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.
ESG is not just carbon: Factors shaping the global supply chain in Canada
In the realm of ESG, the spotlight is increasingly shifting to the significance of “S” in “ESG.” In a previous blog post, we covered the new requirements for an annual “Supply Chain Risk Report,” which many Canadian businesses will need to submit by May 31, 2024. Our latest blog post delves into the intricacies shaping the global supply chain in Canada, emphasizing the multifaceted factors that are driving the ESG agenda forward. Read more from our MLT Aikins ESG practice group here.
Alberta Securities Commission releases update on ESG-related disclosure requirements
In the December 2023 Corporate Finance Disclosure Report, the Alberta Securities Commission (ASC) provided several significant updates on ESG-related disclosures. Most notably, the ASC continues to co-lead the Canadian Securities Administrators’ (CSA) efforts in relation to climate-related disclosure, which are currently contemplating adopting a Canadian version of the International Sustainability Standards Board (ISSB) standards into securities legislation. This process is expected to include: engagement with the Canadian Sustainability Standards Board (CSSB) as it develops domestic standards based on the ISSB standards; engagement with Canadian stakeholders to assess potential modifications to the ISSB standards; development and publication of a proposed climate-related rule for comment; review of comments received; and ultimately publication of a final climate-related disclosure rule.
No date has been set in terms of when the final climate-related disclosure rule will become effective, but reporting issuers will not be required under securities legislation to provide climate-related disclosure based on the ISSB/CSSB standards until the above-noted process is complete. Read more from the ASC here.
Ottawa looking at options to mandate climate disclosures from private companies
The federal government is looking at options to require corporate climate disclosures from private companies across a broad spectrum of the Canadian economy. The federal government is also taking steps to develop a climate taxonomy on sustainable practices in the financial sectors, with the goal of reaching net zero by 2050. Read more from BNN Bloomberg.
Transition Plan Taskforce – oil and gas sector guidance published for comment
The Transition Plan Taskforce (TPT) published a consultation draft regarding oil and gas sector guidance, adding further detail for those that prepare climate transition plans. This consultation draft is open for comment until December 29. Read the full draft here.
Proxy advisory firm warns companies against reducing ESG disclosures
According to the Institutional Shareholder Services’ (ISS) 2023 Benchmark Policy Survey, investors are likely to respond negatively to reduced ESG disclosures. 85% of investors responded that the risk of reduced transparency on E&S topics is greater than the risk of political backlash and that reduced disclosure would not be tolerated. 45% of non-investor respondents agreed. Read more from Practical ESG.
Proposed climate and energy transition disclosure standards released by GRI
The Global Reporting Initiative (GRI) has announced the publication of a new draft of Climate Change and Energy Standards. The proposed standards include new disclosures on the social aspect of climate change, reporting on transition plans, emission reduction targets and progress among other things. Read more from ESG Today.
U.K.’s largest charity fund manager launches its first Modern Slavery Benchmark
CCLA Investment Management, now the largest charity fund manager in the U.K., launched its first Modern Slavery Benchmark highlighting trends and areas of improvement. The tool supports engagement efforts and helps investors determine which companies are working to eradicate modern slavery in their operations and supply chains. It is estimated that 50 million people worldwide are in a state of modern slavery, with 28 million of those in forced labour. Read more from IFA Magazine here. Read the full Benchmark here.
U.K. Court dismisses appeal against Shell directors over climate risk mismanagement
The U.K. Court of Appeal has refused to hear ClientEarth’s historic lawsuit against Shell’s Board of Directors. In the first of its kind, this worldwide derivative action sought to hold directors personally liable for climate risk management. ClientEarth brought the lawsuit in its capacity as a shareholder, and alleged that Shell’s 11 directors had breached their legal duties by failing to adopt and implement an energy transition strategy that aligns with the Paris Agreement. Read more from ClientEarth.
Shell to face legal claims over chronic pollution in Niger delta
The High Court in London has ruled that more than 13,000 farmers and fishers from the Ogale and Bille communities in the Niger delta are entitled to bring legal claims against Shell. It was ruled that it is arguable that the pollution caused by Shell’s Nigerian subsidiary has fundamentally breached the villager’s rights to a clean environment under the Nigerian constitution. Read more about the ruling here.
Exxon settles suit with advocacy group over waterfront tank farm site
ExxonMobil and the Conservation Law Foundation (CLF) have reached a settlement over Exxon’s 100-acre tank farm near, Boston Massachusetts. As a result, Exxon will no longer be able to store fuel at this site. CLF sued Exxon in 2016 stating that the company had repeatedly violated the Clean Water Act by discharging pollutants into the Mystic River beyond the prescribed limits and CLF argued that Exxon put neighbourhoods at risk due to lack of site preparation in response to the climate crisis. Read more from WBUR.
