose standards out of step with the rest of the world would not, in our view, improve CSR. It would only hurt Canadian companies and take them out of the game.
We believe there is a big difference between being a leader and a cheerleader. A leader is on the playing field, working with the team and using their skills and resources to reach the goal. A cheerleader is on the sidelines, hoping for the best. Today EDC is on the playing field, working with Canadian companies, influencing them, and building their CSR capacity. If this bill becomes law, we believe that our opportunities to be on the field would be severely limited. Instead, we as Canadian companies and EDC would be on the sidelines hoping that the other companies who remain in the market do the right thing from a CSR perspective.
Thank you very much. I'd be happy to take questions.
Yes. And we end up refusing in many ways, as well as working with companies to improve the projects.
Right at the early stages of the situation when a company comes to us with an idea or a project they need support for, we do an assessment with the officers who first touched the company to try to determine how the situation looks, whether or not the company would have the capacity to do what would be necessary where they're putting the project in place, what the country's record is, and just how difficult it would be to do something in that country and with that project. In some situations we conclude that it's not possible, that we do not believe the company would actually be able to do that. So we turn them away, usually fairly early, because we don't want the company to be wasting its time. So we try to make an assessment up front.
There are other situations too, and we have an example that's ongoing now—though I can't give you the name, obviously. But in a sub-Saharan African country, we were approached by a company, and when we first looked at it, we thought, oh, this company may not have the capacity to do it; there are some problems in the country. But the project had tremendous value for the country and we believed there was the potential for that company to actually improve its standards and approaches. So we've been working with them for almost two years now, and they have done many, many things. They've engaged a well-recognized local NGO. They've implemented internal procedures and policies that are related to the voluntary principles on security and safety. They've hired external consultants to help them. They've beefed up their internal staff. We're not there yet, but we think we may actually be able to support them in a situation that's very difficult.
So the situations range from our pushing them away right at the beginning to working with them; but if at the end they can't make it, we'd still say to them, “You don't meet our standards, and we cannot support you.”
Thank you for that. I'll try to answer the several pieces to it.
As I mentioned, we've been engaged in the dialogue. In connection with environmental standards, there was clarity. The IFC and World Bank have worked on it, and the OECD's common approaches have identified various standards, and those are clear enough for companies to actually be able to deal with and sign up to in terms of covenants and the management practices they have to follow. But we believe that other than the three parts of the IFC performance standards that deal tangentially with human rights, the human rights standards are not clear enough yet, including who should be responsible for various aspects of human rights, as well as, for example, human rights, including a general right to water. A company can't deal with that as well as a local government can. So we think the standards the bill is trying to apply are not defined well enough yet.
I think they will be as CSR evolves. I think that John Ruggie or an institution such as the IFC will eventually be able to reach a position where they can say that a consensus has been reached on a standard, or standards, that should be applied to human rights. We think Canada is trying to do that ahead of the rest of the world and that it will jeopardize our Canadian companies with a standard that's not clear enough and with which no one will be able to get comfortable and apply.
EDC standards are very clear, and that's how we've been able to implement them and put them in loan agreements and make them covenants and why we've been able to say to somebody, “We cannot support you”, and to make a decision that's clear enough for everyone to understand.
But another big piece of it is the ability to work with a company. This bill requires us to exit if a determination is made, even if we might come to a different decision, or even if other lenders or independent engineers, or anyone else, comes to a different decision. We don't think the international marketplace can live with that.
So if EDC is in a deal and has $100 million on the table as part of a $500 million facility, and we're required to exit, the lenders would then be in a situation where the company would not be fully funded. They would never let that happen: they would make that decision right at the very beginning, so EDC would not be able to get to the table because of the fact that we would have to add the requirement that we could get out if the government made a determination. So that's why we believe our ability to actually play a role will be severely compromised. Companies will just not come to us and ask for help, because their other lenders won't let them and their company won't let them. There will just be too much uncertainty.
But we do support the evolution in this area. As I say, we're going to a meeting next week and we have been a participant in the dialogue. As I mentioned, I think it is going to evolve. When it does, we will be one of the leaders in applying the new standards that have been reached on a consensus basis, just as we have in many, many other areas, including the environment, anti-corruption, and anti-terrorism.
We look at quite a lot of different things, and each situation is somewhat different. One of the things we look at is the track record of the company. Some companies have a well-developed track record and a well-developed CSR program, and they're a lot easier to work with, obviously, because they understand it all. But in some situations we're dealing with companies that are newer. This might be their first venture.
We're obviously trying to develop exports. So we'll look at many things specific to the project, specific to the country. There's the environmental situation in terms of their usage of water, placement of a tailing stem, whether or not it's affecting biodiversity. Those are all tested against the IFC performance standards. Those are not perfect, but they're clear enough that a consensus has been reached that you can make a determination as to whether or not the project can meet those standards. If they do, then we would proceed on the environmental basis.
