Doing business abroad

By Gauntlet Editorial Board

After two weeks of peaceful protesting, a protest in the Santa Ana region of Peru turned violent. A local tax office was broken into and files were set ablaze in the streets when talks between Bear Creek, a Canadian owned company hoping to start a mine in the region, and members of the Ayamara indigenous group broke down. The situation is complex. It does, however, demonstrate the importance of accountability and transparency for Canadian companies active internationally.

Straddling the Peruvian-Bolivian border is Lake Titicaca, the highest commercially navigable lake in the world. The Ayamara claim that the Bear Creek mine will decimate the fish population of Titicaca, as well as pollute drinking water. (To extract silver, miners use cyanide, a highly toxic chemical.) Bear Creek, in contrast, claims that there is little risk of danger because the mine isn’t in the same drainage basin. For mining to occur in Peru companies must undergo an environmental impact assessment, which is currently under review.

Such incidents are common. There is no evidence that Bear Creek has performed any wrongdoing. Too often though, companies active abroad only meet the requirements of the local government, usually to the detriment of the environment and surrounding community. The local government, keen to take advantage of natural resources, offers easy contracts to international companies. According to a recent Associated Press article, Peru has tripled the area allotted for mining in one province in the last eight years.

It’s clear that developing countries don’t hold companies to the same standards that developed ones do, but problems occur locally too. Environmental damage, for instance, isn’t fined heavily enough, meaning companies can cause long-term harm with only small profit loss. Still, Canada’s standards are better than many countries.

To prevent Canadian companies from performing actions abroad that would be considered illegal at home, three steps must be taken. First, the companies themselves must be willing to take a small loss in profit for the sake of safe working conditions and high environmental standards- measured not on the level of the country in which they are operating, but at the level of companies working in Canada. Second, investors and consumers must demand better transparency on those processes. This will make for less revenue for increased prices, of course, but complacency is no excuse.

Finally, the federal government should demand more of Canadian companies working abroad. One way of accomplishing this is through a bill like the one Liberal MP John McKay put forward in 2009. Bill C-300, The Corporate Accountability of Mining, Oil and Gas Corporations in Developing Countries Act makes its goals clear from its name. Unfortunately, the bill failed in 2010 during its third reading.

Consumers are increasingly asking where their products are coming from. So too are companies improving their practices- often to ignore consumer demands is to risk losing more profits. But sometimes they need a push.

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