Insurance Claims against Berkshire Hathaway over Oregon wildfires reach $299 Million
Berkshire Hathaway Energy Co.’s PacifiCorp has agreed to pay $299 million in order to settle claims over wildfires that burned homes in southwest Oregon. The utility has already been exposed to billions in damages from other jury trial litigation over a different group of fires, and is awaiting trial relating to claims by insurers and several timber companies. Escalating claims as a result of extreme weather events continue to put a strain on insurers. Read more from BNN Bloomberg.
Belgian court orders deeper emissions cuts
The Brussels court of appeal has declared that Belgium’s climate targets are insufficient and has ordered Belgium to cut its emissions faster. The order states that Belgium must cut its planet-heating pollution by at least 55% from 1990 levels by 2030. Read more about the ruling from The Guardian.
New lawsuit by California youth seeks greater climate action by EPA
A group of California youth have filed a federal lawsuit in which they allege that U.S. environmental regulators have allowed “dangerous levels of climate pollution” to impact the climate system, which will worsen over time. 18 young people are named as plaintiffs in this lawsuit against the U.S. Environmental Protection Agency (EPA), with EPA Administrator Michael Regan and the U.S. federal government also named as defendants. Read more from Reuters.
COP28 closes with agreement to “transition away” from fossil fuels
After two weeks of negotiations, COP28 has concluded with several landmark agreements. One key agreement relates to the provision of loss and damage funds in support of vulnerable nations experiencing the worst climate change impacts. Other key considerations included in the final text related to: a climate financing target, a global goal on adaptation, a global stocktake with language around the “transition away” from fossil fuels with a focus on methane emissions and a 2030 deforestation goal. Despite the progress, significant frustrations remain amongst attendees around the softening of the central fossil fuel language from “phase-out” to “transition away” and the lack of concrete plans. Read more from Forbes and Reuters.
Canada introduces framework to cap greenhouse gas pollution from oil and gas sector
Canada has released a Regulatory Framework for an Oil and Gas Sector Greenhouse Gas Emissions Cap. The framework proposes to limit 2030 emissions at 35-38% below 2019 levels, while providing compliance flexibilities to emit up to a level about 20-23% below 2019 levels. Read more from the Government of Canada.
EU Parliament votes to push for end of global fossil fuel subsidies by 2025 at COP28
The European Parliament voted 462-134 for a resolution calling for the end of fossil fuel subsidies globally by 2025. The resolution supports phasing out fossil fuels as soon as possible, and a halt to all new investments in fossil fuel extraction. Further, the resolution included a global target to triple renewable energy and double energy efficiency by 2030. Read more from Reuters.
Methane reduction receives renewed international focus out of COP28
The Canadian government has announced stricter oil and gas regulations with the goal of sharply reducing harmful methane emissions, in order to help Canada reach and exceed its 2030 target of slashing methane emissions from the oil and gas sector by at least 75% below 2012 levels. The new regulations include regular inspections of facilities as well as requirements for oil and gas companies to plug methane leaks and prohibit flaring. Read more from CBC.
First report from Energy and Emissions Research Lab identifies methane leaks
Carleton University’s Energy and Emissions Research Lab (EERL) has published the country’s first ever upstream oil and gas methane census, through innovative aerial and on-site research supported by $2.5 million in funding. The date collected through this census is vital in helping Canada meet its target of reducing 75% of all methane emissions produced by the oil and gas industry by 2030. Read more from the Carleton Newsroom.
U.S. EPA announces methane emissions reduction action plan
The U.S. Environmental Protection Agency has announced a final rule that will reduce methane and other harmful air pollutants from the oil and natural gas industry by approximately 1.5 billion metric tons. In addition to this, it will promote the use of cutting-edge methane detection technologies, and deliver significant economic and public health benefits. Read more from the EPA and the U.S. Government.
ExxonMobil joins UN methane emissions reporting program
After years of resisting external monitoring of its approach to climate change, ExxonMobil has agreed to join the UN’s flagship methane emissions reporting program. ExxonMobil is seeking to present a more transparent image and is now in a position to join the Oil and Gas Methane Partnership led by the UN Environment Programme. Read more from the Financial Times.
EU negotiators reach deal to limit methane
European Union negotiators have reached a provisional agreement which would force the fossil gas, oil and coal industry to “properly measure, monitor, report and verify their methane emissions according to the highest monitoring standards, and take action to reduce them”. Read more from Time.
Government of Canada 2023 Fall Economic Statement published
The Government of Canada has published its 2023 Fall Economic Statement. This statement includes many notable new sustainable finance initiatives, such as expanding the coverage of mandatory climate disclosures as well as the proposed Indigenous Loan Guarantee Program. Read the Economic Statement here.
Claims of forced labour in China linked to British Army solar panels
A potential link between the British Army and the use of forced labour and exploitation of Uyghur Muslims in the Xinjiang region of China has been identified due to the militaries use of solar panels at several sites. Polysilicon is known to be a high risk good and is one of the flagged commodities under the U.S. Uyghur Forced Labor Prevention Act (UFLPA). The Chinese government has denied all allegations of human rights abuses in this region, and Prime Minister Rishi Sunak is facing calls to take a harder line against China. Read more from BBC.
