Human Rights Assessment

9. Transparency – Full Finding

Key message

Mining companies are expected to do more to be transparent about the money and gifts they give to governments in order to fight corruption and improve the governance and benefits of mining projects. Access to information and transparency are also important human rights based principles. The implementation of strong transparency policies and procedures for the Mary River Mine can help improve human rights impacts because there will be less opportunity for inappropriate spending and more accountability and incentives for positive contributions.

Overview

The Government of Canada just announced that it is going to make new disclosure rules that will apply to Canadian mining companies. The Mining Association of Canada has helped developed a framework for these new disclosure rules. ArcelorMittal also has strong disclosure and anti-corruption policies. The standards for transparency and disclosure for Baffinland are going to be increasingly stringent over the coming years.

All parties that administer the economic benefits that will flow from the mine should also set a good example about transparency and anti-corruption. This is needed to reinforce public confidence in the contribution of the mine to sustainable development and good governance. Greater disclosure and access to information about economic payments also helps monitoring and assessment of positive human rights impacts from the mine

Concerns have been raised in the public hearings about how much of the IIBA benefits will flow to communities. Last summer, some questions were raised about members of the QIA accepting travel to the London Olympics at Baffinland’s expense. Given their important role in administering royalties and IIBA payments, the Designated Inuit Organizations should develop their own policies about transparency and anti-corruption that takes into account their special status. This is an important piece of the puzzle for ensuring that the Mary River Mine and future mining projects in Nunavut make strong contributions to sustainable development and human rights.

Human rights standards

Human rights standards related to transparency and access to information are derived from Article 19 of the Universal Declaration of Human Rights: “Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.”

The international human rights standards related to access to information and freedom of expression are also relevant to the issue of prior and on-going consultation with all stakeholders (discussed in Finding 5). Meaningful consultation is premised on the provision of adequate information and the respect of stakeholders’ right to freely express their opinions and concerns. According to general human rights principles, transparency and access to information is a component of and indicator for respecting the full range of all other international human rights.

Canadian Legal Standards

On June 12th 2013, Prime Minister Stephen Harper announced that the Government of Canada will be establishing new mandatory reporting standards for Canadian extractive companies with a view to enhancing transparency on the payments they make to governments.

The new reporting regime will be established with a view to: improving transparency; ensuring Canada’s framework is consistent with existing international standards and aligned with other G-8 countries; ensuring a level playing field for companies operating domestically and abroad; enhancing investment certainty; helping reinforce the integrity of Canadian extractive companies; and, helping to ensure that citizens in resource-rich countries around the world are better informed and benefit from the natural resources in their country.

Over the coming months, the Government of Canada will consult closely with provincial and territorial counterparts, First Nations and Aboriginal groups, industry and civil society organizations on how to establish the most effective regime.

It is anticipated that the reporting regime will seek to enhance transparency and accountability around material payments by extractive companies to all levels of governments domestically and internationally, including taxes, license fees and other receipts.

The mandatory reporting initiative is in keeping with the United Kingdom’s priority of transparency put forward at the G-8 Lough Erne Summit.

Extractive Industry Transparency Initiative

The EITI Principles provide the cornerstone of the initiative. They are:

1. We share a belief that the prudent use of natural resource wealth should be an important engine for sustainable economic growth that contributes to sustainable development and poverty reduction, but if not managed properly, can create negative economic and social impacts.
2. We affirm that management of natural resource wealth for the benefit of a country’s citizens is in the domain of sovereign governments to be exercised in the interests of their national development.
3. We recognise that the benefits of resource extraction occur as revenue streams over many years and can be highly price dependent.
4. We recognise that a public understanding of government revenues and expenditure over time could help public debate and inform choice of appropriate and realistic options for sustainable development.
5. We underline the importance of transparency by governments and companies in the extractive industries and the need to enhance public financial management and accountability.
6. We recognise that achievement of greater transparency must be set in the context of respect for contracts and laws.
7. We recognise the enhanced environment for domestic and foreign direct investment that financial transparency may bring.
8. We believe in the principle and practice of accountability by government to all citizens for the stewardship of revenue streams and public expenditure.
9. We are committed to encouraging high standards of transparency and accountability in public life, government operations and in business,
10. We believe that a broadly consistent and workable approach to the disclosure of payments and revenues is required, which is simple to undertake and to use.
11. We believe that payments’ disclosure in a given country should involve all extractive industry companies operating in that country.
12. In seeking solutions, we believe that all stakeholders have important and relevant contributions to make – including governments and their agencies, extractive industry companies, service companies, multilateral organisations, financial organisations, investors, and non-governmental organisations.

