Social Disclosure and Share Value: Empirical Data on (Non-) Disclosure of Information Related to Violence and Lack of Indigenous Consent

Social Disclosure and Share Value: Empirical Data  on (Non-) Disclosure of Information Related to Violence and Lack of Indigenous Consent

Submission to the Canadian Securities Administrators
Consultation Regarding NI 43 – 401
September 13, 2022

Submitted by Shin Imai and Sarah-Grace Ross

The following submission recommends concrete improvements to rules around disclosure, particularly pertaining to human rights issues. These recommendations stem from research and analysis conducted by the Justice and Corporate Accountability Project (JCAP). JCAP’s findings are outlined throughout this submission with the goal of providing sufficient context and data from which to ground JCAP’s recommendations to the Canadian Securities Administrators regarding improvements to NI 43-401.

JCAP’s Empirical Findings

JCAP has filed a number of complaints to the Ontario Securities Commission, the British Columbia Securities Commission and the United States Securities and Exchange Commission relating to the failure of Canadian mining companies to disclose information on community conflict, violence and Indigenous consent. These complaints are based on JCAP’s study of violence associated with 28 Canadian mining companies in Latin America and recorded company disclosure of violence. JCAP’s empirical findings demonstrate that not only are Canadian mining companies failing to disclose human rights conflicts, but that these conflicts constitute material information. These findings are bolstered by the studies conducted by similar organizations.

We found four indicia that showed that the information disclosed in JCAP’s complaints to the securities commissions (but not disclosed by the companies) contained important material information relating to the health of the companies in question:

  1. Media coverage publicizing JCAP’s complaints and instances of violence and lack of Indigenous consent on the mine were followed by a drop in the company’s share price.
  2. Institutional investors divested of the company’s stock due to concerns with the human rights record of the mine.
  3. A subsequent owner of one of the mines immediately and publicly addressed concerns raised in our complaint.
  4. Shareholders began class action law suits based on a company’s failure to disclose material information.

The six complaints filed by JCAP make up a small sample, but impact of social conflicts on share prices has been confirmed by a much larger study that looked at 354 killings over 20 years, mostly around extractive projects, and estimated a cumulative median loss of over USD $100 million in the 10 days following an assassination.

We have also found that mining companies frequently fail to disclose relevant information. In our study of violence associated with Canadian mining companies in Latin America, we found that publicly listed companies reported only 24.2% of the deaths and 12.3% of the injuries analyzed. These findings are consistent with an analysis conducted by the Shift Project, which analyzed the human rights disclosures of 18 of the top TSX-listed Canadian mining companies, and found that the majority were “failing to communicate a comprehensive narrative around human rights, cherry-picking instead a limited set of issues.”

Contributing Issues Relevant to the CSA Consultation

None of the three regulators that received JCAP’s six complaints detailing failures to disclose material information took any enforcement action or required disclosure by the companies. This signals that not only are regulators not paying attention to failures to disclose human rights conflicts, but also that the guidance provided in the National Instruments is too vague to result in proper compliance.


JCAP offers the following general recommendations to the CSA:

  1. Saliency is an appropriate lens for assessing the materiality of human rights impacts.
  2. Canada should keep pace with international disclosure trends toward mandating reporting human rights due diligence and stakeholder impacts.

JCAP offers the following recommendations specifically applicable to extractive companies:

  1. Extractive companies should have more explicit guidance related to disclosure of violence and human rights issues. Securities regulators should enforce disclosures on these issues.
  2. There should be specific disclosure requirements relating to free, prior, and informed consent of Indigenous peoples (FPIC) for extractive companies. Securities regulators should enforce these disclosure requirements.

Read the full report here