CSR in Natural Resource Development: The Good, the Bad, and the Ugly

1. Corporate Social Responsibility AND natural RESOURCE DEVELOPMENT: the Good, the Bad and the Ugly • Presented by Frank Sur, Partner, GowlingWLG (Canada) LLP • IAKL – September 21, 2019

2. Introduction • Canada has a unique system of developing natural resources compared to the rest of the world • This presentation will focus on • Canada’s approach to corporate social responsibility (CSR) in natural resource development • The “good, the bad and the ugly” case study of CSR practices

3. Overview of Corporate Social Responsibility Practices in Canada • Canadian Government defines CSR as voluntary activities that go beyond legal requirements • In November 2014, Canadian Government announced CSR Strategy “Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada’s Extractive Sector Abroad” (the “2014 CSR Strategy”) • 2014 CSR Strategy • Promotes Canadian values and ethical standards for all Canadian companies abroad • Primary audience is oil and gas, minerals and other natural resource extraction

4. CSR Mechanisms • Tools provided by Canada in Connection with CSR • Provides diplomatic support for CSR initiatives to Canadian Companies operating abroad • Appointment of CSR Counsellors who act provide support and guidance on CSR issues • Access to Canada’s National Contact Point for dispute resolutions • Rewards companies that adhere to CSR Guidelines through diplomatic support and penalizes companies that violate CSR Guidelines by withdrawing diplomatic support • Creation of CORE, the Canadian Ombudsperson for Responsible Enterprise, tasked with investing allegations of human rights abuses involving Canadian companies operating outside the country

5. CASE STUDIES • The Good • Canada has stringent assessment and permitting procedures for natural resource extraction • Many Canadian companies have internal policies and guidelines to address social and environmental issues abroad and at home • Canadian government maintains public list of companies that responded to 2014 CSR Strategy

6. The Bad – Nevsun and Tahoe Resources • Earlier this year, Supreme Court of Canada heard arguments for whether a Canadian mining company can be sued in Canada for alleged human rights abuses abroad • NevsunResources • Canadian Company called Nevsun Resources operating Bisha mine in Eritrea • Refugees allege they were conscripted into mandatory military service to work for state controlled entities under contract with Nevsun to build gold, copper and zinc mine under inhumane conditions • Issue whether Canada would be proper forum to hear the case

7. The Bad – Nevsun and Tahoe Resources • Trial courts were unwilling to hear the case stating claim should be brought where alleged breaches occurred • British Columbia Supreme Court rejected Nevsun’s calls to dismiss because there was real risk the refugees would not get fair trial in Eritrea • Decision appealed to Supreme Court of Canada • Since then, 80 more plaintiffs have joined with similar allegations • The case is still being considered

8. The Bad – Nevsun and Tahoe Resources • Tahoe Resources • Prior to Nevsun, decision dismissing a claim by seven Guatemalan men alleging they were injured by security forces hired by Tahoe Resources, a British Columbia company, was overturned by the British Columbia Court of Appeal citing unfairness to the plaintiffs on getting fair trial in Guatemala • Supreme Court of Canada refused to hear Tahoe Resources’ appeal • Earlier this year, American Silver (which acquired Tahoe Resources) settled with the plaintiffs and publicly apologized to victims and community

9. The Ugly – HudbayMinerals • Hudbay Minerals • Eleven Guatemalan women were allegedly gang raped by security personnel hired by Hudbay Minerals at nickel mining project in El Estor • Maya Q’egchi community had opposed project from the beginning, arguing the concessions granted violated rights over ancestral land • Lawsuit has been ongoing since 2007 • Forum issue resolved with Hudbay withdrawing motion to have lawsuit heard in Guatemala • Landmark case – first time Canadian court allowed foreign plaintiff to seek justice in Canada for incidents alleged to have occurred abroad

10. LESSONS • Cases demonstrate fundamental flaw in 2014 CSR strategy • Even with guidelines, proper mechanism to monitor still required • Reporting, monitoring and accountability are key • Proper forum for complaints to be heard still missing • In January 2018, Canadian government announced $6.8 million over six year to create CORE (the Canadian Ombudsperson for Responsible Enterprise)