How Canada is Tackling ESG

Across Canada, you can find ESG-informed values and approaches in a variety of laws, frameworks and regulations. While ESG is primarily used by the investment sector as a means of measuring corporate practices and behaviours against a set of criteria related to environmental, social and governance policies, governments have the opportunity to create the environment for responsible business actions. By encouraging strong ESG disclosure and performance, provinces can support increased investment and competitiveness among companies within their jurisdiction, creating positive ripple effects across society and the economy.

“Increasingly, ESG is a point of differentiation that affects competitiveness both for jurisdictions and the companies that operate from within them. Sustainability performance has become “table stakes.” And governments that don’t explicitly grapple with these issues risk having others dictate their story,” notes a June 2022 report from Canada West Foundation, titled ESG: Why should governments care and what should governments do?

Disruption surveyed governmental approaches across the country to gain a better understanding of the emerging ESG landscape.

Ontario

In January 2021, Ontario’s independent Capital Markets Modernization Task Force issued a final report recommending significant improvements to Ontario’s ESG disclosure standards with the intention of creating an atmosphere in which investors are confident in the market and feel safe with their investments. With the last comprehensive review of Ontario’s capital markets taking place in 2003, the task force’s work was long overdue, especially when considering the importance placed on ESG factors within the investment industry in recent years.

Among the Task Force’s key recommendations is mandating disclosure of ESG information by public companies, specifically climate-related disclosure. As its final report notes, “there is increased global momentum towards enhanced disclosure of the environmental, social and governance (ESG) factors that impact a company’s financial performance.”

In March 2021, the Ontario government released its provincial budget, indicating its intention to increase ESG disclosure requirements, based on the Task Force’s recommendations and noting that throughout its work stakeholders expressed significant support for improved disclosure. However, the budget stopped short of making any policy-related promises, indicating the Ontario Securities Commission would begin work to inform further regulatory consultation on ESG disclosure in late 2021.

Alberta

In its 2021 budget, the Alberta government allocated $2 million to establish an ESG Secretariat operated out of the Premier’s Office. The Secretariat is intended to act as a strategic coordinating body on all ESG-related matters across government, and to promote investment in Alberta by providing data and performance metrics across the province. The Secretariat, noting that no globally accepted ESG framework exists, is pursuing a jurisdictional ESG framework that considers the performance of both government and industry. The framework uses the UN Sustainable Development Goals as a foundation and will ultimately inform policy and identify areas of performance and investment across a variety of categories.

Alberta’s draft ESG jurisdictional framework - Source: Canada West Foundation

Environment

Fresh water availability, conservation and renewal
Emissions, effluents, decarbonization and renewability
Natural capital, biodiversity, remediation and reclamation
Waste reduction, recycling and redirection
Physical climate and weather risk

Social

Demographics, immigration, inclusion, diversity and social mobility
Indigenous partnerships, participation and reconciliation
Wellness and wellbeing, safety and security
Education, skill development, income growth and affordability
Citizenship, community engagement and civil society

Governance

Compliance, transparency and public disclosure
Human rights and production responsibility
Institutional governance, credibility and independence
R&D, innovation and technology adoption
Job creation, exports and economic growth
Financial stewardship and future capacity

British Columbia

The British Columbia government has been working to establish itself as a leader in ESG standards. The province’s long-term economic plan released in February 2022, StrongerBC, aimed to position the province as a competitor in a global economy that has increasingly put more importance on ESG factors in recent years. As part of that goal, the economic plan also established the ESG Centre of Excellence to promote ESG principles and help British Columbians develop, promote, and market environmentally and socially responsible goods and services. It’s intended to facilitate and encourage ESG investments in B.C. with a goal of attracting socially conscious investors, as international investors place greater attention on issues related to climate change, corruption, sustainability, cyber security, and systemic discrimination.

The new Centre will facilitate ESG investments in B.C., attract socially and environmentally conscious investors, and diversify markets for B.C.’s world-class goods and services under a respected and trustworthy ESG brand.The government says the centre will “help businesses increase their capacity to meet international ESG standards and reporting requirements, and to be competitive and increase business opportunities.”

At A Glance: ESG in B.C.