New research suggests North American companies less proactive in implementing ESG compliance
Research suggests that compared to companies based in North America, more companies based in the United Kingdom are taking a proactive approach to meeting ESG expectations. Further, U.K. companies are more likely that North American companies to give broad responsibility to their board for establishing and ensuring ESG benchmarks. Read more about this research from Thomson Reuters.
Forced labour investigation leads Canadian seafood company to cut ties with supplier
After a four-year investigation regarding Chinese seafood companies, a report has uncovered that seafood processed using forced labour in China is being shipped to the United States, Europe and Canada. At least 10 large seafood companies, including High Liner, one of Canada’s largest seafood companies, have used more than 1,000 Uyghur workers since 2018. This has led Nova Scotia-based High Liner Foods Inc. to investigate their supply chains and cut ties with a Chinese seafood plant. Read more from The Globe and Mail.
EU criminalizes wide-scale environmental damage
The European Union has become the first international body to criminalize wide-scale environmental damage described as “comparable to ecocide.” Lawmakers have agreed to an update to the EU’s environmental crime directive, which specifies which kinds of environmental activities are covered and that can implement tougher penalties. Read more from The Guardian.
Guidance on the U.K. anti-greenwashing rule released for comment
The U.K. Financial Conduct Authority (FCA) is seeking responses on its proposed anti-greenwashing guidance, which is designed to help firms better understand its expectations under the anti-greenwashing rule and other existing, associated requirements. This guidance may be indicative of future guidance on anti-greenwashing to be adopted in North America. Read more here.
The FCA has also released a new set of Sustainable Disclosure Requirements for asset managers. These rules are a result of investors increasingly seeking investments with positive environmental and social impact. These requirements also include investment label rules, which aim to ensure the accurate use of sustainability-related terms. Read more from ESG Today.
Environmental impact of U.K. Toyota SUV advertisement leads to ban
Two Toyota adverts have been banned for condoning driving that disregards its environmental impact after a complaint was lodged by Adfree Cities. This is the first time the Advertising Standards Authority has blocked an SUV advert based on breaching social responsibility in an environmental context. Read more from The Guardian.
Indigenous advisory council for CN Rail resigns
The entire Indigenous advisory council for CN Rail, comprised of 12 individuals, has unanimously resigned due to disagreements between the council and CN Rail. Murray Sinclair, the former commissioner of the Truth and Reconciliation Commission, states that CN has missed the mark on reconciliation. Read more from Windspeaker.
Indigenous equity loan program unveiled by Canadian Infrastructure Bank
The Canadian Infrastructure Bank (CIB) has announced a program for First Nation, Métis and Inuit communities to acquire equity ownership in projects in their traditional territories. This initiative allows for the CIB to provide loans directly to Indigenous communities, rather than through a financial institution. Loans will be available in the sectors of public transit, clean power, green infrastructure, broadband and trade and transportation. Read more about the program here.
S&P Global Ratings finds oil and gas companies not yet experiencing extra borrowing costs
Despite efforts by the UN and international organizations encouraging banks and big investors to reduce lending to the fossil fuel sector, oil and gas companies face largely similar borrowing costs compared to less polluting industries. Only one fifth of banks, financial services firms and insurers have pledged to reduce Scope 3 emissions, which would impact their investment and lending activities. Read more from The Financial Times.
Study finds corporate lobbying continues to be in conflict with climate pledges
A recent report suggests that nearly 60% of companies from the Forbes 2000 list with a net-zero emissions or similar climate target are at a risk of greenwashing due to their lobbying. Glencore, ExxonMobil and Stellantis are among the 293 companies that are lobbying for policies that conflict with their own pledges, according to the report published by non-profit InfluenceMap. Read more from Reuters.
Bank of England states that climate change policies are likely to impact inflation
Catherine Mann, a Bank of England policymaker, has stated that climate change policies are likely to impact inflation, inflation persistence and increased inflation volatility. Research suggests that changes in carbon pricing have a more persistent effect on inflation as compared to oil price shocks. Read more from Reuters.
Forest carbon credits and climate finance on the agenda for new World Bank president
The new president of the World Bank, Ajay Banga, plans to launch a mechanism for certifying forest carbon credits in order to revolutionize bank operations while enhancing the credibility and transparency of voluntary carbon markets. Read more from Carbon Credits.
Major banks exit SBTi over concerns that new standard will strictly limit fossil fuel financing
HSBC and Standard Chartered, among several other major banks, have chosen to exit the process of seeking Science Based Targets initiative (SBTi) as the organization prepares to launch a new standard to assess the net-zero goals of financial institutions. This new standard includes criteria that imposes strict limitations on fossil fuel financing. Read more from Reuters.