Event Snapshot: World Bank CAO’s Toronto Workshop

This past January, Toronto hosted the World Bank’s Compliance Advisor Ombudsman (CAO) as part of a two-day workshop given by Canada’s Office of the Extractive Sector Corporate Social Responsibility Counsellor. The purpose of the visit was to develop a dispute resolution mechanism whereby Canadian companies engaging in the extractive sector would be able to constructively negotiate and diffuse potential conflicts with people affected in the areas where those firms are operating.

The Office of the Extractive Sector Corporate Social Responsibility Counsellor, led by Dr. Marketa Evans, is tasked by the Canadian Department of Foreign Affairs and International Trade to “review CSR practices of Canadian companies operating outside of Canada, and to advise stakeholders on the implementation of the endorsed performance standards.”

The three main issues that the CAO’s mandate is concerned with are:

• Implementing international CSR standards into extractive sector policy for Canadian companies (Compliance)
• Providing technical assistance and training for “constructive dialogue and problem solving” (Advisor)
• Acting as an impartial arbitrator between parties that come into conflict with one another (Ombudsman)

The function of the World Bank’s CAO office is much the same as that of Canada’s CSR office. The CAO position was specifically established to act as a watchdog and to hold to account the World Bank’s International Finance Corporation and its Multilateral Investment Guarantee Agency, which are both subsidiary agencies that are tasked with assisting the development of peripheral countries. As such, the CAO’s mandate is broken down into the following key points:

• Address the concerns of individuals or communities affected by IFC/MIGA projects
• Enhance the social and environmental outcomes of IFC/MIGA projects; and
• Foster greater public accountability of the IFC and the MIGA

According to a report published by the CSR’s office on the occasion of the visit from Meg Taylot, Vice President and CAO, there have been four predominant areas of dispute that the World Bank’s CAO has dealt with over the past 13 years – extractive industries, infrastructure, agribusiness, and manufacturing. Accordingly, the report states that “the common thread is the resource intensity of these industries, particularly relating to land and water use.”

As one of the main highlights of the CAO’s two-day working visit to Toronto, Ryerson University’s CSR Institute hosted a seminar where Ms. Taylor gave a keynote speech covering many of the most important issues in dispute resolution for extractive sector corporations. Taylor’s lecture, entitled Business, Communities, and Conflict: Collaborative Processes for the Extractive Industries, highlighted three crucial reasons why companies “come to the table” and call on the CAO to be the arbitrator in disputes with local communities where they are involved in resource extraction efforts:

• Interest in maintaining a badge of good corporate citizenship
• Risk management reasons (protecting corporate reputation and preventing financial losses)
• Promoting corporate social responsibility with ethical social and environmental practices

Taylor discussed two notable cases wherein the CAO has been called upon to arbitrate recently, both in South America. The first case was tied to the Yanacocha Gold Mine in Cajamarca, which is the largest gold quarry on the continent, and where in 2000 local workers had become ill from drinking contaminated water due to the mining company’s poor standards of water treatment and waste management.  With a fair amount of blame traded between local workers and company officials, the CAO managed to resolve tensions peacefully by organizing round-table meetings, while simultaneously organizing monitoring programs to ensure safe drinking water for the surrounding communities.

The second case concerns workers with the Nicaragua Sugar Estates Limited (NSEL) in Chichigalpa, Nicaragua. In 2008, a group of former NSEL workers filed a complaint with the CAO about the fact that many workers had developed Chronic Renal Insufficiency (CRI), which is an acute and oftentimes fatal kidney disease. At the root of this complaint was the workers’ belief that the NSEL had used highly toxic agrochemicals in its sugar refinery plant, which workers had been exposed to in operations.

In its role as arbitrator in the dispute resolution between the NSEL and the affected workers, the CAO established dialogue within the community to determine the underlying cause of the illness, while the ombudsman’s team also recruited a group of Boston University researchers to commission an independent study into finding the cause of the disease. Although the study is still ongoing, the group representing the workers (ASOCHIVIDA) and the NSEL have agreed to provide all the necessary support to the workers and communities affected by the epidemic, and the CAO’s office in turn has ensured to facilitate the cooperation of all parties “with the aim of improving social and environmental outcomes”.

Although the involvement of the CAO in Yanacocha and Chichigalpa represents a mostly successful series of events with regards to dispute resolution between corporations and communities in developing regions, the success of such resolution mechanisms is not always guaranteed. For instance, in 2011 Canada’s CSR Counsellor Dr. Evans experienced a failure, according to a MiningWatch Canada report, to negotiate a settlement in her first case on the job when she was called to arbitrate a dispute between Canadian mining company Excellon Resources and workers at the La Platosa mine in Mexico. The workers claimed that the corporation had failed to respect their “labour rights” and to comply with a “land use contract.” After attempts by the CSR Counsellor to coax Excellon to the table, the company unilaterally backed out of the dialogue process, leading mining commentator Jen Moore to observe that “the fact that a company can walk away at any time and end the process is one of the fundamental flaws in the Counsellor’s mandate.”

In sum, Ms. Taylor’s visit provided an opportunity for Canadian corporations, government representatives, and industry to exchange ideas and knowledge on dispute resolution mechanisms. As one observer from the CAO’s presentation noted in a blog, he is now “less ignorant because of a presentation [on dispute resolution] in Toronto.” You can also be sure it’s no accident that the CSR Counsellor’s report on this visit observed that “the CSR Counsellor’s approach was, and continues to be, deeply informed by the learnings and leadership of the CAO.” The World Bank Compliance Advisor Ombudsman will no doubt continue to influence the evolution of the role of Canada’s CSR Counsellor.

To see Ryerson University’s podcast of Ms. Taylor’s lecture, please follow this link: http://ryecast.ryerson.ca/12/watch/1680.aspx.