Implementation of EITI must be consistent with the criteria below:

1. Regular publication of all material oil, gas and mining payments by companies to governments (“payments”) and all material revenues received by governments from oil, gas and mining companies (“revenues”) to a wide audience in a publicly accessible, comprehensive and comprehensible manner.
2. Where such audits do not already exist, payments and revenues are the subject of a credible, independent audit, applying international auditing standards.
3. Payments and revenues are reconciled by a credible, independent administrator, applying international auditing standards and with publication of the administrator’s opinion regarding that reconciliation including discrepancies, should any be identified.
4. This approach is extended to all companies including state-owned enterprises.
5. Civil society is actively engaged as a participant in the design, monitoring and evaluation of this process and contributes towards public debate.
6. A public, financially sustainable work plan for all the above is developed by the host government, with assistance from the international financial institutions where required, including measurable targets, a timetable for implementation, and an assessment of potential capacity constraints.

For further information about the EITI Requirements and Rules: http://eiti.org/eiti/requirements

Mining Association of Canada

Mining Association of Canada is part of the Canadian Extractive Resource Revenue Transparency Working Group, along with the Prospectors and Developers Association of Canada (PDAC), Publish What You Pay (PWYP) Canada and the Revenue Watch Institute (RWI). The Working Group was formed to develop a framework for the mandatory disclosure of extractive company payments to governments where Canadian companies operate.

In June 2013, the Working Group released “Recommendations on Mandatory Disclosure of Payments from Canadian Mining Companies to Governments,” which state the following:

“The Working Group recommends disclosure requirements for Canadian mining companies be mandatory, not voluntary, to ensure that all relevant information is available and accessible to stakeholders, and that companies cannot opt out of compliance. After consideration of the most appropriate venue, or “home,” for Canadian disclosure requirements, the Working Group recommends the implementation of a mandatory disclosure framework through securities regulation with a strong equivalency provision to align with other jurisdictions such as the US and the EU. This recommendation aligns with the US model (where such disclosure is regulated by the US Securities and Exchange Commission (“SEC”) and recognizes the existing powers of Canadian securities administrators to regulate the disclosures of public entities in Canada.”

“A consequence of establishing a reporting regime in securities requirements is that disclosure will be mandatory only for public companies. However, the benefits of this approach are clear. Such a regime will take advantage of the experience of the Canadian securities administrators in receiving and managing disclosure filings, and likely require fewer start-up costs than a new reporting and compliance regime. In addition, the use of securities regulation would mean that the disclosure requirements recommended here would extend to foreign companies who seek to raise capital in Canadian markets.”

The approach suggested by the Working Group would mean that Baffinland (which is not a publicly-listed company) would not be covered by the mandatory disclosure requirements. However, it may still choose to voluntarily disclose its payments to different levels of government as a result of its corporate policies and commitments.

Company policies and commitments

Arcelor Mittal

From ArcelorMittal's statement of support to the EITI:

In 2009, ArcelorMittal formalised its support of the Extractive Industries Transparency Initiative (EITI), after being an active participant of the EITI in Liberia since May 2007. The EITI’s principles regarding the prudent use of natural resources, transparency, accountability, and stakeholder dialogue complement ArcelorMittal's own corporate values and corporate responsibility policies.

Baffinland sustainability policy

4.0 Transparent Governance

We will take steps to understand, evaluate and manage risks on a continuing basis, including those that impact the environment, employees, contractors, local communities, customers and shareholders.

We ensure that adequate resources are available and that systems are in place to implement risk-based management systems, including defined standards and objectives for continuous improvement.

We measure and review performance with respect to our environmental, safety, health, socio-economic commitments and set annual targets and objectives.

We conduct all activities in compliance with the highest applicable legal requirements and internal standards

We strive to employ our shareholder’s capital effectively and efficiently. We demonstrate honesty and integrity by applying the highest standards of ethical conduct.

Additional Information and Resources:

Government of Canada press release “Canada commits to enhancing transparency in the extractive sector” and backgrounder: http://pm.gc.ca/eng/media.asp?id=5525

G8 Lough Erne Leaders’ Communiqué, paragraphs 34 to 42: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/207771/Lough_Erne_2013_G8_Leaders_Communique.pdf

Resource Revenue Transparency Working Group (including Mining Association of Canada and Prospectors and Developers Association of Canada)
• Draft recommendations on mandatory reporting requirements: http://www.mining.ca/www/media_lib/Press_Release/2013/RRTWGDraftforConsultationJune2013.pdf
• Backgrounder to draft recommendations: http://www.mining.ca/www/media_lib/Press_Release/2013/RRTWGBackgrounderJune2013.pdf

ICMM 'Position Statement on Transparency of Mineral Revenues' that is supportive of EITI, but also considers the broader aspects of revenue transparency. See: http://www.icmm.com/page/14652/position-statement-on-transparency-of-mineral-revenues

Extractives Industry Transparency Initiative requirements: http://eiti.org/eiti/requirements