The Canadian Ombudsperson for Responsible Enterprise (CORE) launches its first investigations
On July 11, 2023, the Canadian Ombudsperson for Responsible Enterprise (CORE) announced the initiation of two investigations into allegations of forced labour in the supply chains and operations of two Canadian companies.
The CORE has decided to investigate complaints against Nike Canada Corporation and Dynasty Gold Corporation involving alleged relationships with Chinese companies that committed human rights violations involving the use of Uyghur forced labour. The CORE has also published Initial Assessment Reports relating to each of these complaints.
These are the first investigations launched by the CORE, which was first appointed in 2019 by Order-in-Council with a broad mandate of promoting corporate responsibility in accordance with internationally-recognized standards.1
The CORE: Complaint and investigation process
The CORE reviews alleged human rights abuses involving Canadian companies operating abroad in the garment, mining, and oil and gas industries. Foreign entities directly or indirectly controlled by a Canadian company are subject to the CORE’s purview.2 To be admissible, the alleged acts or omissions must have taken place after May 1, 2019.
Upon receipt of a complaint, the CORE review process proceeds in several stages.3
- The intake/admissibility stage: The CORE first engages in an informal information gathering process about a given complaint, in view of determining its admissibility.4 With the consent of the complainant, the CORE may communicate with the Canadian company named in the complaint to gather additional information in view of determining whether a complaint is admissible.5 A complaint is considered admissible where there are allegations of abuse of an internationally-recognized human right arising from the operations of a Canadian company in the garment, mining or oil/gas sectors after May 1, 2019. A decision on admissibility is not a decision on the merits of a complaint.6 Should it determine a complaint to be admissible, the CORE will inform the respondent company, and provide the company with a summary of the admissible allegations.7
- The initial assessment stage: The CORE may conduct an initial assessment of an admissible complaint by engaging in problem solving, dialogue and facilitated negotiation. Importantly, the CORE may prepare an Initial Assessment Report, which may be publicly disclosed after the respondent company has been given an opportunity to comment on the contents of the report, and the confidentiality of the information contained therein.8
- Review/investigation stage: The CORE will initiate a review of the facts and send a notice to the parties 10 days prior to making the investigation public. During the course of a review, the CORE may engage in joint or independent fact-finding, which may include interviews of the parties and others.9 While companies are not required to participate in the CORE’s investigation and review process, the CORE can make adverse inferences from non-participation. Such non-participation can result in the CORE considering a party not to be acting in good faith.10 Good faith collaboration with the CORE includes respecting confidentiality protocols and not engaging in acts of retaliation against parties who file complaints.11 The CORE can then make recommendations to the Minister to implement trade measures, including withdrawing or denying trade advocacy or financial support from government ministries and bodies.12, 13
- Mediation: While mediation is available throughout the process, the CORE will seek parties’ consent to engage in mediation following the initial assessment.14
- Recommendations and follow-ups: After a review is completed, the CORE prepares a final report containing recommendations, including a referral to arbitration, referrals to law enforcement or regulatory authorities, financial compensation, formal apologies, or changes to the Canadian company’s policies.15 The CORE may also make recommendations to the Minister relating to funding and services provided by the Government of Canada.16 The CORE can follow-up on these recommendations. Any final or interim reports are to be published, after allowing the persons concerned to comment.17
In the absence of a complaint, the CORE may also undertake a review on its own initiative.18
The complaints against Nike Canada and Dynasty Gold and the initial assessment reports
The complaints were filed by a coalition of 28 organizations including the Canadian Council of Muslim Women, Canadian Council of Imams, Lawyers for Humanity, Muslim Association Canada, and the Canadian Security Research Group.19 The complainants base their allegations on international human rights standards against slavery, notably the Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights, and the International Labour Organisation’s Forced Labour Convention.
