View in browser

With the ESG landscape evolving at a rapid pace, MLT Aikins is pleased to offer a curated list of timely and relevant ESG articles to help you stay current. Learn more about our ESG services.

Climate Activist Groups and Government Target Deforestation and Forestry Industry

Eight leading environmental groups from across Canada have filed a complaint with the Competition Bureau requesting an inquiry into false and misleading sustainability claims regarding the Sustainable Forestry Initiative's sustainable forestry certification scheme. The groups claim the certification system has contributed to unsustainable logging, allowing activities such as clearcutting, spraying toxic chemicals and logging endangered forests. Read more from Ecojustice, including a link to the filed complaint.

From the regulatory perspective, the European Union (EU) has agreed to a new law preventing companies from selling products such as soy, beef, palm oil, cocoa and coffee as well as derived products such as leather, chocolate and furniture, which are linked to deforestation in EU member states. A failure to provide the required due diligence statement proving their supply chain is not contributing to deforestation may result in fines up to 4% of a company's turnover in an EU country. The new law may come into force before the end of the 2022 calendar year. Read an overview of the new law via Australian Broadcasting Corporation (ABC) News.

Big Fines and More Investigations as Regulators Continue to Crack Down on Greenwashing

The U.S. Securities and Exchange Commission (SEC) fined Goldman Sachs Asset Management $4 million after charging the company with failing to follow policies and procedures involving ESG investments.

The charges related to the policies and procedures of two mutual funds and one separately managed account strategically marketed as ESG Investments. The allegations relate to failures regarding the ESG research used to select and monitor securities from April 2017 until February 2020. Read more from Reuters.

The Competition Bureau has opened an inquiry after a group of doctors, nurses and public health advocates made allegations of greenwashing against Canadian Gas Association (CGA). The concerns surround the statements about natural gas through CGA's "Fueling Canada” advertising campaign. The allegation focuses on claims that natural gas is "clean" and methane gas is more affordable than other home energy systems. Read more from the Financial Post.

The Australian Securities and Investment Commission (ASIC) has recently highlighted greenwashing and unsupported claims around sustainable finance as a key priority. The deputy chair noted that several listed entities are being investigated.

Tlou Energy was the first to receive a wave of infringement notices, facing fines totaling $52,280 from four infringement notices for alleged false or misleading sustainability-related statements made to the market in 2021. Read more from ABC News.

Private Equity Uniquely Positioned to Tackle Climate Change

A recent article highlighted the role that the private equity (PE) industry can take in tackling climate change impacts by using its control and influence in its portfolio companies. ESG and climate related risks are becoming material for private equity investors as portfolio companies face impacts from the effects of climate change, and general partners are increasingly asked to report on their approach to addressing these risks. General partners cite challenges such as lack of ESG specific expertise and climate-related risk assessments, difficulty using the ESG and climate data landscape, and productionizing climate change assessments of an entire portfolio. Read more on how to address these challenges and implement ESG in PE from World Wide Technology.

The New Era of Shareholder Democracy

A recent Bloomberg article discusses the new era of shareholder democracy and how U.K. startups Tulipshare Ltd. and Tumelo are bridging the gap between shareholders and the companies they own with potential long-lasting and profound effects on the investing landscape.

Tulipshare allows individual investors to pool their stakes to meet the required threshold to submit a shareholder proposal and allows any shareholder, no matter how small, to become an activist. Some highlights from Tulipshare’s short time in the market include:

pressing Coca-Cola Co. to use fewer plastic bottles
successfully ending Johnson & Johnson's talc sales
gaining support of 44% of Amazon.com Inc. shareholders calling for an investigation of working conditions at its warehouses

Activist Investor Calling for Removal of CEO Who Does Not Align with ESG Strategy

Bluebell Capital Partners is taking aim at BlackRock CEO Larry Fink, criticizing the CEO and BlackRock of being inconsistent in its focus on ESG issues after the firm has been publicly criticized for its ESG strategy. Bluebell is also asking BlackRock to initiate a strategic review of its position on ESG.

In its three years of existence, Bluebell has taken on several companies for their ESG practices, including GlaxoSmithKline, Glencore and Vivendi.

This comes after others have criticized BlackRock for putting sustainability ahead of earning returns, with Florida's CFO pulling $2 billion worth of assets opposing BlackRock’s ESG policies.

ESG by the Numbers: Report on Women in Leadership & Canadian Bank Net-Zero Report Card Released

The Canadian Securities Administrators released its Review of Disclosure Regarding Women on boards and in Executive Officer Positions. The report reviewed a sample of 625 issuers. Some key findings include:

24% of board seats were held by women
7% of the board chairs were women
45% of vacated board seats were filled by women
5% had a woman CEO
19% of issuers had a woman CFO
70% of issuers had at least one woman in an executive officer position

Investors for Paris Compliance provided its grades on the progress of Canada's six largest banks in developing their net-zero policies. The report card provides a grade based on best practices in areas including:

financed emissions reporting
interim financed emissions reduction targets
supporting net-zero strategies

Global Regulators Continue to Build a Standard Regulatory Framework for Climate-Related Disclosure

The Financial Conduct Authority (FCA), the U.K. market regulator for financial services firms and financial markets, announced it is forming a working group to develop a code of conduct for ESG data and ratings providers.

In 2021, the FCA launched an ESG strategy which, among other initiatives, aims to enable market participants to trust green and other ESG-labelled financial instruments and products.

The new code of conduct will consider the previously announced International Organization of Securities Commissions recommendations for improved transparency in the ESG rating and data space. Read more on the new FCA committee and code of conduct from ESG Today.

The Swiss government's Federal Council passed the Ordinance on Climate Disclosure, which will require public companies to report in accordance with the recommendations of the Task Force on Climate-Related Financial Disclosure. Mandatory reporting under the new legislation will begin in 2025. Read more from FinTech Global.