Tag: esg

This opinion was written by Conor Chell and was published in the Globe & Mail on January 1, 2025.

The proposed new amendments to the anti-greenwashing provisions in the federal Competition Act were intended to give businesses some breathing room. But if passed as currently drafted, they may do the opposite and constrain them by creating more legal risk, more uncertainty and a wider gap between what companies say and what they can actually prove.

For the past year, Canada has been home to some of the most stringent and widely discussed anti-greenwashing rules in the world. The original amendments under Bill C-59 required companies making environmental or climaterelated claims about their business to substantiate them using “an internationally recognized methodology.” That language, although imperfect, at least pointed organizations toward established frameworks – the International Organization for Standardization (ISO), the Greenhouse Gas (GHG) Protocol, science-based target methodologies, and third-party assurance practices.

The government has now proposed removing the “internationally recognized methodology” requirement altogether and that change is expected to pass into law in early 2026. In its place, organizations will fall back on the general due-diligence standard that already exists in competition law: claims must be adequately and properly substantiated. On paper, that may sound flexible. In practice, it will be a problem.

Most organizations are not currently set up to substantiate their sustainability and climate-related representations to the level that Canadian courts and regulators have historically required when assessing “adequate and proper” testing.

That threshold – shaped by decades of misleading advertising cases – is surprisingly high. It often requires objective, measurable evidence that is replicable, independently verifiable and directly linked to the claim being made. Many companies making forward-looking climate statements, high-level environmental, social and governance (ESG) claims, or qualitative sustainability assertions simply do not have that level of evidentiary rigour in place.

This wide disconnect exists despite the public believing that businesses are now under stricter scrutiny. The antigreenwashing debate has been frontpage news for months.

The very idea that companies must be prepared to defend their climate and environmental claims has woven itself into Canada’s collective conscience. But removing the methodological requirement will not lower public expectations – it will raise questions about what substantiation means, and whether companies can credibly meet it.

The problem is even more acute when you look at how organizations assess their own readiness. According to KPMG’s most recent Global CEO Outlook, more than 60 per cent of the 1,350 CEOs polled believe they are on track to meet their net-zero ambitions and the sustainability claims underpinning them, yet fewer than 30 per cent have allocated the capital and resources needed to achieve those goals. This creates what I call a “substantiation gap”: companies feel confident enough to make sweeping climate and sustainability claims, but have not invested enough to credibly meet them.

This gap is already visible in practice. In reviewing Canadian companies’ sustainability disclosures, we continue to find numerous misrepresentations. These issues ranged from minor overstatements to material omissions, but the volume alone demonstrates how far many companies still are from the level of evidence regulators and the courts expect.

Some argue that risk will decrease because the government also removed the new private right of access to the Competition Tribunal, which would have allowed private parties to bring greenwashing complaints. But this change is unlikely to meaningfully reduce exposure. In the months since Bill C-59 passed, no private complaints were filed – likely due to the cost, complexity and the inability for complainants to seek monetary damages. Meanwhile, greenwashing allegations have simply migrated elsewhere.

We have already seen:

■ a complaint to the Alberta Securities Commission alleging misleading climate representations,

■ an enforcement proceeding initiated by the Ontario Securities Commission involving similar issues and

■ a civil lawsuit alleging mismanagement of climate-related risks.

In other words, even without a private right of action under the Competition Act, plaintiffs, investors, activists and regulators have found – and will continue to find – other avenues to advance greenwashing claims.

Taken together, these factors point in one direction: legal risk will increase, not decrease, if the proposed amendments are enacted.

Companies will face higher expectations from the public, stricter scrutiny from regulators, more complex evidentiary standards and a growing substantiation gap between what they say and what they can prove.

The solution is not to avoid sustainability disclosures or retreat from climate commitments. It is to professionalize them. Canadian organizations would be well-served to undertake a formal, comprehensive legal risk assessment of their sustainability disclosures and to understand, in concrete terms, what is actually required to substantiate the claims they make.

Clear, credible sustainability communication is not a regulatory burden – it is a competitive advantage. But only if it can withstand scrutiny.

This article was written by Jeffrey Jones and was published in the Globe & Mail on May 13, 2025.

Several financial institutions and pension funds are backing a new initiative by some of Canada’s best-known sustainable-finance experts to bolster companies’ energy-transition plans as a way to win access to more global capital.

The idea behind the effort, called Business Future Pathways, is to give corporations guidance on international standards for developing business strategies that deal with climate risks and the shift to a low-carbon economy. The big investors will endorse the advice.

Organizers are scheduled to announce the project on Tuesday. They said U.S. President Donald Trump’s on-again, off-again tariffs have forced companies to focus on dealing with the resulting economic uncertainty, and that has pushed climate concerns down on corporate agendas.

