Environmental, Social and Governance (ESG)

Adding to the list of challenges businesses face, Environmental, Social and Governance (ESG) issues are rapidly becoming priorities. Discussions abound on how businesses can plan for, and comply with, increasing market demands for enhanced environmental activism, a stronger commitment to sustainability, an active role in addressing social issues and an overall improvement as to how businesses govern their entire supply chain. It is essential that businesses understand risks and opportunities.

What is ESG?

ESG covers a range of topics that combine to measure how ethically a company behaves:

• Environment: climate change, carbon footprint, circular economy, biodiversity, waste, water and resource use, pollution,
• Social: human rights, labour practices, health & safety, community, diversity & inclusion, systematic racism, pay equity, shareholder activism, corporate purpose,
• Governance: corporate governance, company ethics, regulatory compliance, executive pay, board diversity, lobbying, approach to taxation

Why ESG is important

ESG has evolved over the past few years and has now become a critical focus for businesses, investors, NGOs, governments, stakeholders, consumers, lenders, insurers and consumers. Expectations of businesses in this dynamic landscape have never been higher.

The potential impact is vast, affecting a number of areas including strategy, reporting, human capital management, operations, risk management and long-term value. While the companies that choose to work with you may take into account your business' ESG performance, there are increasingly other factors to consider.

The rise in benchmarks and indices that track a company's performance on ESG metrics means that the publication of 'warm and fuzzy' sounding pronouncements is no longer enough. ESG has moved from the domain of a PR and Communications team to become a board-level concern. ESG issues present a series of governance risks in relation to reputation, regulating compliance, investment and sales.

However, alongside managing such risks and requirements, there are many opportunities around sustainability and ESG. Those that are forward thinking in this area are likely to thrive in the 'new normal'.

ESG factors for businesses

Businesses are doing a deep dive into how critical factors in ESG present risks and require careful management and oversight as well as opportunities to be explored and activated.

In addition to the internal structure and reporting issues and requirements, there are stronger external pressures. Proponents of responsible investing, impact investing and sustainable investing are continually pressing for better and more standardized reporting of Canadian ESG issues. Simultaneously, governments around the globe are continuing the transcendence of "hard" law over "soft" law and originating new and more complex regulatory and compliance programs which create additional risks and obligations for businesses.

Class actions and single plaintiff litigation have opened the door for more far-reaching and impactful jurisprudence that stresses risk management efforts.

The adoption and application of international standards, principles, guidelines and goals, which may impact strategies and operations across a business and in a multiplicity of jurisdictions, have many businesses working diligently in unfamiliar territory.

Our ESG advisory services

Governance and corporate

Advising on:

• a board of directors' responsibilities vis-à-vis stakeholders;
• stakeholder relations, stakeholders' issues, and stakeholder management and collaboration initiatives;
• shareholder activist campaigns and shareholder proposals regarding Canadian ESG factors pertaining to the business, its operations and its supply and value chains;
• Canadian ESG, corporate responsibility and sustainability issues for boards of directors and drafting mandates and reports for relevant committees;
• incorporation of British Columbia benefit companies;
• green, social and sustainability financing;  
• and preparing enterprise–wide business principles to address a client's approach to Canadian ESG factors;
• positive Indigenous engagement and pro-active risk-mitigation strategies relating to Indigenous communities;

Providing:

• guidance on lobbying and lobbying registrations, as well as government relations advisory services;
• education to legal teams, executives and senior management on Indigenous-Non-Indigenous relations ("Full Circle" presentation);
• relevant education for boards of directors on Canadian ESG risk oversight issues, directors' fiduciary duties, consideration of stakeholder interests and governance strategies;

Preparing:

• policies and protocols to implement and operationalize the Canadian ESG principles addressed in the business and its supply chains;

Risk oversight and management

Advising on:

• the drafting and implementation of anti-bribery, anti-corruption and anti-money laundering obligations, policies and procedures;
• supply chain audits, supplier compliance standards and programs, and corrective action and remediation processes;
• development of corporate Indigenous Reconciliation plans, including Indigenous engagement policies;
• preparing, management and oversight of business and supplier codes of conduct;
• drafting and implementation of whistleblower and non-retaliation policies and procedures;

Drafting:

• Canadian ESG risk registers
• supplier and procurement policies, standards and codes of conduct and industry/competitor benchmarking;
• supply and procurement agreements containing contractual provisions and conditions to address Canadian ESG risks and to facilitate life cycle assessments and embodied carbon management;
• representations, warranties, indemnities and other contract provisions for M&A transactions to address Canadian ESG issues in the business and its supply chains;

Specific assistance in:

• developing Indigenous procurement supply chains and Indigenous partnerships;
• mapping, identification and assessment of Canadian ESG-related business risks;
• defence of Canadian ESG-related class actions e.g., lawsuits alleging the lack, inaccuracy or inadequacy of disclosure of Canadian ESG issues or failure to prevent climate change adverse impacts or human rights abuses;
• developing due diligence approaches for M&A transactions to assess Canadian ESG risks including drafting Canadian ESG questionnaires;
• reviewing and advising on the preparation and content of CSR (Corporate Social Responsibility), Canadian ESG (Environmental, Social and Governance) and related reports;

Compliance and reporting

Advising on:

• Indigenous outreach, consultation and engagement strategies, requirements and best practices, and associated due diligence;
• annual disclosure requirements under relevant domestic and foreign legislation (e.g., UK, California and Australian modern slavery legislation, as well as annual reporting and due diligence requirements under EU, French, Dutch and other legislation), and the shift towards mandatory climate disclosures;
• continuous reporting requirements for public companies regarding Canadian ESG issues;
• sustainability Accounting Standards Board (SASB) standards, Global Reporting Initiative standards, (GRI), Task Force on Climate-Related Financial Disclosures (TCFD), Climate Disclosure Standards Board (CDSB) and other reporting platforms, standards and requirements;
• compliance with government procurement requirements as they pertain to Canadian ESG issues;
• import, export, tariff and compliance issues pertaining to forced labour, prison labour and child labour as well as engagement with government departments and agencies with respect to the intersection of trade and human rights e.g., USMCA ban on the importation into Canada of goods made with forced labour and the new Canadian measures related to the human rights situation in the Xinjiang Uyghur Autonomous Region;
• conflict minerals compliance and reporting;
• voluntary disclosure, advertising, marketing, packaging, labelling and social media issues relating to Canadian ESG factors;
• relevant updates and/or developments in litigation, legislation and regulation;

Providing:

• training to employees, management and suppliers on Canadian ESG factors, risk management, compliance and procurement issues.
• or developing due diligence and risk assessment processes for ongoing assessment of climate change and supply chain risks and adherence to global standards, frameworks, policies, protocols and guidelines including the UN Guiding Principles on Business and Human Rights, UN Sustainable Development Goals and the OECD Guidelines for Multinational Enterprises, OECD Due Diligence Guidance for Responsible Business Conduct, UN Principles for Responsible Investment (UNPRI), UN Declaration on the Rights of Indigenous Peoples (UNDRIP) and related disclosure requirements;