Trifecta of Corporate Accountability in North America

by Carla Garcia Zendejas on August 29, 2013

They say things come in three’s. Usually when someone makes that remark it pertains to bad events, but in this case the month of July proved to be quite a time in North America. Rarely can you link Mexico, Canada and the United States for having made substantial strides in the legal realm when it comes to corporate accountability but this time they have done it.

On July 7th a new law came into force in Mexico, the “Federal Law on Environmental Liability” passed by Congress has created a clear path to address environmental damages resulting from activities or actions carried out by individuals or corporations. The first regulation of its kind in Mexico this law connects environmental damages and degradation to existing environmental crimes legislation establishing liability and imposing responsibility for environmental restoration, compensation and fines against both individuals and corporations.

On July 22nd a Canadian court ruled for the first time that Canadian parent corporations may be sued for failing to prevent human rights violations by their foreign subsidiaries. The ruling allows 13 indigenous Mayans from Guatemala to file a claim against Hudbay Minerals in Canadian Courts for alleged violence which included shootings, murder, gang-rape and forced evictions at the site of a mine. This ruling comes after years of legal attempts made through the Canadian courts where Hudbay Minerals tried to have the case dismissed or at the very least have the case tried in Guatemala using a forum non conveniens motion.

Finally, on July 23 a U.S. District Court upheld the Conflict Minerals Disclosure Rule[i] which obliges companies to investigate and disclose whether the minerals used from the Democratic Republic of Congo (DRC) and neighboring countries financed or benefited armed groups. The Conflict Minerals Disclosure Rule was issued by the Securities and Exchange Commission (SEC), as directed by Congress, to implement Section 1502 of the Dodd-Frank Act. This section of the Dodd-Frank act is the reaction of Congress to the human rights crisis stemming from extreme levels of conflict and violence in the DRC and neighboring countries financed from the extraction and trade of conflict minerals.

Aside from the fact that all three of these legal developments are directly related to corporate accountability they share another critical issue, mainly the operations, activities and impacts of extractive industries. Throughout the world there has been great expansion in the number of mining companies and projects, not just in the realm of gold and platinum but also in the extraction of tin, tantalum and tungsten which are needed to produce the many high-tech electronics we use every day.

We are all overdue for genuine transparency and accountability when it comes to mining practices worldwide mainly because corporations have no nationality, multinationals exist globally and their activities and operations have far-reaching consequences. Communities struggle to have their voices heard regarding the impacts to health, environment and livelihoods, but their access to information and decision making processes is still for the most part non-existent. Reaching the courts and being granted access to judicial remedies is also fraught with obstacles, not to mention economic limitations.

The case of the Mayans against the Canadian mine in Guatemala is by no means the first attempt to sue a mining corporation in its home country, there have been a series of unsuccessful cases brought against corporate interests from communities in Africa and South America. Mexico can boast about its impressive environmental legal framework, but never has corporate accountability been linked to environmental damages as clearly as now. In the U.S. the SEC protects individual investors by requiring that corporations disclose proper information about investments. Now investors can expect much more information regarding activities by extractive industries in violent regions such as the DRC, which will have far reaching implications for many corporations.

In time these three achievements will have an effect on the day to day activities and decisions of a myriad of the corporations. The ultimate goal would be for corporations and shareholders to decide to hold themselves up to a different standard of responsibility for environmental and social impact before it occurs here or on the other side of the world. Obviously, these legal advancements must also be accompanied by widespread campaigns which will serve to encourage communities,  corporations, litigators and judges to use these tools until they become common practice. I can only hope that all of these changes are propelled by a swift wind.

 


[i] Conflict minerals are defined as columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives by the Dodd-Frank Act, the Court referred to the relevant minerals as the derivatives most commonly extracted from these ores namely: tantalum, tin, tungsten, and gold.

 

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