Benchmarking studies have shown Canadian companies were already lagging their global peers – including many in the United States – in developing decarbonization plans and putting them into operation, said Barbara Zvan, chief executive officer of University Pension Plan Ontario and a driving force behind Business Future Pathways.

Ms. Zvan previously held a senior role at the Sustainable Finance Action Council, known as SFAC, which Ottawa created to develop plans to compete for tens of billions of dollars in global capital required to achieve the country’s emission-reduction targets. The new initiative is not affiliated with the government.

She said in an interview that the effort aims to move beyond the concept of regulatory compliance to turn climate strategy into a competitive advantage.

“This is about trying to help, similar to SFAC, get the financial community together to say what this could look like,” Ms. Zvan said. Technical experts will provide input and share it with finance professionals at companies across industries and show how standard practices can benefit both the corporations and their investors, she said.

Several institutions have signed up for Business Future Pathways’s advisory committee, including Addenda Capital, Mackenzie Investments, Vancouver City Savings Credit Union, Desjardins Group, University Pension Plan Ontario, among others.

The group is launching at a time when sustainable finance progress has slowed to a crawl. In April, many large investors expressed disappointment when Canadian Securities Administrators suspended its work aimed at making climate-related disclosure mandatory for public companies.

The CSA, which comprises the provincial and territorial securities commissions, cited the changing “global economic and geopolitical landscape” for the move.

“A lot of what we’re seeing right now, with everything that’s happening in the U.S., it’s creating a lot of uncertainty for Canadian business and investors,” said Jonathan Arnold, who will lead research for Business Future Pathways.

“At the same time, the climate risks and opportunities continue to forge ahead, and transition plans really provide a way to thread the needle on how businesses can respond in a way that manages this uncertainty.”

The group plans to issue a series of reports, with the first expected to be published this autumn, said Mr. Arnold, who is director of sustainable finance at Canadian Climate Institute. He also conducted research for SFAC, which wrapped up its work last year after designing a framework to serve as a guidebook for green and transitionary investments and calling for mandatory climate-related disclosure.

The initial Business Future Pathways report will make the case for why climate-ready business strategies are important, how future profitability could be dependent on them and other macroeconomic themes, he said.

“There’s lots of international guidance out there. I think a lot of it falls short in terms of specifics as it relates to some of the challenges that Canadian businesses face, and what we hope to do is ground this guidance in sectoral pathways,” Mr. Arnold said.

The Canadian Sustainability Standards Board has set out its first guidelines for climate-related reporting, based on the global sustainability and climate reporting baselines developed by the International Sustainability Standards Board.

The new group, meanwhile, will focus on strategies for dealing with plans for decarbonization, Ms. Zvan said.

“This initiative is not about creating any new guidelines, or any new standards or frameworks. It’s about showing how to use the existing standards and frameworks,” she said.

This article was written by Jeffrey Jones and was published in the Globe & Mail on April 24, 2025.

Canada’s provincial securities commissions have suspended their work aimed at making climate-related disclosure mandatory for public companies, the latest in a years-long series of delays in efforts to formalize reporting environmental risks.

Canadian Securities Administrators, the commissions’ umbrella group, said it is also pausing amendments to required diversity rules the group had planned. It blamed both suspensions on the changing “global economic and geopolitical landscape.”

The moves are a setback for the environmental, social and governance movement, which has been overshadowed by economic and trade worries among Canadian companies and a backlash in the United States fanned by President Donald Trump’s administration.

Stan Magidson, chair of both the CSA and the Alberta Securities Commission, said the companies are struggling with increased economic uncertainty and concerns about competitiveness amid the cross-border friction.

“In response, the CSA is focusing on initiatives to make Canadian markets more competitive, efficient and resilient,” Mr. Magidson said in a statement.

Many institutional investors have been calling for some form of mandatory reporting of carbon emissions, targets and risks so they can get an accurate picture of physical and policy-related issues that companies face.

The halt is “extremely disappointing,” given how quickly many other jurisdictions around the world are implementing climate disclosure rules, said Barbara Zvan, chief executive officer of University Pension Plan Ontario.

Canada would improve its competitiveness in the race for capital by proceeding with the initiative, she said.

Ms. Zvan was a member of the Ottawa-appointed Sustainable Finance Action Council, which more than two years ago called for sustainability disclosure, aligned with international standards, to be made mandatory across the economy.

“This is done because it’s material risk assessment, and yet we’re saying there’s no rush. But the rest of the world is moving forward,” she said. Meanwhile, Canadian leaders are calling for more foreign investment and for the country’s large pension plans to invest more at home, Ms. Zvan added.

In December, many observers assumed formalized reporting requirements were close when the Canadian Sustainability Standards Board released its first set of voluntary disclosure guidelines for companies to follow. The CSSB was formed to tailor rules developed by the International Sustainability Standards Board for the Canadian economy.

