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.
Environmental targets and executive compensation: The gamble of unstandardized metrics
Executive compensation tied to environmental targets faces challenges due to the lack of standardized data and disclosure. Many companies use short-term incentives and combine metrics with unrelated measures, hindering effectiveness. Improved target-setting and alignment with measurable benchmarks are needed to address these concerns. Read further at the Financial Post with commentary from MLT Aikins ESG Practice Group Head Conor Chell.
Crocs revises climate commitment in latest ESG report
The global shoe brand Crocs has updated its climate commitment in its recent ESG report. The initial goal of achieving net-zero emissions by 2030 was deemed insufficient in scope and credibility, leading Crocs to amend the commitment to 2040 for all emissions scopes. The revised target is considered ambitious yet “more credible and realistic.” Crocs also retains its commitment to halve the carbon footprint of each pair of shoes and increase the share of bio-based content. Read more at Edie.
Canadian securities regulators propose reforms on diversity and other enhancements to corporate governance disclosure
The Canadian Securities Administrators (CSA), have proposed two options to enhance diversity disclosure requirements for corporate boardrooms. The reforms seek to expand reporting beyond gender representation to include Indigenous people, racial minorities, disabled individuals and LGBTQ+ individuals. One option mandates reporting on specific groups, while the other requires disclosure of diversity policies, with specific reporting on women. The reforms aim to align with federal corporate law changes and investor demands. Read more at Investment Executive.
Beyond the proposed changes to diversity disclosure requirements, the CSA is also considering modifying corporate governance disclosure rules related to director nominations and board. The amendments aim to increase transparency about diversity beyond gender representation, provide decision-useful information to investors and offer guidance to issuers on corporate governance practices. The proposals, open for public comment for 90 days until July 12, 2023, are based on consultations, research and reviews undertaken by the CSA. Stakeholders are encouraged to provide written feedback, and the CSA is committed to engaging with Indigenous Peoples and organizations during the comment period. Read more on that and on how to get involved from the CSA.
Bank of Canada leads in climate risk disclosure, urges financial institutions to follow suit
The Bank of Canada has set a significant precedent by disclosing climate-related risks to its operations and balance sheet. In its report, released alongside the annual report, the bank assesses its greenhouse gas emissions and vulnerability to natural disasters, and quantifies its exposure to climate-related risks. The central bank aims to inspire other financial institutions to enhance their climate-related disclosure practices, as regulators increasingly emphasize transparency in assessing vulnerabilities to climate change. Read more at the Globe and Mail.
Largest U.S. banks projected to fall short of 2030 oil and gas emission targets
A report by Ceres and the Transition Pathways Initiative (TPI) reveals that the six largest U.S. banks are likely to fall short of their 2030 oil and gas emission targets. Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo's targets do not align with the necessary carbon emission reductions of the Paris Agreement. The report emphasizes the need for improved target-setting practices and accelerated emissions reductions. Shareholders will vote on resolutions urging the banks to disclose transition plans aligning financing activities with emission reduction targets. Read more at Market Watch.
Exxon Mobil shareholders demand better disclosure on asset valuation risks
Shareholders, including Legal & General Investment Management (LGIM), have urged Exxon Mobil Corp. to improve documentation of asset valuation risks amid the transition to lower-emitting energy sources. The resolution requests disclosure of the impact of the International Energy Agency's net zero emissions scenario on Exxon's asset retirement obligations. This clarity is essential for evaluating long-term risks and economic viability. The move highlights the importance of understanding future liabilities in a carbon-constrained future. Read more at Bloomberg.
SEC climate reporting rules critical to avoid EU disclosure mandate
As the Securities and Exchange Commission (SEC) moves to finalize regulations on corporate disclosure of emissions and climate-related risks, the EU has indicated that if the SEC rules are not equivalent, it may subject thousands of U.S. companies to its extensive climate-related disclosure requirements. The SEC aims to establish a global standard and bridge the gap with EU regulations. Read further discussion from The Wall Street Journal.
Climate lawsuit against Shell’s board of directors dismissed by U.K. High Court
The U.K. High Court has dismissed a lawsuit filed by ClientEarth (and backed by major institutional investors) against Shell’s board of directors. The lawsuit alleged that Shell’s directors had breached their legal duties under the U.K. Companies Act by failing to adequately adopt and implement an energy transition strategy in alignment with the Paris Agreement. The court found that ClientEarth had failed to establish a clear case against Shell’s board for its management of material climate-related risks and highlighted the lack of “universally accepted methodology” for emissions reduction as part of its decision. Read more from ESG Clarity and BNN Bloomberg.
