The Prospectors & Developers Association of Canada (“PDAC”) hosts the world’s largest mining conference here in Toronto this week. By all accounts, the event was a tremendous success, and the rumour is this year’s event set new records, attracting more than 25,000 investors and industry participants.
Bill C-300 garnered a significant amount of attention at this year’s conference. The private members bill, sponsored by Liberal MP John McKay, is aimed at increasing accountability for mining and oil & gas companies operating in developing countries. The concepts in the bill appear difficult to argue against – but notwithstanding the effectiveness and costs of the program, the bigger issue is the message the proposal sends and the damage it does to Canada’s reputation abroad.
HOUSE OF COMMONS OF CANADA
BILL C-300
An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries
FIRST READING, FEBRUARY 9, 2009
SUMMARY
The purpose of this enactment is to promote environmental best practices and to ensure the protection and promotion of international human rights standards in respect of the mining, oil or gas activities of Canadian corporations in developing countries. It also gives the Minister of Foreign Affairs and Minister of International Trade the responsibility to issue guidelines that articulate corporate accountability standards for mining, oil or gas activities and it requires the Ministers to submit an annual report to both Houses of Parliament on the provisions and operation of this Act.
The stated purpose of the Act would be to ensure that mining and oil & gas companies “act in accordance with international environmental best practices and with Canada’ commitment to international human rights standards.” Details of proposed Act include:
- Oversight of international activities of resource companies would fall under the Minister of Foreign Affairs and the Minister of International Trade (the “Ministers”)
- Environmental standards would be set by the International Finance Corporation’s policies, and human rights practices compared to “international human rights standards”
- The Ministers will be required to investigate written complaints, unless they are deemed frivolous
- The direct mechanism for enforcement is the restriction of government support, specifically the ability to conduct business with Export Development Canada and access to investment from the Canada Pension Plan Investment Board
The issue is not one of regulation, but of branding. The approach and tone of the Bill directly contradicts the brand Canada has successfully built on the international stage. Mining and energy exploration and production are what we do well*:
- Fifty per cent of the 9,700 mineral exploration properties held by Toronto Stock Exchange (“TSX”) and TSX Venture Exchange (“TSXV”) companies are outside of Canada
- The Canadian capital markets are home to 55 per cent of the world’s mining companies and 43 per cent of the world’s energy companies
- TSX and TSXV listing criteria for mining and oil & gas companies were developed based on geological reports and the potential of the assets – unlocking the equity markets for juniors
- Two S&P/TSX indices were revised to allow non-Canadian companies eligibility in recognition of the importance to international resource companies of access to Canadian investors
- The Flow Through Share investment vehicle is unique to Canada, allowing exploration companies to pass tax deductions through to their investors
*Sources: PDAC and TMX Group data
It has been this cultivation of a flexible and supportive atmosphere over decades that has built up our reputation in the resources industry around the world. Canada’s reaction to increasing regulation of financial markets in the mid-2000s (most notably SOX in the US) was not simply to follow suit, but to continue its principles-based approach to oversight. This same model can be used for corporate social responsibility (“CSR”).
The PDAC has developed a framework for CSR – e3 Plus. The program has eight core principles, and is developing the performance criteria and reporting guidelines, and is exploring the possibility of verification by independent CSR auditors.
Rather than tell the world we don’t trust our resource companies, let’s continue to be leaders in the field and develop a real framework based on transparency and accountability.
To find out more about this issue, e3 Plus, and how to support the mining industry, follow the link below:
