Canadian ESG Series | Canadian ESG for In-House Counsel

Stephen: Good afternoon everybody. My name's Stephen Pike and I'd like to welcome you to our webinar on Canadian ESG For In-House Counsel. We're delighted that you could join us today. We have a terrific program for you and an amazing panel that I'm going to introduce right away.

We have Jennifer King, who's an environmental lawyer and Partner in Gowling Toronto office. She practices environment law in Ontario, federally, and in Nunavut. She provides strategic regulatory advice on a wide range of matters including environmental impact assessments, natural resource development in major infrastructure projects including those in Canada's near and far North. She represented in Intervener, the Canadian Public Health Association, in a recent reference before the Supreme Court of Canada regarding the Federal Greenhouse Gas Pollution Pricing Act. Jennifer's a climate governance expert with the Canada Climate Law initiative. Welcome, Jennifer.

Linda Hogg is a Partner in our Vancouver office and she practices in the area of corporate and securities law. She provides advice on all aspects of regulatory requirements for public companies including corporate finance, M&A, proxy battles and taught business law at the BC Institute of Technology and UBC. She's spoken on ESG and the world of the board to the members of Women Get On Board on building a sustainable mining sector at the PDAC 2021 conference. Welcome, Linda.

Neena Gupta is a Partner in our Waterloo office. She deals with human capital management in her employment and human rights practice. She's also Co-Chair of our firm's diversity and inclusion council. Since the beginning of the pandemic Neena's been working on difficult issues and advising employers on COVID-19 in the workplace, health and safety, work from home, returning to work, vaccinations and mandatory vaccination policies and vaccination incentives. Welcome, Neena.

I'll be the moderator this afternoon. I'm Stephen Pike. I'm a business law lawyer based in Gowling's Toronto office and work in ESG on supply chain and human rights issues as well as corporate governance aspects of the ESG. Our format today will be an active panel discussion, not a lecture. We're going to have a Q&A format and because ESG impacts all areas of Canadian businesses I'm going to ask the panel a wide variety of questions on everything from environmental to diversity issues from Indigenous peoples to M&A and from human capital judgement to due diligence. In addressing and advising on ESG risks and opportunities it's critical for in-house counsel to do so within a well informed context and with acuity. In my view, ESG factors are not generic. They're not identical for every business or for every industry or even for every region or country. So to help provide context for in-house counsel in Canada we want to provide you with some insight into Canadian ESG factors and issues. You say, "What are these Canadian ESG factors and issues?". Well, they're unique to Canada and let me give you some examples. You'll hear more in a couple of minutes. Indigenous peoples in Canada are stakeholders but they're stakeholders with constitutionally protected rights and interests that's unique to Canada. Canada's an Arctic nation. As we hear from Jennifer King, there are social, social justice and environmental issues in Canada's Arctic that are unique to Canada. Human capital management in Canada is unique. Canadian workplace laws are very different than those that we see in the US, and speaking of the US, in ESG we have different environmental laws and regulations and project approval processes. From a social perspective we have many similar social and social justice issues but we have many that are unique to Canada, such as French language rights in Quebec and outside. From a corporate governance perspective, we're very different than the US. We're shareholder primacy, the premise that businesses exist and are run for the benefit of primarily of shareholders, is the law. In Canada the interest of stakeholders have been recognized as a legitimate part of the board's considerations when it's fulfilling its fiduciary duty to act in the best interest of the corporation. According to the Supreme Court of Canada, stakeholders can include shareholders, employees, suppliers, consumers, governments, creditors in the environment, and with the codification of the BC case in the 2019 amendments to the Canada Business Corporations Act, pensioners and retirees in the long term interest of the corporation were added to the list of interest that boards of directors in Canada can consider. So it's in this context that our discussion of Canadian ESG can begin.

The first question that I want to put to the panel, and I'll put this question to Jennifer is, why have climate change and climate risk factors become immediate critical issue for Canadian in-house counsel?

Jennifer: Thank you, Stephen, and thank you for that introduction. I'm going to talk about four reasons why climate change risk factors have become an unavoidable and critical issue for Canadian companies and their legal advisors. First, climate change is already physically impacting Canada. Second, it's impact is disproportionate on our most vulnerable, including Indigenous communities in the North. Third, regulation of greenhouse gas emissions is quickly evolving and proliferating in Canada, and finally, COVID-19 has shown a spotlight on climate change, in Canada and across the world. Turning to the first factor, climate change is already impacting Canada. It's no longer a future risk. Chief Justice Wagner in the recent decision regarding the Greenhouse Gas Pollution Pricing Act, which was just released last month, said that it's the essential factual backdrop to the appeals is uncontested. Climate change is real. It is caused by greenhouse gas emissions resulting from human activities and it poses a grave threat to humanities future. The only way to address the threat of climate change is to reduce greenhouse gas emissions. So the urgency and the public interest in mitigating the impacts of climate change is understood and the Paris Agreement target to limit global warming to 1.5 degrees Celsius will require a shift with rapid and far reaching transitions in land, energy, industry, buildings, transports and cities. In other words, the shift will affect Canadian business in every sector. Climate change is also different from other ESG risks. It's understood to be a systemic and interconnected risks that can act as a risk multiplier. That's what the World Economic Forum recognized in its recent report on global risks. Climate action failure is linked to water crises, food crises and infectious diseases and as we saw last year with the wildfires in West United States, which had direct impact on the health of Canadians across the border, it's a borderless issue. Second, I'm going to speak a little bit about the disproportionate impact on Canada's North. In 2019 the Federal Government released a scientific report noting that Canada is warming at twice the rate as the rest of the world and in the North it's three times as fast. This was also recognized in the recent Supreme Court decision where the majority found that the effects of climate change have been, and will be particularly severe and devastating in Canada, and particularly in the North. Evidence of warming can be seen in the thawing of permafrost. So permafrost is land that is permanently frozen except for the top layer which freezes in the winter and thaws in the summer. When it melts, permafrost exposes carbon dioxide and methane which contributes to warming, and it also has other impacts on the landscape in the North. Which is related to projects in the North and mining operations in the North. What they're finding is that oil and gas industry waste pits, that were supposed to be frozen in the permafrost forever that were built in the 70's and 80's, they're thawing. The waste is now migrating into fresh water systems. An example of this is Giant Mine in Yellowknife, which was built within the municipality of Yellowknife, and the gold mining there created waste. Arsenic trioxide. When the mine went bankrupt the government was left with the task to store the waste, and the government at the time decided to keep it underground, frozen in the permafrost. Now the permafrost is melting and we're going to have to come up with another method for maintaining it and perhaps for years we'll all be paying to refrigerate it. So we're seeing the Nunavut Impact Review Board, which is Nunavut's impact assessment agency, is not talking about climate change and talking about the immediate impacts in the Arctic and we're seeing proponents change the design of their projects, dealing with different contingencies and really dealing with impacts on waste management right now and having to adjust plans and project designs from only a few decades ago. Third was about changing regulations, and that we have the Canadian Impact Assessment Act which replaced the old Impact Assessment Act in 2019, and it's put climate change front and center. The project will only be approved if it's in the public interest and public interest includes consideration of the extent to which the affects of the project will contribute or help Canada's ability to meet its obligations with respect to climate change. There's a lot of regulation across Canada now that's proliferating about climate change and with the Greenhouse Gas Pollution Pricing Act referenced a decision which just came down, the Supreme Court has made it clear that not only one level of government can regulate climate change or greenhouse gas emissions, all levels. So as in-house you'll see is that there's changing regulations across Canada with respect to climate change. You're going to find regulation at every level of government, and there's kind of a patchwork map right now with respect to even just carbon pricing, which is only one method to combat climate change. Back to you, Stephen.

Stephen: Thank you very much, Jennifer. Neena, I've got a question for you but first I wanted just mention to everyone who's enjoying the presentation and our discussions, that if you have questions we're going to try and have a Q&A session for your questions at the end of the webinar. Feel free to pose them using the Q&A function and include your name in case we're not able to get to you when we do the Q&A session so they can follow up with you after. Okay. Neena, what ESG trends in the workplace are using that are unique to Canada?

