01/17/2018 12:15 EST | Updated 01/18/2018 17:03 EST

Feds create new ombudsperson to keep tabs on corporate behaviour abroad

OTTAWA — Investment firms, human rights groups and aid agencies gave a thumbs-up Wednesday to the Liberal government's decision to create an independent watchdog to enforce responsible conduct of Canadian companies operating abroad.

International Trade Minister Francois-Philippe Champagne announced the new position, saying the office would be first of its kind in the world, and that he would take an active role in making sure it prevented any bad corporate behaviour that might tarnish Canada's broader brand.

The new Canadian ombudsperson for responsible enterprise is intended to be a substantive upgrade to the current "corporate responsibility counsellor," which has been widely criticized as a toothless entity for dealing with misconduct complaints against Canadian companies, mainly in the mining industry.

The ombudsperson will work towards resolving conflicts between local communities and Canadian companies operating abroad, and will focus on several sectors, including mining, oil and gas and the garment sector, said Champagne.

It will also have the power to independently investigate and make recommendations in cases involving human rights complaints, he said.

Champagne said the government may withhold support, including financial, from companies that are found to have committed violations and that he would not shy away from publicly persuading violators to toe the line.

"To fly the Maple Leaf means something. It means being associated with a set of values," he told a news conference.

"This is an extraordinary brand to have in the world today," he added. "But it also comes with responsibilities."

The head of one of the world's largest investment firms — BlackRock, which has consulted closely with the Trudeau government on its economic agenda — has told big companies they need to step up their corporate responsibility efforts if they want to benefit from their investment.

Laurence Fink has said if companies don't engage better with local communities they will "ultimately lose the licence to operate from key stakeholders."

"When investors are reading the morning news, the last thing they want to read about is a risk event happening to a company in their portfolio. This includes headline risk, reputational risks such as human rights abuses in the supply chain," said Dustyn Lanz, head of the Responsible Investment Association.

The association represents a range of Canadian financial services institutions, including asset management firms and advisers.

Hundreds of mining companies operating in Latin America, Africa and Asia make Canada a leading player in the sector, which has led to periodic human rights complaints and legal action, often by Indigenous groups.

The mining industry said it looks forward to working with the government and others to develop the mandate of the new office, said the Prospectors and Developers Association of Canada.

"PDAC believes that in order to be effective, the mechanism must be designed in a way that both enables effective dispute resolution and maintains the competitiveness of responsible Canadian companies operating abroad," the organization said in a statement.

Alex Neve, the head of Amnesty International Canada, said the new ombudsperson position places Canada at the forefront of enforcing good international corporate behaviour.

"We certainly would be hopeful that it's a model that other governments will be encouraged to follow," said Neve. "It's not the end of the game when it comes to corporate accountability; it's a very significant step forward, and it is a moment where Canada has demonstrated some leadership."

Julia Sanchez, head of the Canadian Council for International Co-operation, said civil society groups such as hers will be watching closely to see that the ombudsperson succeeds.

Her organization, an umbrella group for aid agencies, and others will be part of an advisory board that was also established as part of Champagne's announcement.

"All those pressures, both from consumers, from investors, from government regulatory bodies, all of that can add up and it can have an impact," said Sanchez.

Liberal MP John McKay has championed corporate social responsibility legislation for more than a decade. He said he finally convinced the current government to move in that direction because it made a good fit with its broader, more inclusive trade and economic policies.

"It actually puts a little meat on the bones as far as a progressive trade agenda (goes), so I think, in that respect, it fits with the government's overall agenda."