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 disclosure requirements for Canadian financial institutions published

In Canada, the Office of the Superintendent of Financial Institutions published Guideline B-15 on Climate Risk Management, setting expectations for the management of climate-related risks. The new guidelines recognize the significant impact climate change and the global response to it may have on the safety and soundness of the Canadian financial system. More details on the new rules, including comments by MLT Aikins ESG practice group head, Conor Chell, can be found in this article by the Financial Post.

Looking for a major government contract? You’ll need emissions targets by April

The Government of Canada will now require suppliers to disclose their greenhouse gas emissions. The new initiative is part of Canada's Net-Zero commitments. Suppliers of more than $25 million will be required to disclose the emissions and reduction targets through participation in Canada's Net-Zero Challenge or another approved internationally recognized equivalent standard or initiative. Read the full press release. 

A discussion of the implications for Canadian companies by MLT Aikins lawyers can be found in this blog. 

The U.S. announced a similar initiative last year as the Biden administration proposed rules requiring major suppliers of the federal government to disclose their greenhouse gas emissions. Read more from Bloomberg. 

Boards move to bolster sustainability experience

As mandatory climate-disclosure regulations are coming into force, boards are bolstering their sustainability experience as 25% of board appointees for Fortune 500 boards in 2022 had previous experience on sustainability. This comes after many executives have admitted they feel unprepared for the new climate-related disclosure requirements set to come into force in the coming years. The Wall Street Journal discusses the shift in this article. 

Board directors and executive officers beware: Personal ESG liability is here

Subpar ESG strategies can create liability and make your company a litigation target. The MLT Aikins ESG team discussed personal ESG liability for board of directors and executive officers in this recent blog. 

The legal implications for Shell’s board of its ESG performance were further discussed in a Globe and Mail article with comments from the MLT Aikins ESG practice group head, Conor Chell.

Global banks face lawsuits for financing new O&G projects, Canadian banks may follow shortly

A group of French NGOs have launched a lawsuit against the Paris-based bank BNP Paribas after they financed new oil and gas projects. The legal basis of the case rests on the "duty of vigilance" adopted by French law in 2017, which requires companies to assess and prevent their operational impacts on the environment and human rights. Read more information on the lawsuit and the duty of vigilance in this article from ESG Today.

Meanwhile, Greenpeace Canada's new investigation team released its report, So Sue Me, outlining how the failures of banks globally to meet their promises is leading to litigation. They warn that Canadian banks are likely to encounter a similar fate soon if they continue as they are. The report explores greenwashing and discrepancies between the climate pledges and policies of two major banks, as the major banks in Canada have put more than $US130 billion toward the fossil fuel industry in 2021.

Canadian banks in hot water with shareholders over ESG performance

This month saw a number of shareholder proposals putting pressure on the large Canadian banks. Shareholders of RBC, Scotiabank and TD will be voting on proposals to halt investments expanding fossil fuels or lean on these companies to reduce their emissions. The group by the name of SHARE, on behalf of several investors, announced its shareholder resolutions filed with these major banks to be voted on at their respective annual meetings in April. 

The National Observer explores these resolutions and growing pressure of shareholders toward ESG improvements in this article. 

Shareholders' votes and dollars put pressure on companies to improve ESG performance

With more than €130 billion euros in assets, two of the largest U.K. pension funds have announced their intention to vote against top directors at BP and Shell unless the companies improve their commitments to take on carbon emissions.

Investors concerned about the rush for minerals in the energy transition are calling for tough sustainability policies in the mining industry to protect the environment and local communities. The Global Investor Commission on Mining 2030 announced it would be introducing standards which will look to overhaul the mining industry with a focus on areas including waste management, biodiversity protection, child labour and the role minerals play in conflicts globally. The Wall Street Journal discusses further in this article.

In response to shareholder pressure, Barclays announced its commitment to end financing oil sands producers and ban further financing new oil sands pipelines. New policy significantly limits its financing activities in emission intensive energy sectors, including ending financing for oil sands companies and projects and accelerating its phase out of financing for coal-powered generation for clients in the OECD economies. Some claim this does not go far enough to address emissions impact of financing activities. Read an overview of the new policy from ESG Today. Stand.earth has also provided commentary on the Barclays announcement.

