1. Closing the Governance Gap: Corporate Self-Regulation in Conflict Zones – Implications for Human Rights and Canadian Public Policy Closing the Governance Gap: Corporate Self-Regulation in Conflict Zones – Implications for Human Rights and Canadian Public Policy © Georgette Gagnon, Audrey Macklin and Penelope Simons Not for reproduction, distribution or public display without express permission of the authors © Georgette Gagnon, Audrey Macklin and Penelope Simons Not for reproduction, distribution or public display without express permission of the authors

2. What is the Governance Gap? A legal vacuum wherein enterprises operating beyond the reach of effective mechanisms of accountability may commit, aid, abet, knowingly benefit from or otherwise be complicit in violations of fundamental norms of human rights and humanitarian law. Most often arise through commercial relationships with repressive host regimes, private security forces Violations include forcible displacement, killing, sexual and other violence, slave labour A legal vacuum wherein enterprises operating beyond the reach of effective mechanisms of accountability may commit, aid, abet, knowingly benefit from or otherwise be complicit in violations of fundamental norms of human rights and humanitarian law. Most often arise through commercial relationships with repressive host regimes, private security forces Violations include forcible displacement, killing, sexual and other violence, slave labour

3. The Governance Gap: Global Controversy over TNC responsibilities under int’l human rights and humanitarian law UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights (13 August 2003) companies only have responsibilities “within their respective spheres of activity and influence” do not create new legal obligations, but rather codify how existing obligations under international law are relevant to companies “states have the primary responsibility to respect, ensure respect for, prevent abuses of, and promote human rights recognised in international as well as national law.” Controversy over TNC responsibilities under int’l human rights and humanitarian law UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights (13 August 2003) companies only have responsibilities “within their respective spheres of activity and influence” do not create new legal obligations, but rather codify how existing obligations under international law are relevant to companies “states have the primary responsibility to respect, ensure respect for, prevent abuses of, and promote human rights recognised in international as well as national law.”

4. The Governance Gap: Domestic Reluctance to “go it alone” Unlikely that host states are able/willing to regulate TNCs in conflict zones Domestic legal mechanisms of home states do not provide for effective regulation of TNC extraterritorial activity Voluntary self-regulation regimes are inadequate Reluctance to “go it alone” Unlikely that host states are able/willing to regulate TNCs in conflict zones Domestic legal mechanisms of home states do not provide for effective regulation of TNC extraterritorial activity Voluntary self-regulation regimes are inadequate

5. Regulation of Canadian TNCs Regulation of Canadian TNCs Policy Options for the Canadian Government

6. Direct and Facilitative Regulation Facilitative Regulation - laws which enable private actors (shareholders, consumers) to exercise their rights to invest/divest, patronize/boycott, litigate Direct Regulation - norms, enforcement, consequences for non-compliance Facilitative Regulation - laws which enable private actors (shareholders, consumers) to exercise their rights to invest/divest, patronize/boycott, litigate Direct Regulation - norms, enforcement, consequences for non-compliance

7. Norms Mandatory code of conduct for TNCs operating in conflict zones Content TNC shall ensure activities do not contribute directly or indirectly to violations of international human rights or humanitarian law TNC shall not commit or be complicit in violations of international human rights or humanitarian law Mandatory code of conduct for TNCs operating in conflict zones Content TNC shall ensure activities do not contribute directly or indirectly to violations of international human rights or humanitarian law TNC shall not commit or be complicit in violations of international human rights or humanitarian law

8. Norms - Content of Code Content TNC shall ensure security arrangements observe international human rights and humanitarian law and laws on use of force TNC shall conduct risk assessment on human rights and humanitarian impact of proposed activities TNC shall establish system of independent monitoring Content TNC shall ensure security arrangements observe international human rights and humanitarian law and laws on use of force TNC shall conduct risk assessment on human rights and humanitarian impact of proposed activities TNC shall establish system of independent monitoring

9. Norms - Definitions Conflict Zone Definitions should be available for scrutiny, neutral, attend to human rights or humanitarian implications of conflict Reliance on Country Indicators for Foreign Policy to identify risk of conflict Conflict Zone Definitions should be available for scrutiny, neutral, attend to human rights or humanitarian implications of conflict Reliance on Country Indicators for Foreign Policy to identify risk of conflict

10. Norms - Definitions - Complicity Complicity Acts or omissions that provide material assistance to the perpetrator where TNC knew or ought to have known that its acts or omissions would provide such assistance Acts or omissions which abet the perpetrator in circumstances where the TNC knew or ought to have known that its acts or omissions would encourage the perpetrator Complicity Acts or omissions that provide material assistance to the perpetrator where TNC knew or ought to have known that its acts or omissions would provide such assistance Acts or omissions which abet the perpetrator in circumstances where the TNC knew or ought to have known that its acts or omissions would encourage the perpetrator

11. Norms - Definitions - Complicity Common Intention: Acts of a commercial undertaking or any of its members in violation of the Code and in furtherance of the commercial undertaking where the TNC knew or ought to have known that the commission of the acts would be the probable consequence of carrying out the commercial undertaking with the members

12. Monitoring Monitoring Body - CSR Working Group/Agency Composition: NGO, INGO, industry, gov’t, auditors, academic experts Funding: 50% gov’t / 50% industry Mandate analysis of human rights impact assessment recommendations on whether or not TNC can proceed, mitigation of negative impacts on-going monitoring and disclosure Monitoring Body - CSR Working Group/Agency Composition: NGO, INGO, industry, gov’t, auditors, academic experts Funding: 50% gov’t / 50% industry Mandate analysis of human rights impact assessment recommendations on whether or not TNC can proceed, mitigation of negative impacts on-going monitoring and disclosure

13. Monitoring On-going Monitoring Self-reporting by TNC, reviewed and verified by Working Group and/or Monitoring by an independent team of experts commissioned by Working Group On-going Monitoring Self-reporting by TNC, reviewed and verified by Working Group and/or Monitoring by an independent team of experts commissioned by Working Group

14. Consequences of Non-Compliance Facilitative Instruments Disclosure requirements for Socially Responsible Investment (SRI) regarding Working Group reports Legislation to protect whistleblower employees Facilitative Instruments Disclosure requirements for Socially Responsible Investment (SRI) regarding Working Group reports Legislation to protect whistleblower employees

15. Consequences of Non-Compliance Incentive Mechanisms Income Tax Act amendment to deny foreign tax deductions: where Canada has annulled a tax treaty on human rights grounds upon recommendation of Working Group Obligation on Export Development Corporation to tie availability of services to findings of Working Group Incentive Mechanisms Income Tax Act amendment to deny foreign tax deductions: where Canada has annulled a tax treaty on human rights grounds upon recommendation of Working Group Obligation on Export Development Corporation to tie availability of services to findings of Working Group

16. Consequences of Non-Compliance Coercive Mechanisms Amendment of Special Economic Measures Act to clarify its availability to prohibit: certain business activities investment in a particular state Creation of specific criminal offences and/or private causes of action within 3 years of introduction of above measures Coercive Mechanisms Amendment of Special Economic Measures Act to clarify its availability to prohibit: certain business activities investment in a particular state Creation of specific criminal offences and/or private causes of action within 3 years of introduction of above measures

17. www.law.utoronto.ca/faculty/macklin Click on “Publications” link to download Deconstructing Engagement Click on “Publications” link to download Deconstructing Engagement