For its part, the CSSB pointed out that its recently released guidelines are closely aligned with international standards that are aimed at setting a global baseline for climate and sustainability reporting. Those standards are being widely adopted.

The CSA said it would study the CSSB’s guidelines to determine what a set of required rules may include. That plan was expected to push beyond a series of previous halted attempts, though recent market uncertainty raised questions about timing.

On the diversity front, the regulators were working on a policy for companies to go beyond the current rules for gender diversity to address how Indigenous people, racialized people, people with disabilities and LGBTQ+ people are represented on boards of directors and executive officer ranks.

Companies that have already put work into adopting the CSSB standards will be frustrated with the CSA’s pause, said Katie Dunphy, ESG reporting leader for KPMG. However, the regulator has left the door open for the efforts to resume later, she said.

“As we continue to see the climate disruption and climate events, in my opinion, we will see an evolution of this, and perhaps when the timing is more appropriate for Canadian businesses to address this head-on,” Ms. Dunphy said.

For its part, the CSSB pointed out that its recently released guidelines are closely aligned with international standards that are aimed at setting a global baseline for climate and sustainability reporting. Those standards are being widely adopted.

“We recognize that regulatory approaches may evolve in response to market conditions, but the demand for credible, comparable sustainability information continues to grow – both globally and at home,” said Wendy Berman, CSSB’s incoming chair.

The moves on Wednesday follow other measures the CSA adopted earlier this month aimed at bolstering corporate competitiveness in the face of economic uncertainty. The group said it was reducing regulatory burdens and costs for raising capital and launching initial public offerings.

Kevin Thomas, CEO of the Shareholder Association for Research and Education, an investor advocacy group, said reducing unnecessary burdens is beneficial for both companies and investors.

“But let’s be smart about it. Forgoing new rules on climate disclosures just shifts that burden onto investors who have to make best guesses about their exposure to climate-related risks, and it makes our markets less attractive to the global capital we need now more than ever to grow our economy,” he said.

This opinion was written by Conor Chell and was published in the Globe & Mail on January 1, 2025.

Over the past 18 months, Canada’s sustainability landscape has experienced sweeping regulatory reforms and mounting expectations for greater transparency. These increasing requirements show no signs of slowing down. Governments around the world – including Canada’s – have introduced numerous sustainability disclosure mandates and laws, setting the stage for increased corporate accountability. Further transparency and enforcement-based legislation are expected to come into effect in 2025 and beyond.

For Canadian companies, especially those operating internationally, the cumulative impact of the ever-expanding list of sustainability reporting and compliance requirements represents a growing challenge. Many companies are facing significantly rising compliance costs, a lack of qualified and experienced personnel needed to meet these requirements, and direct effects on operations.

Sustainability regulation in Canada isn’t merely a bureaucratic hurdle. It signals a fundamental change in how companies are being held accountable. For instance, Canada has introduced one of the most punitive greenwashing laws and associated penalties in the world (Bill C-59, which amends the Competition Act); a law which many companies are not prepared for. KPMG’s annual CEO Outlook survey found 53 per cent of Canadian CEOs believe their sustainability claims can withstand scrutiny. With this heightened focus on regulatory and reporting requirements, many business leaders may be questioning their ability to substantiate claims such as carbon-neutral, environmentally friendly or ethically sourced.

The cost of compliance will continue to escalate, given that stricter and farther-reaching reporting requirements are on the horizon. For example, the fall economic statement revealed the federal government is preparing to amend the Canada Business Corporations Act to require mandatory climate-related financial disclosure for large federally incorporated private companies.

Sustainability regulation in Canada isn’t merely a bureaucratic hurdle. It signals a fundamental change in how companies are being held accountable.

Meanwhile, some argue that the incoming U.S. administration is set to have a profound impact on how businesses compete in the U.S. and global markets, with worries over tariffs and talk of rolling back green regulations and measures under the Inflation Reduction Act. Nonetheless, Canadian companies shouldn’t expect sustainability reporting and disclosure laws in Canada to materially change.

As investors and other stakeholders continue to expect more ESG data disclosure, we are seeing the convergence of sustainability reporting frameworks and standards on a global scale. There is a growing international consensus on the need to address sustainability issues through standardized transparency, accountability and enforcement. This signals a movement toward political and regulatory alignment – one driven by market pressures, broader international co-operation and, importantly, the need to tackle climate and social challenges.

As sustainability regulation continues to gain ground globally, it would be very difficult for any Canadian government to walk back, for instance, antiforced and child labour legislation. In fact, over the past few months, the U.S. has been pressing Canada to take greater steps to ban imported goods that may have been made using forced or child labour. In response, the government is now proposing to legislate the import ban on goods produced using forced labour, create a new oversight agency for compliance, and invest $25-million in the Canada Border Services Agency and Global Affairs Canada.