Governments continue to invest in projects tackling decarbonization

The Biden administration announced earlier this month that it would be directing $US8 billion in funding toward speeding up decarbonization projects in energy hungry industries. The new grants will cover up to 50% of project costs and are part of the president’s pledge to decarbonize the U.S. economy by 2050. Read more from Reuters.

The Province of B.C. has entered a memorandum of understanding with Haisla Nation to help its Cedar LNG project achieve climate objectives including exploring enhanced environmental performance and lowering emissions to near zero by 2030. The project will be the first Indigenous-majority owned LNG export facility in Canada. For more information, see the recent news release from the B.C. Government. 

Examples of greenwashing continue to be found in the marketplace

Hyundai Motor UK found themselves in the crosshairs of regulators after they claimed that if 10,000 of its cars were on the road, carbon emissions were reduced equivalent to planting 60,000 trees. The Advertising Standards Authority (ASA) found the ad misleading and was not to be used again. Companies found making greenwashing claims could face big fines as the EU is set to review new laws for proposed fines. Read more from the Guardian.

The ASA also found the airline Lufthansa left consumers with a "misleading impression of its environmental impact" in its recent "Connecting the world. Protecting its future." campaign. The airline told investigators this was based on goals to be carbon neutral by 2050 and halving emissions by 2030. The ASA took the position that such claims suggested significant mitigating steps had already been made to ensure net environmental impact of their operations was not harmful. The Guardian provides a summary.

A Reuters special report found that a Dow Inc.’s recycling program to transform the soles of old running shoes to playgrounds and running tracks in Singapore may not go the distance, as trackers show the shoes in second-hand markets. Read more on the investigation and its findings about the recycling program, which has collected tens of thousands of shoes, in this report from Reuters.

HSBC has recognized the risk that "greenwashing" in the banking industry poses when it comes to access to future capital markets. The bank commented that greenwashing was an important risk that is likely to increase over time as they develop capabilities and products to achieve their net-zero commitments. Read more from Bloomberg.

Protecting investors from greenwashing claims remains a priority

This month saw several examples of how greenwashing continues to be a priority for regulators. The SEC's Division of Examinations stated in their priorities for the year that they will continue to monitor greenwashing in the capital markets. Focus will include whether funds operate in a manner consistent with their disclosure documents and whether ESG products are appropriately labelled and recommendation of these products is in the investors' best interest.

With growing claims of greenwashing, SHARE has launched a new investor guide on Corporate Action Plans. The new guide breaks down how investors can hold publicly traded companies accountable to their ESG commitments. Learn more about the new tool.

The federal Sustainable Finance Action Council's newly announced climate investment taxonomy, creating standardized labels for investments, may be a major step toward securing Canada's competitiveness in the global net-zero transition capital race. While Canada is one of the last G7 and G20 countries to develop this type of taxonomy, the new framework categorizes transition activities, which can be more difficult than simply identifying green investments. This opinion piece in the Globe and Mail provides insight into how Canada is finding the balance in identifying transition investments.

The financial think tank Planet Tracker released its new report, The Greenwashing Hydra, discussing the increasingly sophisticated and various forms of greenwashing. This article from Planet Tracker provides a quick summary of the report.

The Corporate Climate Responsibility Monitor released its evaluation of the transparency and integrity of companies' climate pledges, assessing four main areas including: (i) tracking and disclosure of emissions, (ii) setting emission reduction targets, (iii) reducing own emissions and (iv) climate contributions and offsetting claims. The report also discusses best practices for those looking to improve their ESG practices.

Physical risk associated with climate change a growing concern

Physical risks associated with climate change were front and centre in S&P Global’s article looking into the trends and potential gaps in adaptation investments to help companies cope with the rising cost form physical climate risks such as wildfires, flooding and hurricanes. The article discusses the 2022 S&P Global Corporate Sustainability Assessment, highlighting that only one in five companies has a plan to adapt to the physical impacts of climate change.

In a press conference, the outgoing Federal Reserve Chair, Janet Yellen, warned that, as climate change intensifies, there is a potential for asset values to decline as a result of natural disasters and warming temperatures. This could have a cascading effect on the U.S. and global financial system. She also warned that delayed and disorderly transition to a net-zero economy may lead to additional shocks to the financial system. Read coverage on the press conference from Reuters.