Neena: That's a great question, Stephen, and I want to start by picking up something that Jennifer just said and it was alluded to in your opening remarks which is the importance of Indigenous rights in Canada. The world was galvanized last year and continues to be grappling with issues arising from George Floyd's murder, the conviction of Derek Chauvin, and the Black Lives Matter movement. In Canada what we saw is those influences also included the cause for Indigenous justice and the cause of inclusion of people of colour. Corporate Canada is not immune from those social pressures. There is increasing pressure on corporate Canada to be part of the solution. Develop internal policies to retain, recruit, promote, sponsor, BIPOC, talent and more importantly to be seen as being vocally on the right side of history. So that's, I would say, something that has really come to the fore in 2020/2021. But I think there's actually a deeper and really inherent sort of difference. It's the recognition of the judicial regulatory and maybe even the zeitgeist in Canada of the centrality of work and one of my favourite quotes, and any employment lawyer on the call will recognize this quote, it's from Justice Brian Dickson, the former Chief Justice, and he said in the Alberta reference, "Work is one of the most fundamental aspects in a person's life, providing the individual with a means of financial support and, as importantly, a contributory role in society." Then he goes on to say, "A person's employment is an essential component of his or her sense of identity, self-worth and emotional well-being. Accordingly the conditions in which a person works are highly significant in shaping the whole compendium of psychological, emotional and physical elements of a person's dignity and self-respect." What we see is that permeates judicial culture in Canada and it really, quite frankly, creates high expectations of corporate counsel and those advising corporations about the high standard employers have when they are dealing with their employees. It's just consistent. Broad human rights protections for things like disability and illness but also for elder care and childcare, family care responsibilities. In the last decade, Stephen, we have seen increasingly higher standards with respect to psychological safety. I think Quebec led the way with their standards against psychological harassment but all of the occupational health and safety Acts contain broad protection against generic harassment and bullying. Conduct, quite frankly Stephen, when I joined the workforce in the last millennium was employees will be boys, it's horseplay, it's a blue collar workforce, it's a rough and dirty work place,  you have to put up with it; are no longer tolerated. In Ontario we see the obligation to be very proactive about including people with disabilities and illness in the workplace and that's really codified in a piece of legislation known as the Accessibility for Ontarians with Disabilities Act. We call it AODA for short and there's a filing deadline coming up on June 30^th. So shout-out. We're doing a seminar May 6^th for those of you who are a bit curious about what the filing deadline entails and what your responsibilities in Ontario are under that piece of legislation. In the courts we see aggressive wage an hour class actions. Huge fines for workplace injuries and fatalities and huge damage awards for human rights violations. Maybe not huge by American standards but certainly huge by Canadian standards. A decade ago an award for 20 to 40 thousand dollars would be considered to be anomalous for human rights violation. We're now seeing awards hundred thousand, quarter million, 900 hundred thousand, for egregious violations, but nonetheless the Tribunals are enforcing human rights with a big stick. So bottom line, Stephen, I think for our listeners, many of whom are in-house counsel, they will have to pay increasing attention to how their workers and employees are dealt with in the workplace. There's clearly high, and I would say increasing, expectations in Canadian corporations not to treat employees as kind of fungible pieces of the machinery but also be very mindful of their personal circumstances. So, high standards, indeed.

Stephen: Thanks, Neena. It reminds me of statements at the beginning of the pandemic about we're all in this together and our first priority is the health and safety of our employees that courts in Canada would be examining those carefully and making sure that, in fact, that the actions backed the statements that were made.

Neena: Absolutely, Stephen.

Stephen: Linda, in your work with in-house counsel would you say that Canadian ESG factors are becoming more impactful on in-house counsel in M&A, corporate reporting, commercial agreements?

Linda:   Thank you, Stephen, and absolutely. ESG is now a mainstream focus. It's assessed with the same rigour and the same traditional measures as credit and liquidity risk. You have to assess the ESG risk and it's not straightforward. There are no unified metrics. If the assessing of it can be difficult and different, as we all know for different industries, you have to assess the key in setting the materiality for your particular company. We start in any M&A in trying to establish value and we start with the due diligence. You have to assess due diligence from an ESG perspective. You have to, when beginning a process, look and ask yourself in the due diligence questions, a broader scope. Does the target have an ESG strategy? Has the target adopted an ESG framework? What is the target's approach to ESG governance? How has the target board been involved in understanding, developing and implementing an ESG strategy? Including the accountability for it. Are there management incentives in place to promote ESG? What ESG factors are relevant to the target's ability to operate its business? How do ESG factors influence key stakeholders to this business and their decisions? How does the target engage those stakeholders and what is the history of stakeholder engagement? Are there are sufficient personnel and other resources to properly handle ESG matters and how are they deployed? So you see that your entire diligence questionnaire must include and focus on these issues. Once you get through the due diligence and assess you come to drafting the contracts. As in-house counsel you have to address the representations and warranties. Did that due diligence bring to mind things that need to be addressed specifically as opposed to just the general representations and warranties that you would have for that business? Do you need specific ESG contractual terms? Will there be a review of insurance clauses as to what the risks might be represented in that due diligence? What about post ESG integration of your businesses and how can they be set up? We talk about the ESG clauses, which must be added, because if your due diligence identified a material ESG risk you may want to consider a specific clause addressing that risk because it will affect the value of what you're acquiring. Think of the target's compliance with application ESG policies and including that as a representation and warranty. Consider whether misconduct that implicates materialistic concerns including possible allegations of sexual harassment or misconduct or complaints on discrimination and should that be included? We've referred to these some times as the Harvey Weinstein clauses and make people think that how would Miramax, his company, be judged and valued both before and after the issues with respect to him came to light. Are there any other social, labour, health, safety, security, environmental considerations? Accidents. All of these things should be considered in the course of drafting the contract. So as counsel, once you've gotten through due diligence, representations and warranties, you've got to look at force majeure clauses. I mentioned that agonized a force majeure clause in a very large transaction in January of 2020. I had included the word 'pandemic' as part of my force majeure, which was pushed back on very hard by the other side but it stayed in, and thankfully so. That was a transaction that we needed that clause as we worked through 2020 to closing. What happened through that clause, as I saw that which was signed up in February and closed in August of 2020, it changed values as to how we looked at ESG through that process. That particular transaction was a large mining acquisition in South America. You have to talk about the human capital. How was the mining camp designed? I mean the value of that had to change. They changed our structure of what our value was because usually those were communal. That had to change in COVID. How was quarantine managed? Usually people in remote areas worked 2 weeks on and 2 weeks off. That had to change when you added a quarantine provision to that and how did that affect your employees and how they were able to function? We did find retaining was harder. People didn't want to be away from home for a month and quite legitimately so. Sadly, in that process, there was a COVID outbreak at that particular mine site. We had to address it. We did not have a COVID policy in place and we will not face that again. We will ensure, as in-house, there must be a COVID policy in place. It must be a standard bar. We had to re-gain the social licence to operate, both locally, regionally and nationally with that government and work through that successfully. But had to re-establish that social licence to operate. So as in-house counsel you have a process in any M&A transaction of how to value it and how will ESG affect that value. l What are your due diligence considerations? What clauses do you need? How will you address those throughout? Back to you, Stephen.

Stephen: Thank you very much, Linda. Neena, back to you. Linda provided a great segue in terms of COVID-19. How has COVID-19 impacted human capital management in Canada?

Neena: I think, Stephen, in every way and in ways I think no lawyer or in-house counsel anticipated at the beginning. I joke that I have job security because the incoming is unbelievable. I'm sure it is unbelievable for our audience as well. Let's start thinking about what COVID-19 has proven for us. A lot of us have had to work from home. This panel discussion is, although we have lovely backgrounds, is really from our bedrooms and spare rooms and offices and basements across the country. Work from home or work from away really presents complex legal and HR challenges with respect to maintaining confidentiality and security of data. Something as simple as what are you going to be allowed to print, how are you going to shred paper. It's also raised difficult questions about that work/life balance, which I personally don't think exists, but let's just leave that aside. How do you maintain traditional timekeeping systems? For somebody who might be working from home and having to take time off periodically, intermittently during the day to take care of young children who are homeschooling or need lunch or need a nap, don't have daycare, don't have child care because nobody can come into your home, and then how do you deal with maintaining hours? So we're now seeing wage an hour litigation arising from the work from home phenomenon. We also see a huge amount of vacation time that isn't being used because, I don't know about you, but I don't want to take a vacation where the only place I'm going to go is quite frankly my Zoom screen. So how are you going to deal with that backlog? We've seen challenges to layoffs, wage reductions, job sharing and, in fact, the cases that have come out, Stephen, to my surprise a little bit, have essentially said that the law of constructive dismissal, as we knew it pre-pandemic, still applies and so if you're company did a wage rollback, a layoff (in Ontario we call it an infectious disease emergency leave), job sharing, you could still be facing a huge constructive dismissal piece of litigation. Quite frankly, honestly, I anticipate a number of class actions because of that. Companies are now grappling with, Stephen, really intriguing questions. Should we pay people more if they physically come to the office? Should we actually pay them less if they come into the office because they're costing the company overhead? There's no right or wrong answer. It's just a question that in-house counsel are now grappling with. I also think in-house counsel have become embedded in health and safety. So you heard Linda talk about the lack of a health and safety plan. How do you deal with physical spacing in a mine? Well, those questions are being replicated in every workplace. We have people who genuinely don't want to come back to work, physically in the workplace. Sometimes because they're legitimately afraid of catching COVID. They have an autoimmune disorder. They live with vulnerable people. Some people are discovering the joys of software programming from Costa Rica or perhaps back home in Vietnam, China or India. I just shout-out those countries, not because they're exclusive, but they're the ones that I dealt with in the last 2 weeks. When work from anywhere becomes something more than a short vacation there are really complicated international tax benefit. Whether or not you are establishing a presence in a foreign jurisdiction by virtue of an agency relationship with a senior employee or officer, and of course, labour compliance issues. Conflicts of law issues. Whose rules apply? As we return back to the office, and Stephen, I'm desperate to get back to the office. I am sick and tired of my dining room. I see in-house counsel having to grapple with things like PPE, health and safety, the HVAC system and whether they meet safety standards. Whether the cubicles are in fact 6 feet apart or 10 feet apart. Things that quite frankly lost never prepared any of us for and, more importantly I think, in-house counsel are going to have to grapple with the huge impact of the George Floyd and Derek Chauvin interaction and how are we going to grapple with diversity, equity and inclusion and make sure our companies and clients are on the right side of those issues. So I think in-house counsel are just going to be busier than they have ever been before, Stephen.

Stephen: Thanks, Neena. I think we'll hear from Jennifer on that one. The climate change side, it may be the same. The climate change litigation that we've heard about in the news, Jennifer, it's been focused on reinstating government decision makers. Are companies now facing litigation relating to climate change issues?