Dozens of jurisdictions around the world have already enacted anti-forced and child labour and anti-greenwashing laws, so repealing this sort of legislation in Canada seems very unlikely, regardless of which political party forms the next federal government. It is also unlikely that any Canadian government would repeal laws prohibiting environment and social misrepresentations (such as Bill C-59), especially since the vast majority of Canadians support anti-greenwashing measures.

While the path forward is not crystal clear, the trajectory toward greater ESG regulation is. Global strides have been made and increased regulatory and legal scrutiny on Canadian businesses are irrevocable.

Companies must prepare to ensure their claims are credible and align with emerging sustainability reporting standards. Those that respond effectively will continue to communicate their environmental and social benefits in this heavily regulated environment, positioning themselves as market leaders and differentiating themselves from their competitors. There really is no turning back.

This article was written by Jeffrey Jones and was published in the Globe & Mail on December 19, 2024.

The body in charge of sustainability accounting in Canada has issued its first standards, sticking closely to international guidelines but giving companies extra time to adopt some contentious provisions for emissions reporting, scenario analysis and timing of disclosures.

The Canadian Sustainability Standards Board said the additional time, or transition relief, for those measures will help strike a balance between providing investors the data they’ve demanded to make informed decisions and not putting companies at a competitive disadvantage as they take on additional reporting.

Major institutional investors on Wednesday welcomed the standards and urged companies to adopt them without delay, while environmental advocates expressed disappointment about the extended implementation periods.

The guidelines are based on those developed by the International Sustainability Standards Board to replace a mishmash of reporting templates for environmental and social risks with a global baseline. The CSSB started its work in 2023 to tailor those rules to an economy heavy in resource extraction and in smalland medium-sized businesses.

The CSSB said its initial standards preserve the baseline by making sure all the provisions come into effect after its transition periods end. The guidelines follow months of public consultation on a draft it released early this year.

“What this means for Canada is we now have the first set of Canadian sustainability disclosure standards. They’re voluntary at this stage,” Bruce Marchand, interim chair of the CSSB, said in an interview. “We believe that with the transition relief that we’ve now included in response to what we heard from all of the respondents, that these are practical and able to be implemented.”

Sustainable investing professionals have been waiting for the standards. The new guidelines, along with a green and transitionary investment taxonomy recently approved by Ottawa, are aimed at adding certainty to sustainable investments, avoiding greenwashing and bolstering Canada’s ability to compete for green capital, their authors say.

The standards prescribe how to report key sustainability and climate metrics, including carbon emissions, risks and opportunities tied to environmental issues, analysis of potential policy options, and other items.

The rules are voluntary, though Canadian Securities Administrators, which represents provincial and territorial securities commissions, said it will use them to determine a future set of compulsory measures, starting with climate-related reporting.

The CSA said in a statement that it aims to issue rules that balance investor demands for consistent disclosures while contributing to efficient capital markets and keeping the capabilities of public companies of different sizes in mind. It will study the feedback the CSSB received, while also conducting its own consultation.

The regulator also said it plans to monitor events in the U.S. closely, given the interconnectedness of the two markets. With the change in administrations in Washington, the fate of planned climate reporting rules set by the Securities and Exchange Commission is now a major question mark.

Where the CSSB standards differ from the international ones is the time granted for adoption of some of the measures that faced opposition from many companies that submitted comments to the process.

For Scope 3 emissions – greenhouse gases that stem from a company’s supply chain and end use of its products – the CSSB is allowing until Jan. 1, 2028, to begin tallying and reporting that data. That is three years beyond what is prescribed by the ISSB.

Where the ISSB calls for sustainability and climate reports to be issued with annual financial statements, the CSSB has decided companies can also conform to that standard by 2028. In the interim, companies can issue those reports nine months from their financials in the first year, and in the subsequent two years they are allowed a six-month gap.

For climate resilience, the CSSB is not granting companies transition relief for qualitative scenario analysis – how companies could fare under a range of potential policy, price and physical outcomes. But it is offering three years to develop and implement quantitative analysis – number crunching associated with that analysis.

“Part of the reason for that is to acknowledge what is required to accomplish that. There’s expertise required, resources required, methodologies to be matured, process implications and so on,” Mr. Marchand said.

Ten of the largest Canadian pension funds, including Canada Pension Plan Investment Board, Caisse de dépôt et placement du Québec and Ontario Teachers’ Pension Plan, said the new standards offer a robust framework that will boost the competitiveness of Canadian companies in the race for global capital.

However, Sonia li Trottier, the director of the Canada Climate Law Initiative, lamented the additional time granted for implementation, saying companies have long known they would have to eventually disclose the data. “One year of relief is enough time, as there have been many years of guidance on climate-related disclosure and methodologies,” she said in a statement.