Companies need to do due diligence on human rights abroad


theglobeandmail.com | Published 10 May 2016

FRED PINTO and PETER CHAPMAN

The sale of Canadian military vehicles to Saudi Arabia has once again raised the age-old debate over whether Canada should do business with countries that have dubious human-rights records or in conflict-torn regions.

But it’s not just a question for governments to address. Companies also need to understand the human-rights risks they face in overseas operations and supply chains. And, increasingly, their investors do, too.

New international instruments such as the United Nations Guiding Principles on Business and Human Rights as well as new reporting requirements under securities regulations are increasingly emphasizing the need for global businesses to assess their own human-rights risks, and to take steps to ensure that they are not contributing to rights violations.

In a globalized operation, failure to assess those risks in a trustworthy, transparent and effective manner is ultimately a failure of due diligence. And for a company’s investors, a failure of due diligence may lead to regulatory, legal, operational and reputational problems that could and should have been avoided.

That’s why, as shareholders in Potash Corp. of Saskatchewan Inc., Oceanrock Investments’ Meritas Jantzi Social Index mutual fund was concerned when the Saskatoon-based company began sourcing phosphate rock from the non-self-governing territory of Western Sahara. As responsible investors, when our fund perceives environmental, social or governance risks in a company’s operations, we work with the Shareholder Association for Research and Education to engage with those companies to address those issues. Filing a shareholder proposal asking the company to commission and publish an independent human-rights assessment of its sourcing from Western Sahara was the next step in that process.

That resolution will be put to a vote Tuesday at the company’s annual general meeting.

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