Jennifer: Yes, Stephen, they are. I would commend everyone who's more interested in this to look at the UN Environment Program, Global Climate Litigation Report. They just published their report regarding 2020 status in January of this year. What the report has found is a rapid increase in climate litigation around the world. To give you just some stats to ground that, in 2017 there were 884 cases brought in 24 countries. As of July 1^st, 2020, those cases had nearly doubled with 1,550 climate change cases filed in 38 countries. The reason why this is important for in-house counsel and Canadian companies is that Canadian litigants are heavily influenced by US and international cases. We'll talk a little bit about it. This litigation is compelling governments and corporate actors to pursue more ambitious climate change mitigation and adaptation goals. We're seeing scientific understanding of climate change and causation of climate change. That's also improving which is also leading to more litigation risk as science is better able to establish causation. So the UN report categorizes climate change litigation and a number of categories and I really want to talk about three. Litigation against governments. Litigation against governments that impacts directly private projects and litigation that targets private entities. What you'll see that's common between all of these pieces of litigation is that there's a real emphasis on the public interest. There's often multiple parties and often what we're seeing in Canada is multiple interveners. So in the past litigation, with respect to climate change, has really focused on governments and climate rights. So what we're starting to see is that some of this litigation is gaining some traction, particularly from the perspective of youth. So in Canada a class action was filed in Quebec on behalf of citizens aged 35 and under. This class action was dismissed by the Superior Court of Quebec in 2019 but the Quebec Court of Appeal just heard the appeal in February and the judgments pending. In Ontario there's the Mathur case, M-A-T-H-U-R, where youth are seeking a declaration that the new targets set by the Province of Ontario to reduce greenhouse gas emissions was not sufficiently ambitious and violated their rights under the Charter, section 7. So they submit that they have a constitutional right to a stable climate system. That case survived a motion to dismiss and is ongoing. These Canadian cases are modelled on international and US litigation. There was a case in the District of Oregon, brought by 21 youth plaintiffs. That was dismissed but that was a few years ago and you can kind of see these cases learning and there was another case, the Urgenda case, which is quite famous in climate change litigation where the Supreme Court of the Netherlands in 2019 found that the State owes a duty of care to protect its citizens from climate change. The other type of litigation I want to talk about that we're familiar with are when companies are caught up in litigation against government actors. So the Greenhouse Gas Pollution Pricing Act case, which I've already talked about briefly, the Federal Government passed a law a few years ago that essentially sets a back stop for carbon pricing in Canada and tells everyone across Canada, all the different jurisdictions, that if you don't have carbon pricing that meets the Federal Government standards then the Canadian law applies. A number of Provinces challenged that and as a result it was challenged all the way up to the Supreme Court and the Supreme Court upheld it. Now we can see carbon pricing regulation across Canada changing and of course that affects companies. That affects the advice that in-house counsel will be giving to the companies. The other type is with respect to impact assessment. So if a project needs a permit and I'll give an example from Australia. So in Australia, Gloucester Resources proposed a new coal mine. The Minister of Planning, they rejected the mine, due to just typical land use planning concerns. The company appealed that to a Court in Wales and similar, the process if very similar to Canada, where the proposal was evaluated on the basis of planning concerns and environmental and social factors. But the Chief Justice in that case went a step further and said that if Australia is going to meet its Paris Accord commitments they can't be approving new coal projects due to their downstream effects. He concluded that the mine was in the wrong place at the wrong time and really rejected the project on the basis of its GHG emissions. We're seeing those kinds of cases here. Those same kinds of arguments here. Now we're seeing a new wave of litigation against private entities. The first wave of these cases were not successful in the States. Largely in the States, tort claims and public nuisance claims, because of the causation problem. How can you say whether or not one company's emissions are really causing the impacts of climate change? But there's a real new emphasis, a second wave of these kinds of challenges, and for example we see them as class actions. I know Neena was talking about class actions. I'm going to tell you about a case that didn't actually proceed but you can see how this is kind of giving us, we're looking into the future on what we might see. So in 2019 the Municipality of Victoria became the first municipality in Canada to endorse a class action law suit against oil and gas producers for climate related harms. The Victoria City Council resolved to support the class action, and this got a lot of press out West, I don't know if Linda heard about it at the time. But this was to enable Victoria to safeguard the financial interests of its residents by recovering costs for climate related harms, really focus on infrastructure. Now, this lawsuit did not proceed for a number of reasons but it was modelled after a US case where the City of New York brought a case again Exxon Mobil Corporation. Very similar arguments and it was a lawsuit against Exxon for misleading shareholders over the true costs of climate change. In that case, the court ruled in favour of Exxon in December 2019, but the facts matter. Like I've said, the science is evolving and we're getting more and more scientific and technical information about causation. So we'll see what happens in the future. We're also seeing cases around climate change disclosures and greenwashing as there's more of a public focus and a demand for green products. There's also consumer challenges against greenwashing. So for in-house counsel, when you're thinking about litigation risk, we need to look abroad. Look to the South. Look internationally with respect to climate litigation. How it's evolving. The Supreme Court in the recent decision from last month relied on two of the cases that I just mentioned to you. These international cases. So with climate change legal precedent isn't just about Canadian precedent. It's global. Back to you, Stephen. I could speak about this a lot longer. It's very interesting to see the litigation evolve and just really looking internationally to see where it's going.

Stephen: Thank you very much, Jennifer, for a peak around the corner as to what's coming in Canada and part of which is already here. Linda, from your perspective, how are in-house counsel involved and how are they managing and budgeting the costs of dealing with ESG factors in the corporation and the reporting of ESG issues?

Linda:   The in-house counsel have a very large role in this. Companies now have to have, and dependent on your size, whether it's an ESG officer or an ESG committee. These are fundamental frameworks that a corporation must have. You say why should in-house counsel take this on? They're the obvious place where this repository exists. As in-house counsel you enjoy a broad visibility and engagement across all organization's business lines. You're intimately involved in the development of corporate policy and standards as well as in compliance, governance, human rights, anti-corruption, diversity and inclusion, enterprise risk, management. All of which are at the heart of ESG. You are sometimes referred to as in-house counsel as the conscious of corporation. You align yourself well with ESG. You are a strategic and trusted business advisor with a direct line to corporation leadership. Which is the critical effect of development implementation and oversight of the framework of ESG. So you are at the center of this and you must establish and develop an ESG policy. You must ... that it meets, that it has metrics that it is working from. I've made the comment with Neena before that we have now in a workforce, five generations working in a workforce at the same time, for the first time in history. All motivated by different things. All with different goals. All with different expectations that have to be met. You have to develop, and this becomes critical in your reporting, an ESG repository. This is a critical piece of your framework. It records your organization and what they're already doing in terms of ESG categories. This repository performs really two functions. First, it serves as the central database to measure and track your progress across the various priorities. Second, it provides a useful resource to inform the ESG story as you have to convey it, both internally and externally to your various audiences. You must develop an external facing communications plan. You have to draft public disclosures in public companies and how you're going to address those. There was a key market put out by KPMG that noted that 92%25 of Canadian companies are now reporting on sustainability. 74%25 Canadian companies includes sustainability in their annual reports. 62%25 of companies are disclosing carbon reduction targets. 62%25 acknowledge the risks of climate change in their reporting. All of these things have become critical. As Jennifer speaks to all the litigation we've seen, and the litigation that will likely come, as in-house counsel you're role is to try to ensure that your company has met the metrics without facing litigation. You're at the forefront of defining the role that sees your company is not in litigation. I use as an example of that, over 20 years ago I was approached by Ecojustice who were then called the Sierra Legal Defense Fund, and they came to me and said, "We are litigating all of these decisions after the fact and it's years and time consuming and expensive, and yes, it's our role to make this happen. But we think we can be more effective if we're in the boardroom. If we're there when you're making the decisions and know that those decisions are including environmental, social governance issues. We might save ourselves years of issues after the fact." We did that. I served on their board for years and I brought their mindset into the mining company boardroom. The mining company boardroom backed their mindset so there was a communication which created better decision making. I think as in-house counsel that's a place you can play a role.

Stephen: Thank you very much, Linda. That's really good insight into trying to solve problems early. Jennifer, you've talked to me about problems and you've identified a number of business risk that in-house counsel should also be considering the benefits and opportunities of dealing with these issues as Linda has alluded to. Can you talk about climate related opportunities available to Canadian companies?

Jennifer: Yes, I can and I certainly can't cover the field of opportunities in a few minutes because on the other side of risks you always find, of course, opportunities if you look carefully. With respect to COVID-19 I will say that some of the recovery plans are being linked to a green recovery. So access to COVID recovery stimulus in Canada, for example the Large Employer Emergency Financing Facility which was announced last year, requires that the bridge financing requires a condition that you must publish annual climate related disclosure reports as part of access to that stimulus. So there's an opportunity that is tied to a requirement to disclose. The pandemic is confirming what environmental experts have been saying for years which is that companies with good governance practices, including ESG and environment, are better positioned to manage risk. What we're talking about today we see that ESG funds are outperforming the wider market. So there's opportunities also for companies to access new markets with new technological innovations. Think battery storage, artificial intelligence or smart metering. There's also new low emissions products and services that can improve competitive position and capitalize on the shifting consumer and investor preferences that we've been talking about today. But really I do want to take a minute to come back to the Indigenous perspective that we've been talking about today. I think that what we're seeing now with climate change and with COVID-19 and the kinds of ESG risks is that we also need to stop thinking about our Indigenous peoples in Canada as just a barrier or risk. Consultation with First Nations, Supreme Court of Canada in the recent years and cases have made it very clear that the Crown must consult with First Nations. But I think we're seeing that we need to take it further now and it's a good idea for project proponents to get ahead of the game by engaging with and consulting with these First Nations that may be impacted by a project. Then further, with the focus on ESG, there's now stimulus and laws that require First Nations participation in projects. Not just consultation but actual participation in projects. It's evolving to First Nations and Indigenous peoples taking part in infrastructure projects, both on and off their lands. I also think that as we come out of COVID there's a number of infrastructure needs in our First Nations communities in Canada and there's a recognition that there's mutually beneficial opportunities for large projects, infrastructure projects, for both First Nations and industry. I think this is something that we're thinking about as we recover from COVID-19 and I will say, just tying into what Neena's talking about, as part of all of this there's also a push for Indigenous service providers for these projects. Not just Indigenous involvement but also consultants and lawyers. There's a push to have Indigenous consultants and lawyers and making sure that we're building that capacity, both in the South and in the North.

Stephen: Thank you very much, Jennifer. Neena, from your perspective, again looking around the corner, what do you see for in-house counsel in terms of preparing for human capital management issues in 2022 and beyond?

Neena: I don't think the world or the workplace will ever by the same again and it used to be you'd go to work. Work was a place. Now work is really something you do. Where and how you do it is up for negotiation. So from an in-house counsel perspective I see them having to work much closer with HR, tax, insurance and benefits providers with respect to policies around that work from home/work from anywhere. How is compensation going to be run? How is that consistent with pay equity or human rights obligations? How do we have a flex time policy and still be competitive? We're also going to have to work with our IT providers with respect to online digital security. As well as dealing with some of the online bullying and harassment that we see. I also think COVID-19 reminded us that we have to take care of frontline workers. It's really interesting, my son who works at a pet food store is essential. I am not. At least not to the same degree. Certainly not from a perspective of risk. How are we going to take care of the people who are frontline? That's going to actually require us to plan and procure PPE and have strong policies and communications so that we can protect these people when somebody comes in. Every day my son comes in and talks about somebody who deliberately tries to cough in his face or not wear a mask or abuse him because he's trying to enforce the rules. How are we going to protect those people? Health and safety, as I've alluded to earlier, is going to be a huge portfolio and quite frankly there's no piece of advice I can give. There's more people in that health and safety area. Finally, Stephen, I want to talk about something I think Linda mentioned about the in-house counsel being in a real interesting role. The conscience of the corporation. I think corporations are going to be looked to, to really develop policies, not just about recruitment and retention but things like supplier diversity and procurement plans. Then one thing we haven't talked about and we can probably spend the entire seminar talking about it is the impact of workplace mental health. Our workers are stressed. They're tired. They're exhausted. But quite frankly our lawyers and in-house counsel are stressed and tired and exhausted. I was shocked to look at some research about just how bad lawyer depressions, exhaustion and mental health is. We have to be number one. We're 3.6 times higher than the general population, Stephen, in terms of depression and suicide is the third leading cause of death for lawyers. So if I were to end off on anything, it's very easy to say, "Oh, you should be doing this and you should be doing that." but if we're going to be the conscience of a corporation, if we as a profession are going to try to take care of our in-house clients, we have to really take care of ourselves first. So, before you go and do all of the to-do's that we've suggested on this call, Stephen, I really recommend that we try to take care of ourselves and that goes for in-house partners as well as the lawyers that are working in law firms. Without that we're not going to be able to take on the challenges of the next decade.

Stephen: Thank you, Neena. Very, very wise and I hope everybody who's on the webinar now will take that to heart. Linda, a quick question for you. How are you finding banks, private equity, investors, asset managers, shareholders? How are they assessing ESG in investment decisions that are impacting access to capital?