If the project is located in a country where there are also human rights issues, they can range from all kinds of things. They can range from the government using the property of the mine for security forces to launch things that would be bad. But it could also be things like artisanal mining and how to deal with locals who have been picking away at the side of a cliff and making a tiny living out of it. Some countries encourage it and some companies see it as a way to resettle everybody. We would have to look at that and ask if that's the best method, is there compensation, or are there other ways of dealing with the artisanal mining.
For example, there's one situation where the company has actually provided some more tools and training to the local miners, who will then continue to pick away at it, but under much safer conditions. They then sell their ore to the mine itself instead of having to sneak it off the property and across a border or to some other place where they can sell it.
Each situation is very different, and we have a team that deals with the environmental side; we have a team that deals with the human rights side. Unfortunately with the human rights side, there aren't yet standards that we can say have to be met. So each case is on its own, and we have to see what the issues are and how they will be dealt with.
Thank you very much, Mr. Chair, and thank you very much to EDC for coming.
I would like to raise two points that I would like your expertise on.
The previous speakers who came before us brought along their expertise in development and human rights. Although I was very concerned about Mr. Alex Neve saying “I don't really care whether there is something...” when they said this is the approach Canada takes. Canada takes, as you rightly pointed out...to work together. But their expertise is in this, and your expertise is in business.
I want to go on to what Bob Rae said about the investment process and the business that you've been doing, which is giving money, and the impact, which you rightly pointed out, of the mining industry in Canada. But we seem to have forgotten one serious factor. My colleague from the NDP keeps talking about DRC because he made a trip to DRC. I made a trip to Tanzania and to Zambia, where the copper industry is going on, and to Papua New Guinea and all these places, and as my colleague said about Mongolia, a tremendous investment is being done and impacting the local economy. Papua New Guinea's ambassador to the UN said 12,000 people in Papua New Guinea are not living on dollars a day, which he's talking about, but are actually making a fantastic living out there. So we have this whole economic factor out there.
I have two points on the issue you brought out here. One, what impact, which you're already talking about, will it have on the Canadian companies moving out? For example, we know China is going out to Africa and signing all these deals out there, and there are no standards as far as China or other countries are concerned. They are moving right in there. Now, I'm not saying that Canada should not have standards. That is why we were at this year's round table conference, and we came out with very good suggestions with every stakeholder there. It was very good. The companies, the NGOs, and everybody took part in that. That should be the first stepping stone.
The second factor is the international standards that you're talking about—human rights. As you rightly pointed out, the three environmental ones that came out of the World Bank are applicable to everyone across the world. Why can we not then, at that given time, wait for those international standards to develop through the pressure that the NGOs are talking about, going to their members and going to all these things, using the same pressure to come out so that there is an international standard out there, so that everybody has a level playing field, including China and everyone? Nobody is talking about China. My friend talked about Talisman out there. Let's go to Africa and see what is happening with the investment that China is making out there, in absolute disregard of everything here.
My question here would be about the impact of , the chilling factor on investment, not here but abroad, as well as on the international standards, which are not a level playing field.
Thank you. I'll answer in reverse order.
We believe that the development of international standards on the human rights side will occur. As I said, we are working with that. We are applying the expertise we've developed the best way we can, but to try to apply a standard that is not clear internationally and not well established, we believe, will put Canadian companies at a significant disadvantage, because a competitor, for example, could lodge a complaint with the ministers and cause a deal to be delayed, could cause a reputational issue, even if it was totally frivolous, all to the advantage of the competitor. We think there are severe disadvantages to Canadian companies being the only ones that would have this applied to them.
We think it will get applied worldwide. I can't speak to China, but I think it will be applied in the developing world through the OECD, and to projects that require international financing probably through the Equator Principles. When these standards become formed and a consensus is reached, we think it will be applied by reputable banks, by export credit agencies, and by countries that care about CSR. But there will probably still always be exceptions.
In regard to the impact on the Canadian companies--and I tried to explain this a bit in my speech--I'll put my hat on as a CEO. I want to borrow money, or I want to have a PRI policy--political risk policy--and I need to know that I have that in place for the entire term of my loan. I need to know that I control whether or not that's the case. The banks that are signing up and providing their money need to know that the large pool of money that's going to be required, both equity and debt, is sufficient to be able to do this project. If EDC comes along and says we have these standards, and nobody else has to apply them, but we do; and they're not really all that clear, but we have to have them; and if they're not met on a decision of somebody external, we need our money back or we're going to yank the PRI policy, the company CEO and the CFO, as well as the other lenders, are going to say, thanks, EDC, that's great, but we're not going to let you be involved in this deal because we can't be sure, no matter how much due diligence we do up front, that something may not happen that will cause a problem.
For example, you could have a mine going and the government changes and decides it wants to take action with its security forces. It comes to the mining company and says, I'm going to take your concession away unless you allow us to use your property to launch strikes. They don't know what to do. They have to work with the country. They look to Canada if we're involved; they look to EDC to help. If we were in that situation, we'd be having to say, we can't help you; we've got to get out.
We really believe there's a strong disadvantage to applying this to Canadians now ahead of the consensus that I believe will be reached and will be applied to many countries and all export credit agencies.