Goldman Sachs agrees to $215-million settlement in gender bias lawsuit
Goldman Sachs has agreed to a $215-million settlement in a class action lawsuit accusing the company of gender bias in pay and promotions. The settlement covers around 2,887 current and former female employees. Despite denying wrongdoing, Goldman Sachs aims to resolve the 13-year-old case, avoiding a trial. Each plaintiff is estimated to receive an average payout of $47,000 after legal fees, pending court approval. The settlement also includes provisions for independent analysis of gender pay gaps and performance evaluations at the company. Read more about this case at Reuters.
Bonaparte First Nation sues government and Ashcroft Terminal over ancestral territory dispute
The Bonaparte First Nation is suing the British Columbia and federal governments, along with Ashcroft Terminal Ltd., over the construction of an inland port on its ancestral territory. The lawsuit alleges inadequate consultation and damage to burial grounds. The Bonaparte staged a sit-in protest after ancestral remains were found but faced barriers in productive discussions. The lawsuit claims that the project was falsely presented as small-scale while causing destruction. Responses from the defendants are pending. Find out more from the CBC.
Environmental NGO triumphs in lawsuit against TotalEnergies's misleading climate claims
Climate Action Germany (DUH) has won a legal battle against TotalEnergies over misleading claims of "climate-neutral" heating oil. DUH argued that TotalEnergies's advertising violated consumer protection laws by falsely presenting its Thermoplus heating oil as environmentally friendly. The court ruled in favor of DUH, ordering TotalEnergies to stop advertising the product as "CO2-compensated" and provide specific details about emissions offsetting. This case is the first of 15 legal proceedings initiated by DUH to challenge deceptive climate claims. See Clean Energy Wire for more details.
Legal complaint filed against Cargill over deforestation and human rights abuses in Brazil
A legal complaint has been filed against Cargill for its failure to address its role in deforestation and human rights violations in Brazil. Cargill's soy business, supplying global retail brands, has been linked to deforestation and violations of Indigenous and forest-dependent communities' rights. The complaint alleges that Cargill has violated the OECD's guidelines on responsible business practices. It calls for improved operations and due diligence policies to mitigate environmental and human rights impacts. See Client Earth for a summary of the complaint.
Colombian victims file complaint against energy companies for human rights violations in "blood coal" case
Colombian victims affected by human rights violations related to coal mining are lodging a complaint against energy companies RWE, Vattenfall, Uniper and Engie along with other entities. The victims claim that these companies knowingly contributed to the human rights abuses associated with the coal they sourced. They seek reparations, acknowledgement of harm and improvements in affected communities. Read more from SOMO.
Alberta unveils ERED plan for net-zero emissions and energy security
Alberta has introduced the Emissions Reduction and Energy Development (ERED) Plan, aiming to achieve net-zero emissions by 2050 while ensuring affordable and reliable energy. The plan focuses on modernizing the electricity system, supporting natural gas-fired generation and collaborating with industry and Indigenous communities. It aligns with Alberta's commitment to address climate change and prioritize energy security. For more information, read the press release or the ERED Plan.
Unlikely alliance: renewables industry and big oil lobby for permitting reform
The renewables industry and big oil are collaborating to advocate for permitting reform to streamline new energy development. Frustrated by the lengthy review process, the energy industry aims to leverage negotiations over the debt ceiling for a deal on permitting reform. While finding common ground on permitting, the industries recognize challenges and opposition from environmentalists. Read more about the alliance at Financial Times.
Canada passes landmark legislation against forced and child labour in supply chains
Canada passed Bill S-211 to combat forced labour and child labour in supply chains. The legislation requires companies to report on measures addressing labour exploitation and creates a public database. It also prohibits the import of goods made with child labour. World Vision Canada praised the legislation and called for continued efforts in the global fight against labour exploitation. Read more from World Vision Canada.
European Parliament approves law to ban imports linked to deforestation
The European Parliament approved a law banning the import of commodities linked to deforestation, including beef, soy, coffee, palm oil, cocoa and rubber. Companies selling into the EU must provide due diligence statements to prove their goods were not grown on deforested land after 2020. The law aims to eliminate deforestation from European supply chains. See Reuters or the Climate Disclosure Project (CDP) Explainer.
