Major Canadian pension funds ask companies to adopt and improve their environmental, social, and governance (“ESG”) reporting by disclosing material and industry relevant ESG factors through the adoption of Sustainability Accounting Standards Board (“SASB”) reporting and the Task Force on Climate-related Financial Disclosures (“TCFD”). Israeli companies that have offices in Canada need to consider these factors.
On November 25, 2020, managers of the eight largest pension funds in Canada, representing Alberta Investment Management Corporation, British Columbia Investment Management Corporation, Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board, Healthcare of Ontario Pension Plan, Ontario Municipal Employees Retirement System, Ontario Teachers Pension Plan, and the Public Sector Pension Investment Board (the “Pension Funds”), released a joint statement calling for wide-spread improvement in ESG reporting from Canadian businesses. The statement notes the financial and social instability witnessed in 2020 due to Covid-19, and the wave of emerging awareness of social inequities, systemic racism, and environmental threats.
The Pension Funds take the stance that ESG transparency is an integral part of their duty to their investors, as promoting businesses who excel on ESG issues is not only the right thing to do but will also, in their opinion, unlock opportunities and mitigate risk in the long term.
In order to deliver on their mandates to their investors, these fund managers recommend transparency from companies, specifically related to how companies identify and address diversity and inclusion, human capital, board effectiveness, and climate change. The Pension Funds comment that, while adding to the myriad of disclosures already required by a company, ESG reporting in a standardized form is a vital part of 21st century business evaluation.
The Pension Funds specifically ask companies to adopt and improve their ESG reporting by disclosing material and industry relevant ESG factors through the adoption of SASB reporting and the TCFD. The SASB standards focus broadly on industry relevant sustainability reporting, and create a standard way to compare and evaluate ESG results and disclosure against industry peers. The TCFD framework more directly focuses on climate-specific disclosures and performance across different reporting levels.
The Pension Funds consider ESG reporting a necessity for evaluating business risks and opportunities in the 21st century. They directly believe that ESG astute companies with diligent and comparably strong disclosure practices will outperform competing companies in the long term.
The Pension Funds’ statement highlights the importance of modernizing and improving ESG reporting for attracting investment in the 21st century. DLA Piper (Canada) LLP can help your business adopt and improve diligent ESG reporting standards, using SASB and TCFD, to help ensure your business is evaluated favourably.
See DLA Piper’s global ESG Handbook, a useful reference tool in discussing and refining your ESG programs.