Written by Sander Grieve, Sharon Singh, Darrel Pearson, Radha Curpen, Sabrina A. Bandali and Katrina Crocker
On March 15, 2021, the Canadian Ombudsperson for Responsible Enterprise (CORE) launched its complaints process, enabling the receipt of complaints respecting human rights abuses arising from the operations abroad of Canadian companies in the garment, mining, and oil and gas sectors.
Anyone will be able to lodge an Internet complaint though this online form. Canadian companies should review their diligence systems and processes, including those related to assessing internal risks, and risks associated with any current or historic human rights issues associated with a company's potential merger and acquisition target.
Below we provide a background on the CORE and its implications for businesses.
The CORE's Mandate
Flowing from a Liberal Party commitment during the 2015 election, the creation of the CORE was one of two new initiatives announced in January 2018 to promote Responsible Business Conduct (RBC) abroad and to hold Canadian companies accountable for human rights abuses. It is meant to be an impartial body that operates at arm's length from Global Affairs Canada, and reports directly to the Minister of Small Business, Export Promotion, and International Trade. The first CORE in Canada and in the world, Sheri Meyerhoffer, was appointed in April 2019.
The CORE's mandate, established by Order in Council 2019-1323, is to:
- promote the implementation of the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises;
- advise Canadian companies operating abroad on practices and policies related to RBC;
- review alleged abuses of human rights arising from the operations abroad of Canadian companies or the entities they control (arising from complaints filed by individuals, organizations, and communities, or initiated by the CORE); and
- recommend remedial action by Canadian companies and make recommendations to the Minister of International Trade regarding potential actions, measures, or reforms.
The Human Rights Responsibility Mechanism
The complaint's process is part of an overarching compliance and dispute resolution mechanism known as the Human Rights Responsibility Mechanism (HRRM). In addition to complaints, the HRRM can be initiated by a review commenced by the Ombudsperson, or a request for informal mediation services. The HRRM's process is guided by the CORE's Operating Procedures.
The HRRM launch allows any individual to submit complaints of alleged human rights abuses arising from a Canadian company's operations abroad, including an entity it controls.
The process for a filed complaint will involve the following steps: intake, initial assessment, mediation, review, and a public report with recommendations. First, the CORE will decide whether the complaint meets three admissibility criteria:
- it alleges an adverse impact on an internationally recognized human right, including any of the rights referred to in the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, and the International Covenant on Economic, Social and Cultural Rights;
- it arises from the operations abroad of a Canadian company in the garment, mining, or oil and gas sectors; and
- it allegedly took place after May 1, 2019, or if it allegedly occurred before May 1, 2019, it remains ongoing.
If the complainant agrees, the CORE will advise the company about the complaint and work with all parties to try to find a solution. If a solution is not possible, the matter will advance to either mediation, if the parties agree, or to a review of the complaint. If the CORE decides to investigate a complaint, it will start with a joint fact-finding exercise, but if collaboration among the parties is not possible, it will move on to independent fact-finding (which may include interviewing the parties or suggested witnesses and inviting submissions from the parties). All parties are expected to fully participate in the review by providing the CORE with relevant information and documents and making witnesses available on reasonable notice. The CORE will report publicly on its findings, and, if appropriate, make recommendations for remedies and for reform.
All parties or subjects of a review are stated to be required to act in good faith, meaning they must respect confidentiality requirements, refrain from providing false information, refrain from publicly misrepresenting the HRRM process, and not retaliate against those who make a complaint. Failure of companies subject to a review to do so could lead to a recommendation that Global Affairs Canada deny trade advocacy support and that Export Development Canada stop any financial support.
Issues with the Current Framework
Primary concerns have emerged from both industry and civil-society organizations as to whether the CORE's investigatory powers should include the quasi-judicial power to compel witnesses and documents. Attempts by the government to broker a solution during the early years of the first Liberal mandate entrenched polarization, with non-government organizations (NGOs) largely withdrawing from constructive engagement with the CORE and openly criticizing the government's position that the office begin operating before additional powers are considered.
According to confidential advice provided to the previous Minister of International Trade recently leaked by NGOs, the McIsaac Report, imbuing the CORE with commissioner-like powers to compel documents and witness testimony—to differentiate itself from the Corporate Social Responsibility Counsellor—would require the passage of legislation to establish the CORE or the appointment of the CORE as a commissioner under Part I of the Inquiries Act.
Applicable investigatory powers raise objections much like those that led to the repudiation of Bill C-300, which included serious concerns in relation to procedural fairness and adequate resourcing (including on-the-ground resourcing to investigate issues in foreign jurisdictions). In particular, meaningful work, including a thoughtful and transparent government-led consultation process around the issue, is required to assess how this is to function when many relevant parties, including foreign states, suppliers, and service providers, are not Canadian. It also raises concerns that the HRRM will be used to harm the reputations of companies purely through unproven allegations, despite the confidentiality provisions.
The trend towards greater scrutiny of a company's international activities will continue as evidenced by recent legislative developments, including those related to modern slavery, and Canadian supply-chain integrity initiatives. These legislative developments are supported by the heightened focus on environmental, social, and governance (ESG) performance criteria.
Companies should ensure that they have adequate systems to gather reports of human rights concerns or non-compliance with company policies. Adequate whistleblowing systems, designed to incorporate protection mechanisms to encourage internal reporting and prevent reprisals, are an important risk mitigation strategy (see our previous guidance for companies seeking to implement a right-sized whistleblower system).
Canadian companies should also carefully review their diligence framework and processes to assess risks, and establish appropriate mechanisms to identify, investigate, and address any concerns about the company's or their potential acquisition target's potential human rights violations. Companies should also (continue to) implement, monitor, and, as appropriate, document their diligence and investigation activities.