Written by: Isobel O’Connell

Date: May 3, 2019

While it is clear that Canada will not be the first to adopt human rights policy statements or supply chain legislation, it should be the next. Doing so would prove the country’s commitment to addressing child labour, modern slavery, and other human rights violations.

In January 2018, Canada’s Ministry of Trade announced a new independent post, the Canadian Ombudsperson for Responsible Enterprise (CORE)[1]. As the first-ever position of its kind in the world, CORE is designed to increase accountability for Canadian companies operating abroad in the mining, oil and gas, and garment industries.

But CORE is only partially here… Questions remain about how it will operate and how effective it will be. Even still, the CORE should be seen in context as part of a broader effort to improve business and human rights laws in Canada.  One missing piece in CORE’s remit is the need for what you might call a “Made in Canada” approach, or a tailored due diligence process to address business and human rights (BHRs) issues in Canadian companies’ supply chains, both at home and abroad.

Export Development Canada

Last week another agency in Canada made a step forward in initiating and addressing BHRs. Export Development Canada (EDC)[2] became Canada’s first commercial banking institution to release a dedicated BHR policy statement built on the United Nations Guiding Principles on Business and Human Rights (UNGPs)[3] – specifically the UNGP’s second pillar and Guiding Principle #16[4].

The UNGPs stipulate that all business enterprises, including banks, should “respect” human rights – meaning to avoid infringing upon the human rights of others and to address adverse human rights impacts with which they are involved. They should accomplish this through a management system approach.

On May 6, 2019, Institute for Human Rights Business’s CEO John Morrison was invited to address the Canadian EDC’s Corporate Social Responsibility Advisory Council on the issue of “leverage”[5]. Morrison conveyed the importance of finance and banking institutions contributing both directly and indirectly to adverse human rights impacts. Financial instruments may also cause human rights violations indirectly by lending money to companies involved in land grabs and funding projects that displace indigenous populations.

Of note, EDC Human Rights Policy Statement says that when its customers come to the attention of the new ombudsperson, it will take “reasonable steps to co-operate in these processes and will also encourage our customers to do so.”

As Canada’s Export Credit Agency, EDC understands human rights-related risks can compromise any business’s reputation, increase liability and affect their social license to operate. EDC will integrae BHRs due diligence in transactions with their Human Rights Policy Statement organising that work.

However, it is simply not enough for a company to just draft a policy statement or a supplier code of conduct, or total up the number of sustainability initiatives in their supply chain, and assume they are doing the right thing. The days of accountability by case study are fading, and EDC, with the support of the Canadian Government, must actually do the work and invest the capital to create lasting change in both their client supply chains.

EDC’s Human Rights Policy Statement can further promote a proposed “Made in Canada” approach by supporting Canada’s need for national legislation for BHR in Canada[6]. They can support companies with international operations, particularly in countries with human rights or rule-of-law challenges, would be prudent to develop and implement a BHR Policy Statement where they have not yet done so.

Introducing a TSCA 

To support companies with addressing BHR, in April 2019, the Transparency in Supply Chains Act (TSCA) was tabled by the All-Party Parliamentary Group to End Modern Slavery and Human Trafficking, and imposes obligations on Canadian companies’ supply chains. If adopted, Canada would join other major players such as the United Kingdom and France in the fight against modern slavery in its various forms.

The hope is that the TSCA provides a framework for human rights protection in the operations of Canadian businesses, which would solidify Canada’s reputation as a human rights leader and make partnerships with Canadian businesses more desirable for governments and companies worldwide.

The proposed TSCA and EDC’s Human Rights Policy Statement shows that Canada has come to a “fork in the road” with two ways forward, though in fact, they converge. First, both a company’s Human Rights Policy Statement and government legislation, show the need to monitor compliance levels, and determine whether penalties and independent oversight are needed. At a global level, compliance can include the UNGPs, OECD Guidelines for Multinational Enterprises, and the Global Compact among other human rights standards.

Canada’s appointment of CORE, the proposed TCSF and the EDC’s public Human Right Policy Statement are a start, and quite good ones. But ultimately it will take strong legislation to create a robust ‘Made in Canada’ approach to tackle the urgent human rights issues in supply chains.

Isobel O’Connell is a recognised Canadian social performance strategist who focuses on human rights, shared value and risk management.

Ardea International provides workshops, toolkits and guides specifically designed to help organisations comply with both mandatory and voluntary human rights mandates. To find out more go to: https://www.ardeainternational.com/toolkits-guides

Isobell’s earlier blog on this matter is published on the BHRC website and can be read here. 

[1] Global Affairs Canada, Responsible Business Conduct Abroad Website: www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/csr-rse.aspx?lang=en

[2] EDC is a financial Crown corporation dedicated to helping Canadian companies of all sizes succeed on the world stage. As international risk experts, they equip Canadian companies with trade knowledge, financing solutions, equity, insurance, and connections.

[3] EDC Statement on Human Rights, May 6, 2019.

https://www.edc.ca/EN/About-Us/Corporate-Social-Responsibility/Documents/human-rights-statement.pdf

[4] National Action Plans on Business and Human Rights, United National Guiding Principles GP 16: https://globalnaps.org/ungp/guiding-principle-16/

[5] How Can the Finance Sector Best Use its Leverage for Human Rights? John Morrison, Chief Executive, IHRB EDC Advisory Council on Corporate Sustainability & Responsibility 6 May 2019, Ottawa, Canada: https://www.ihrb.org/uploads/speeches/2019.5.13_JM_Speech_to_Canadian_ECA.pdf

[6] Business and Human Rights Center, Isobel O’Connell: Canada has a new Responsible Enterprise watchdog – is it enough to tackle corporate human rights abuse? https://www.business-humanrights.org/en/canada-has-a-new-responsible-enterprise-watchdog-is-it-enough-to-tackle-corporate-human-rights-abuse