Human rights due diligence: best practices and emerging trends. Wednesday, February 1, 2017

Transcription

1 Human rights due diligence: best practices and emerging trends Wednesday, February 1, 2017

2 Join the conversation Tweet using #NLawMotion and connect Connect with us on LinkedIn linkedin.com/company/nortonrosefulbright 2

3 Speakers KayLynn Litton Partner Calgary KayLynn Litton practices primarily in the energy area, and regularly assists clients on a broad range of corporate and commercial matters, including domestic and international acquisitions and divestitures, joint venture projects, corporate reorganizations, aboriginal consultation and general contractual matters. Her practice includes the negotiation and drafting of complex transactional, corporate, commercial and operational agreements. Ray Chartier Partner Calgary Ray Chartier s practice includes dispute resolution within the energy and mining industries, regulatory and environmental compliance matters and aboriginal law issues. Mr. Chartier represents and regularly provides advice to energy industry clients concerning project impacts on indigenous populations, including the duty to consult in the context of resource development. Michael Torrance Partner Toronto Michael Torrance advises corporations on domestic and international human resources management, occupational health and safety and human rights law, with an expertise in international standards of sustainability and risk management. He is the Local Practice Leader for Occupational Health and Safety for Norton Rose Fulbright Canada LLP in Toronto. Mr. Torrance s practice also includes Risk Advisory on international standards of environmental and social risk management and human rights due diligence. 3

4 Overview 1. Introducing human rights due diligence 2. Canadian businesses operating abroad and the corporate responsibility to respect human rights 3. Indigenous Rights in Canada and the principle of Free Prior and Informed Consent (FPIC) 4

5 Introducing human rights due diligence

6 The domino effect One incident can lead to follow-on consequences and loss of confidence across multiple issues and parties: Press Regulators Commercial counter-parties Debt Rating Agencies Lenders Investors Insurers Government Employees and Contractors Equity Analysts 6

7 Human rights scenarios Global Mining Co. Shareholder activism Global food retailer Supply Chain Code of Conduct development Energy and mining company Investment due diligence (local laws and international standards) Class action litigation Rana Plaza 7

8 Exploring human rights due diligence: Report 8

9 Report executive summary 77% of respondents who had conducted a specific human rights due diligence process identified actual or potential human rights impacts during the process 19% of respondents who did not conduct human rights due diligence identified adverse human rights impacts 74% of respondents who had conducted a specific human rights due diligence process identified actual or potential human rights impacts linked to activities of their third party business relationships 29% of respondents who did not conduct human rights due diligence identified adverse human rights impacts linked to activities of their third party business relationships 9

10 Key impacts by sector 10

11 Key takeaways How is HRDD being conducted? What are the key benefits of conducting HRDD? What are the risks of not undertaking express HRDD, but rather incorporating human rights issues into other due diligence processes? 11

12 Key takeaways (cont d) Why conduct human rights due diligence? The top incentives for conducting human rights due diligence include brand, reputation, normal corporate legal risk avoidance and compliance with reporting requirements and applicable laws Focus due diligence on human rights impacts Although almost half of the businesses surveyed by NRF and BIICL had never conducted a due diligence process dedicated solely to human rights, those that did conduct such due diligence had a much higher chance of spotting a problem Perspective When conducting human rights due diligence, companies need to look beyond the impact on the enterprise to the impact on the affected rights holder, as a stakeholder. Supersedes materiality. Governance gaps Normal corporate processes such as audit and record keeping are not always effective in revealing the impact of the business enterprise on human rights 12

13 Key takeaways (cont d) Crossdepartmental approach To get the best results, the legal and compliance departments should work together with other functions, including in particular the human resources and corporate social responsibility teams Subsidiary and business partner risks Possible legal and reputational damage for the acts of subsidiaries or subcontractors abroad. In order to properly assess its impacts, a business can no longer just look at the other legal entities in the group, but needs to understand the human rights impact of other businesses within its supply and value chains. Keep in mind: Leverage is higher Capacity building versus termination Contractual provisions and Codes of Conduct are often the primary method for preventing or addressing human rights impacts 13

14 Key takeaways (cont d) Legal relevance of voluntary principles When determining what standard of due diligence is necessary, it can be helpful to look at the United Nations Guiding Principles on Business and Human Rights, the leading soft law in this area. Although these principles are voluntary, courts are increasingly holding companies to account for failing to observe them. Potential defence Effectively addressing potential human rights issues in supply chains can mitigate these risks and can serve as a defence if something does go wrong. 14

15 Canadian businesses operating abroad and the corporate responsibility to respect human rights

16 16

17 Guiding Principle 11 Business enterprises should respect human rights. This means that they should avoid infringing on the human rights of others and should address adverse human rights impact with which they are involved. 17

18 OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas Five step framework Step 1 Step 2 Step 3 Step 4 Step 5 Establish strong company management systems Identify and assess risk in the supply chain Design and implement a strategy to respond to identified risks Support independent third-party audit of the refiner s due diligence Report annually on supply chain due diligence 18

19 Canadian corporate law and Directors duties OSC Emerging Market Review Eight Areas of Concern Business and operating environment Language and cultural differences Corporate structure Related parties Risk management and disclosure Internal controls Use of and reliance on experts Oversight of external auditor 19

20 Canadian legislative developments Canada s enhanced Corporate Social Responsibility (CSR) Strategy - Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada s Extractive Sector Abroad Extractive Sector Transparency Measures Act 20

21 Evolving approach of Canadian courts to alleged human rights violations of Canadian companies operating abroad Garcia v. Tahoe Resources Inc. Araya v. Nevsun Resources Ltd. Choc v. Hudbay Minerals Inc. Bil in (Village Council) v. Green Park International Ltd. Association canadienne contre l impunité c. Anvil Mining Ltd. 21

22 Indigenous rights and the emerging principle of Free Prior and Informed Consent (FPIC)

23 F ree, P rior and I nformed C onsent 23

24 1. What is FPIC? 2. What does FPIC require? 3. Why is FPIC important? 24

25 UN Declaration on the Rights of Indigenous Peoples Article 19 States shall consult and cooperate in good faith with the indigenous peoples concerned through their own representative institutions in order to obtain their free, prior and informed consent before adopting and implementing legislative or administrative measures that may affect them. Article 32 States shall consult and cooperate in good faith with the indigenous peoples concerned through their own representative institutions in order to obtain their free and informed consent prior to the approval of any project affecting their lands or territories and other resources, particularly in connection with the development, utilization or exploitation of mineral, water or other resources. 25

26 Duty to consult VS. FPIC 26

27 27

28 28

29 Contact Ray Chartier Partner, Norton Rose Fulbright KayLynn Litton Partner, Norton Rose Fulbright Michael Torrance Partner, Norton Rose Fulbright

30 30

31