In support of their allegations, the complainants notably rely upon the findings in a 2020 report published by the Australian Strategic Policy Institute (ASPI) entitled Uyghurs for sale.20 The ASPI report outlines the alleged involvement of over 82 companies in the operation of factories in China, at which around 80,000 Uyghurs are being forced to work.21 The ASPI claims that human rights abuses, including forced labour, segregation, surveillance, and constraints on religious practices, have been denounced since 2017.22
The complaint filed against Nike alleges the company’s involvement with multiple factories operating in Uyghur forced labour camps. Prior to the launch of the formal investigation, the CORE held separate meetings with the complainants and with representatives of Nike.23 The company has taken the position that it has fulfilled its due diligence obligations regarding forced labour activities and subsequently released statements reiterating its commitment to ethical and responsible business activities. It has however declined to meet with the CORE to undertake an initial assessment meeting.24 Nike has also not been amenable to mediation but has said it remains open to that possibility in the future.25
Dynasty is a mining company incorporated in British Columbia operating the Hatu mine in Xinjiang, China. The company has been engaged in a legal dispute with a local company over the ownership and control of the mine. The complainants contend that the issue of operational control does not affect Dynasty’s due diligence duties regarding human rights.26 The CORE states that it has unsuccessfully sought to contact and engage in assessment meetings with Dynasty over the last few months since the complaint.27 Dynasty contends that there is no evidence to support the allegations and that they had ceased operations at the mine over a decade ago.28
Key takeaways for Canadian companies
These first investigations by the CORE are consistent with increasingly robust initiatives taken by the Government of Canada to increase responsibility and accountability for human rights abuses committed abroad by Canadian companies. Indeed, Canada recently enacted the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff that will come into force in the coming months.29 The Act seeks to impose transparency obligations on companies and imposes fines for various offences, such as providing misleading or false information to the public. Canada has also implemented measures specifically concerning the forced labour of Uyghurs in China, notably by requiring companies doing business in the Xinjiang region to sign the Integrity Declaration on Doing Business with Xinjiang Entities.
In view of complying, Canadian companies should pay attention to the activities of the CORE and potential evolutions in its mandate and investigation powers. Companies should proactively review their due diligence processes throughout their supply chains in view of ensuring compliance with international human rights laws. Companies should evaluate and comply with their obligations under the Organisation for Economic Co-operation and Development’s Guidelines for Multinational Enterprises as well as the United Nations Guiding Principles on Business and Human Rights.
While the CORE does not presently have the authority to compel information or to impose punitive measures, Canadian companies should consider the reputational repercussions of such investigations and related public reports, as well as potential resulting litigation.
The CORE is expected to publish Initial Assessment Reports for 11 pending complaints on their website in the coming weeks.30
The authors are grateful to Inès Bagaoui-Fradette, law student, for her invaluable contribution to this article.
1 See for example: OECD Guidelines and UN Guiding Principles.
2 Order in Council P.C. 2019-299 (“OiC”) at s.1(2).
3 Government of Canada, Guide to filing a complaint with the CORE, 16 June 2023.
4 Government of Canada, Operating Procedures for the Human Rights Responsibility Mechanism of the CORE (“OP”), at ss. 5.11 and 5.7.
5 Government of Canada, Operating Procedures for the Human Rights Responsibility Mechanism of the CORE, 3 August 2021 at s. 5.17.
6 OP at ss. 5.7 and 5.8.
7 OP at s. 6.
8 OP at ss. 8 and 16.
9 OP at s. 10.
10 OP, ss. 12.4 and 12.6, and 13.7.
12 OP, s. 12.7.
13 OiC at s.10.
14 Ibid at s.9.
15 OiC at s. 11, OP at s. 13.
16 OiC at s. 12.
17 OiC at ss. 14 and 16.
18 OP at . 10.
19 CORE, Initial Assessment Report: Nike Canada Corp., 11 July 2023 at Annex 1.
20 Australian Strategic Policy Institute, Uyghurs for sale, 1 March 2020.
23 CORE, Initial Assessment Report: Nike Canada Corp., 11 July 2023.
24 CORE, Initial Assessment Report: Nike Canada Corp., 11 July 2023 at paragraph 27.
25 Ibid at paragraph 40.
26 CORE, Initial Assessment Report: Dynasty Gold Corp., 11 July 2023.
27 Ibid at paragraph 3.
28 Ibid at paragraph 38.
29 Bill S-211: An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff, 2023 c.9.
30 The CORE launches investigations into two Canadian companies (canada.ca)