Canadian companies operating overseas face being cut off from financial support from the country’s official export credit agency if they do not co-operate with a new human rights watchdog, but campaigners are sceptical the body can hold errant firms to account.

The Canadian Ombudsperson for Responsible Enterprise (CORE) started accepting complaints from the public about companies’ conduct in late March this year, more than two years after its launch was first announced by the Canadian government.  

The role, currently held by governance consultant and former oil and gas lawyer Sherri Meyerhoffer, was established in response to ongoing criticism by campaign groups over human rights allegations against Canadian firms extracting resources or manufacturing goods outside the country. 

Canadian mining and resources firms have a large global presence, particularly in South America and Africa, thanks to the expertise and money generated by its domestic extractive industry. But there has been long-running debate over alleged collusion with authoritarian or corrupt regimes and the impact of projects on local communities. 

Witnesses at a parliamentary hearing on the CORE last month cited examples including an oil company prone to spills and accidents at its Ecuador operations and mining companies’ alleged complicity with persecution of environmental activists in the Philippines. The deaths of more than 1,100 people after the 2013 collapse of a Bangladesh garment factory which supplied a Canadian supermarket chain was also cited as an example of why greater scrutiny of firms’ overseas operations is needed.

The CORE can initiate its own reviews and fields complaints from the public about firms operating in three industries: mining, oil and gas, and textiles. It can then provide advice, initiate mediation or open a “fact-finding” mission, including by visiting sites overseas. Its remit does not include companies that only export goods produced in Canada.

Meyerhoffer does not have the power to compel documents or witnesses from companies – a fatal flaw, according to critics – but can recommend to the minister for international trade to refuse any future financial support by Export Development Canada (EDC), the export credit agency, for any company not acting in good faith during a CORE review or not complying with requests for information.   

The CORE can also ask Canada’s Global Affairs department to revoke any current or future trade advocacy on behalf of an unco-operative company. Following an investigation the CORE will publish a report that may include recommendations for a firm to implement. If a company does not act on the recommendations, the CORE can also recommend withdrawal of trade or other government support. 

Asked if EDC will always ditch a firm subject to a negative recommendation by CORE, a spokesperson for the agency suggests that it would approach recommendations on a case-by-case basis. 

“We take responsible business and human rights very seriously at EDC, and if the CORE has concerns about a company, we want to hear those concerns,” the spokesperson tells GTR 

“Any next steps taken toward remedy after an impact has occurred would depend on specific circumstances, but we recognise the important role we can play in enabling remediation when human rights impacts occur in connection to the business we support.” 

This year EDC beefed up its disclosures on human rights as part of a policy to improve transparency on deals it turns down. In 2020 its decision-making committees knocked back 19 potential transactions on environmental, social or governance (ESG) grounds, according to its annual report published earlier this month.  

It said the number was low due to the coronavirus pandemic curtailing new international projects and because it does not yet record data on requests for financing that are rejected on ESG grounds before they are formally considered. 

The spokesperson said it was not possible to say how many of the rejections were due to human rights concerns. EDC conducted 386 human rights risk screenings during 2020, up from 226 the year before. Most occurred in the light manufacturing, IT and communications and mining sectors. 

Chris Scheitterlein, an Ottawa-based international trade lawyer with law firm McMillan, says he expects EDC to act on CORE’s recommendations. “I would imagine that EDC would block the company from receiving any kind of future EDC support for export trades, but also for general working capital facilities or other types of loans, and structural and project financing for large projects.” 

“It’s interesting that the Order in Council [the legal instrument establishing the CORE] speaks of ‘future financial support’”, Scheitterlein, who previously worked at EDC, tells GTR, saying he expects that is designed to exclude existing financial support offered by the EDC, which could be difficult to terminate before maturity.  

The CORE’s activities could also trickle down to private financing, Scheitterlein says. “In a situation where EDC ‘disbars’ a company on the recommendation of the CORE, it is conceivable that EDC could refuse to provide guarantees to a bank that finances the company’s projects overseas.”

“In such a scenario, there could be a risk that the bank will refuse to provide financing to the company without the EDC guarantee.” 

CORE communications director Nelson Kalil said Meyerhoffer was unavailable for an interview. Asked how many complaints the agency has received, Kalil tells GTR “14 individuals reached out to us since the launch of the complaints portal” but declined to say how those complaints have progressed. 

A toothless tiger?

At a parliamentary committee meeting in March, Canada’s minister of small business, export promotion and trade Mary Ng was grilled over the CORE’s inability to subpoena documents or to force company executives to answer questions.  

John McKay, a backbench MP from the governing Liberal party, asked: “How is it that the ombudsperson could produce a report that would be useful to you if she’s not able to talk to the key people?”

Saying “we are still playing with some pretty bad actors”, he cited former Canadian mining company Nevsun, which last year reached an out-of-court settlement with former labourers who alleged they were subject to slavery and torture during the construction of its gold and copper mine in Eritrea and who later came to Canada as refugees. 

Jamie Keen, the communications and outreach co-ordinator at campaign group Mining Watch Canada, says the Liberal government had reneged on its original plans for a hard-hitting investigative body. 

He says in an interview with GTR that the absence of investigative powers “was a great disappointment to a lot of people in civil society. And I think a great relief to the industry, people who’d lobbied fairly hard for that.”

“We’ve now got an ombudsperson without power to investigate. It presents the risk of really just being a whitewash exercise, because of that. You end up with reports that don’t really say anything.”

Karen Hamilton, the head of Above Ground, a Canadian group which monitors government and EDC support for private companies, says it is advising partners abroad to “proceed with caution”. 

“We were hopeful when the government announced the creation of such an office. But the CORE is not the office that was promised. The government created an advisory post that lacks the crucial powers to compel testimony and documents from companies accused of wrongdoing.”

Scheitterlein agrees that the CORE’s investigative powers “are rather limited”. “It is also not clear whether the threat of refusal of trade advocacy and EDC support is enough to keep parties engaged in the review process,” he adds. But he says firms will likely be motivated to go along with the CORE to avoid the reams of bad press that would follow.

The CORE’s Kalil tells GTR the organisation is often questioned over its powers, but insists “we believe our office can make a real and positive difference now”. 

“We can respond to complaints and initiate reviews. We can offer mediation, investigate and publish our findings. We can make recommendations for remedies and changes, follow up on those recommendations, and make public reports on their implementation.”