The Hon. John Manley
Minister of Industry
235 Queen St., 11th Floor East
Ottawa, Ontario K1A 0H5

March 30, 2000

Dear Minister Manley:

We, the member groups of the Corporate Responsibility Coalition (CRC), are writing concerning the recently introduced proposed changes, in the form of Bill S-19, to the Canada Business Corporations Act (CBCA). More than 155,000 corporations are incorporated under the CBCA, including half of the 1999 Financial Post Top 500 corporations in Canada.

In this round of changes to the CBCA, we want to see the removal of barriers to shareholders expressing their concerns to other shareholders; the enactment of measures to ensure that the interests and concerns of stakeholders of corporations other than shareholders are addressed by corporate decision-makers; and measures to increase corporate accountability to shareholders and stakeholders in other ways.

Corporations set up under the Canada Business Corporations Act (CBCA) are major forces both in Canada and in terms of Canadian corporate operations internationally. Not surprisingly, the environmental, social and ethical track record of these businesses is often of enormous concern to various corporate stakeholders, including local communities, customers, employees, shareholders.

In addition, the activities of these corporations are of concern to all government departments, as corporations are involved in all aspects of society and often regulated directly by the federal government in various ways.

For citizens, communities, and governments, corporate wrongdoings have major negative impacts. Corporate wrongdoings can entail deaths and injuries in the workplace or for customers; unfair or discriminatory treatment of employees, suppliers and customers; pollution and degradation of the environment; an increased burden on government resources forced to clean up after corporate wrongdoings; and an overall lowering of respect for laws in society. Because of the size and influence of the corporate sector, the negative effects of corporate irresponsibility on society are much greater in most areas than the irresponsibility of individuals, or even of governments.

Several surveys in recent years have shown clearly that Canadians are concerned about lack of responsible actions by corporations. Most recently, Environics International developed and coordinated a survey on corporate social responsibility to representative samples of about 1,000 citizens in each of 23 countries on six continents - more than 25,000 interviews conducted in May 1999. A total of 1,500 Canadians were surveyed, and 43 per cent said the primary role of large corporations was not to make profits, pay taxes, provide employment, and obey laws, but to set higher ethical standards, go beyond what is required by law, and actively build a better society for all. Only 11 per cent said that corporations should focus only on making profits, paying taxes and providing employment. The remaining respondents said that corporations should operate "somewhere between these two points of view."

More Canadians said that the primary focus of corporations should be on social responsibility than citizens in any other country surveyed except Australia. And fewer Canadians said that the primary focus of corporations should be on profits, taxes and employment than in any other country except Australia. The number one concern, supported by a total of 83 per cent of Canadians, was that corporations should be held totally responsible for protecting the health and safety of employees, followed by avoiding bribes or corruption, not using child labour, treating all employees equally, and protecting the environment. Further, in 20 of the 23 countries a majority of respondents said that corporations should do more than focus primarily on making profits, paying taxes and providing employment.

Despite such popular support for greater corporate responsibility, in recent years stakeholders from many different sectors pressing for greater corporate responsibility on the part of CBCA corporations have unfortunately encountered a number of legal roadblocks. Several of these roadblocks are in the CBCA itself, and others result from general lack of effective corporate responsibility laws and regulations.

Since 1994, several citizen groups have made submissions to Industry Canada concerning these problems with the CBCA, a law that has not been changed very much at all since its enactment in 1975. We are very concerned because these submissions have been ignored in Bill S-19's proposed changes to the CBCA, and some of the proposed changes step backwards and raise the barriers to shareholders expressing their concerns. We are further concerned because this is the first time that the CBCA will be changed significantly in the past 25 years, and further changes will likely not be considered for several years.

For several years, the federal government has used voluntary codes as a substitute for laws as a means of regulating various activities by various corporate sectors. As a coalition we oppose this use of voluntary codes because they have been shown in almost all cases to be ineffective and unenforceable. For example, the voluntary code negotiated in early 1997 between the federal government and Canada's largest banks concerning lowering barriers to access to banking service has done very little to change banks' practice of discriminating against people with low incomes.

Similarly, a survey in 1997 of corporate codes of conduct of Canadian businesses with significant international operations by the Canadian Lawyers Association for International Human Rights (CLAIHR) in collaboration with the International Centre for Human Rights and Democratic Development (ICHRDD) found that most corporations did not have codes, and most that did have incomplete codes that are never monitored independently. While the federal government has recognized the significant and numerous drawbacks to voluntary codes in its March 1998 publication Voluntary Codes: A Guide to Their Development and Use, the government unfortunately continues to use such codes.

For all the reasons set out above, we feel it is essential that the measures we are proposing be enacted in law, and enforced effectively. Set out below are the recommended measures the Corporate Responsibility Coalition wants to see enacted in the CBCA and related laws during the upcoming round of amendments. Our reasons for proposing these measures are set out below each recommendation or set of related recommendations. Overall, the measures, if enacted, will raise corporate responsibility standards in several areas to a level Canadians clearly want and deserve.

We think it is reasonable, and therefore expect, that you will address our concerns and the concerns of most Canadians by ensuring that these measures are enacted into law through the CBCA amendment process. We also request that the committees reviewing the draft legislation travel across Canada to ensure that Canadians across the country have an opportunity to participate fully in the decision-making process concerning this very important law.

In addition, we request a meeting with you to discuss our recommendations further. Please contact Duff Conacher, Coordinator of Democracy Watch, in Ottawa at tel: 241-5179 to arrange a meeting with representatives of the Corporate Responsibility Coalition. We look forward to hearing from you.

Sincerely,
Duff Conacher, Coordinator
Democracy Watch

and the following 24 citizen groups, 14 national and 10 from five provinces, all member groups of the Corporate Responsibility Coalition:

Henry McCandless, Co-Director, Alliance for Public Accountability
Yves Michaud, Founding President, Association de protection des épargnants et investisseurs du Québec (APEIQ)
Betty Plewes, CEO-President, Canadian Council for International Cooperation
Al Cook, Coordinator, Canadian Lawyers Association for International Human Rights (CLAIHR)
Corinne Baumgarten, Director, Canadian Friends of Burma
Judy Darcy, President, Canadian Union of Public Employees (CUPE)
Gil Yaron, Director, Citizens Council on Corporate Issues
Harry Kits, Director, Citizens for Public Justice
Peter Tabuns, Executive Director, Greenpeace Canada
Josephine Grey, Human Rights Project, Low Income Families Together (LIFT)
Lynda Yanz, Coordinator, Maquila Solidarity Network
Joan Kuyek, Executive Director, MiningWatch Canada
Kripa Sekhar, Vice-President, National Action Committee on the Status of Women
Larry Brown, National Office, National Union of Public and General Employees
Karen Farbridge, Coordinator, Ontario Public Interest Research Group-Guelph
Jennifer Lalonde, Coordinator, Ontario Public Interest Research Group-Ottawa
Mark Fried, National Office, Oxfam Canada
Ruth Morris, Executive Director, Rittenhouse (A New Vision)
Erika Cancino, Board Member, Saskatchewan Action Committee on the Status of Women
Mel Watkins, President, Science for Peace
Angela Rickman, Deputy Director, Sierra Club of Canada
Regina Flores, Project Coordinator, Sierra Youth Coalition
Eugene Ellmen, Partner, Social Change Associates
Stacey Chappell, Coordinator, Vancouver Island Public Interest Research Group

cc. Ministers of Cabinet
Members of the Senate Committee on Banking Trade and Commerce

ATTACHMENT: List of Recommended Corporate Responsibility Changes to the Canada Business Corporations Act (CBCA) and Related Measures