Canadian financial regulators have been urged by a government-appointed
body to produce guidelines that would require enhanced disclosure by
companies on their social and environmental impacts.
The National Round Table on the Environment and the Economy has
recommended that the Canadian Securities Administrators (CSA), an
umbrella body for 13 securities regulators overseeing capital markets,
set out ‘a requirement for clearer and better disclosure [in annual
reports] which might, in turn, facilitate greater transparency
regarding social and
environmental issues’. This should be ‘through publication of guidance
or an interpretation statement’, making it easier for institutional
investors, in particular pension funds, to take such factors into
account when making investment decisions, it says.
In addition, the round table suggests the CSA encourage Canadian
companies to use the Global Reporting Initiative when making
disclosures.
The conclusions have been drawn up by a task force which consulted
extensively with the private, public and voluntary sectors. They are
not binding for the government, but the round table has influence and
political commentators expect ministers and regulators to heed its
advice.
The task force, which was asked to explore the relationship between
capital markets, financial performance and sustainability in Canada,
also called on federal, provincial and territorial governments to adopt
regulations, similar to those in Britain, requiring pension funds to
disclose the extent to which they take social and environmental factors
into account in investment decisions, as well as in proxy voting.
It said the federal government should ‘lead by example’ by considering
social and environmental issues when allocating funds for capital
markets projects and federal pension plans, and that such issues should
be ‘integrated into the education requirements of academic and
professional institutions and programmes’, especially MBAs.
The task force says the measures are needed to quicken the pace of
change on business responsibility issues, to which it feels investors
and regulators have been slow to respond. Most Canadian investors
‘continue to be advised by counsel that consideration of social and
environmental factors is in general conflict with their fiduciary duty’
– despite an opinion to the contrary issued by the international law
firm Freshfields Bruckhaus Deringer more than a year ago (EP7, issue 8). It said pension fund trustees needed, as a priority, to be made aware that considering such factors was desirable.
The 17-member task force included Patricia McCunn-Miller, executive
vice-president of corporate responsibility at Synenco Energy, David
Wheeler, dean of management at Dalhousie University, and Ernst
Ligteringen, the Global Reporting Initiative chief executive. It also
featured mainstream
figures such as Charles Coffey, executive vice-president at RBC
Financial Group and a former deputy prime minister, Suzanne Hurtubise.