Law Society of England and Wales guides firms to refuse polluter clients
The Law Society of England and Wales released climate change guidance allowing law firms to decline representation for polluters. It suggests accommodation for employees considering climate commitment a protected characteristic. The guidance aims to help solicitors provide competent advice and address professional duties in light of climate change. Find more on this at the Law Society Gazette.
Report reveals slow progress in project approvals under Impact Assessment Act
A report highlights slow progress in project approvals under Canada's Impact Assessment Act. Most projects are in the early phases, delaying infrastructure and resource development. Efficient regulatory procedures are needed to meet climate goals and accelerate infrastructure deployment. The government plans to address the issue and streamline the permitting process. Visit the Financial Post to read further.
ESG activities integrated with risk and compliance teams due to new regulatory rules
Regulatory rules on ESG disclosures are prompting companies to shift ESG activities to risk and compliance teams. The SEC and European authorities have introduced new rules standardizing climate-related and sustainability disclosures. Managing ESG data and adopting a risk-based approach are crucial for business planning and meeting expectations. More on this can be found at Thomson Reuters.
Royal Bank of Canada tops list of global fossil fuel financiers, according to environmental report
Royal Bank of Canada surpasses JP Morgan Chase as the leading global financier of fossil fuel companies, providing $42.5 billion in financing for fossil fuel projects in 2022. The annual ranking by environmental groups highlights the role of banks in climate change and biodiversity loss. More at Financial Post.
Investors in green funds warned of backing oil and gas giants
Asset managers have invested $376 billion in oil and gas companies despite pledging to support efforts to limit global temperature rises. More than 160 funds with green labels, including members of the Net Zero Asset Managers initiative, held $4.6 billion in major oil and gas firms. Concerns arise regarding "greenwashing" and the alignment of sustainable funds with fossil fuel companies.Read more at the Guardian.
B.C. pension fund votes against Imperial Oil directors following Kearl spill
British Columbia Investment Management Corp. (BCI) has voted against Imperial Oil directors due to their inadequate risk oversight and engagement with Indigenous communities following the Kearl oil sands spill. BCI seeks greater consideration of climate targets in compensation plans and an audited report on the cost of transitioning to net-zero. Read further about the considerations at the Globe and Mail.
Climate Fund Managers secures historic debt-for-climate conversion to safeguard the Galapagos Islands
Climate Fund Managers (CFM) has closed a debt-for-climate conversion to protect the Galapagos Islands, valued at $1.628 billion. Ecuador exchanged government bonds for a $656-million impact loan, generating savings of $1.126 billion until 2041. Ecuador will allocate $323 million toward Galapagos conservation and establish a $227-million endowment fund. CFM advised and structured the transaction, investing $2 million in the early stages. The conservation funds will protect the marine reserve, promote sustainability and support community development. See Climate Fund Managers for further details.
Assessing the financial system's role in driving a sustainable economy
The Financial System Benchmark report evaluates 400 financial institutions worldwide on their efforts to support a just and sustainable economy. The report focuses on governance, planetary boundaries, human rights and social issues, with a specific emphasis on the relationship between governance and climate issues. It aims to accelerate the financial sector's role in triggering sustainable change. See World Benchmarking Alliance for more on the report and download the full report.
Investors warn Nestlé of "Systemic Risks" arising from unhealthy foods
Institutional investors with more than $3 trillion in combined assets urge Nestlé to reduce its reliance on unhealthy products. They believe overconsumption poses "systemic risks" to financial returns and call for targets to increase revenues from healthier foods. Disclosure efforts by Nestlé are acknowledged but further action is needed to address population health concerns and protect investors. See Financial Times for more.
Banks worldwide divided on ESG factors as risks or opportunities, green products on the rise
A Bain & Company study reveals global banks have differing views on ESG factors, perceiving them as risks or opportunities. While green products are on the rise, many banks have yet to fully integrate climate risks into credit underwriting practices. Regional variations exist, with European banks more optimistic about environmental transition, while Americans and Asians focus on social issues as risks. Clear frameworks and methodologies are needed for effective ESG risk management and capitalizing on opportunities. Check out ESG Today for more and view the study results.
Finance industry opposes ESG bill over legal risks
The finance industry, including the Association for Financial Markets in Europe (AFME), is set to challenge an ESG bill in Europe. The proposed Corporate Sustainability Due Diligence Directive (CSDDD) aims to enable lawsuits against companies for ESG violations. The AFME argues that the bill disregards financial firms' unique position, potentially exposing them to civil liability and penalties for human rights abuses or environmental damage. Find out more at Bloomberg.