Linda:   This has become critical for companies at this stage. As in-house counsel you will have to, whenever you approach a bank, a private equity or shareholder raise, you will be given an ESG score and that score will be literally taken assessing your regulatory risk, your litigation risk, you reputational risk, the environmental risk. Whether there's been shareholder activism and what risk comes from that? We've seen in the last number of years the most prominent things brought forward by shareholders are climate change, human rights and labour standards. They're all critical points that are going to affect whether you are able to finance. You have to also look at ethnic, gender diversity in your company and how that's addressed. Those are critical parts of the different pieces of it. There was a report done moving towards gender balance in private equity and venture capital in 2019. Done by a division of the World Bank. It evidenced that the report revealed that private equity and venture capital funds with gender balanced general partners generated up to 20%25 higher returns compared with those that were majority male or majority female. We've all come to the understanding that diversity of opinion and diversity of view creates better decision making and you will be judged on those things. That critical part of reputational risk comes forward to in these companies. There was an article published where the Norway Government pension fund divested itself of all of its holdings in Barrick Gold, a well known Canadian company and quoted in their reason to divest themselves, "Barrick posed an unacceptable risk of the fund contributing to serious environmental damage." They went one step further and said that, "Barrick's assertions that its operations do not cause long term and irreversible environmental damage carried little credibility. This is reinforced by Barrick's lack of openness and transparency in the company's environmental reporting." This is where your ESG committee in preparing and having that repository of information is going to be able to increase your ability to access capital. There's definitely been a reallocation of capital towards investment strategies that place sustainability at the center of those investment decisions. There was a report published actually in 2020 by Ernst & Young that asked, and stated when they looked at, that 74%25 of financial leaders are now saying that investors increasingly use non-financial information in their investment decision making. So this is going to make an extreme difference in how in-house counsel prepare their reports. They actually stated that ESG reporting finance showed was responsible for and deeply involved in creating more open and accountable reporting to win stakeholder trust. No longer will you be measured solely on financial metrics. Such as earnings per share, dividend yield and return on capital that benefits the investors. But rather you will be measured on quantifiable ESG metrics. Carbon reduction nets your carbon emission commitments. Diversity and inclusion measurements. Customer satisfaction metrics. Employee and safety measures that benefit all stakeholders and you will have to be able to do that. It's not that we stop working on these various things. I use the comment that as a mining lawyer that we make the issues that we are the future. You can't have computers. You can't have electric cars. You can't have wind turbines. You can't have solar panels, phones, computers without the earth's minerals but it has to be done in a sustainable way that knows that you have created a better broad space for the people that you work with, in the community in which you work and how you've developed that. It is critical for ESG if you're going to survive as a company going forward. Thank you, Stephen.

Stephen: You're very welcome, Linda. That was excellent. I just have a very quick question for Jennifer King. What do you see in terms of the interconnectedness of E S and G? I wouldn't want to leave everyone this afternoon with the impression that these are silos. Jennifer, for example, the connection between E and S. The connection between climate change and  health. What do you think?

Jennifer: That was a soft lob actually, Stephen. I've been thinking a lot about that over the past few years and in fact before I went into law school. I think for environmental lawyers across Canada we've been thinking about ESG for decades. My whole career we've been thinking about it. The reason why the environment and environmental impacts are important have long been connected with human health and haven't been limited to just what happens in a remote area. Specifically, before the Supreme Court my client, The Canadian Public Health Association, argued that climate change is a public health crisis. It is in fact the most significant and most grave public health crisis of our lifetimes. Absolutely the interconnection between E and S, it's always been there, and we're really recognizing it now with COVID-19.

Stephen: Thank you very much, Jennifer. Let's see if we can answer a couple of quick questions from our audience. First question is, I'm seeing ESG disclosure requirements with respect to public companies in Canada. What are your thoughts on how ESG may impact private corporations? Will there be any legislation that puts disclosure obligations on these private companies? So, let me answer that really quickly. There is a Bill before the Canadian Senate, Bill S-216, which is would be called the Modern Slavery Act. The Canadian modern slavery legislation will require companies, private companies over a certain threshold of revenue, assets and employees as well as public companies, to disclose annually the steps that they've taken to prevent or reduce the risk that there's forced labour or child labour in the production of goods that they are producing or importing. So that's an example of legislation that's currently passed Second Reading in the Senate. It's now being studied by the Senate Standing Committee on Banking Trading Commerce. That's an example of legislation that would impact private companies as well as public companies.

  Another question we can deal with is about on the environmental side, are there additional environmental regulations specific to Nunavut that are laid over existing Federal ones. Jennifer?

Jennifer: Absolutely. Thank you and I can't remember now who asked that question. I think it was Carla ... Thank you for that question. Yes. Nunavut is a Territory entered into the Nunavut Agreement in the 1990's and there's a number of requirements under that Agreement itself whereby the Inuit and Nunavut exchanged their Indigenous rights for this very specified Agreement. Under that Agreement a number of pieces of legislation are required and there are a number of bodies including the Nunavut Impact Review Board, which I discussed earlier, which carries out the impact assessment in Nunavut. Unless there is trans-boundary effects to a certain extent where the Federal impact assessment will take over the impact assessment in Nunavut is run by these co-management bodies which are very interesting, regulatory bodies with very diverse representation. So the answer is, yes, there is Nunavut regulation.

Stephen: Thank you very much, Jennifer. We have time for one more question and that is, curious about the impact of the legalized discrimination against religious minorities, Quebec Bill 21 and potentially impact of that on sectors outside the laws area of application. Should we expect to see anti-discrimination protections in the private sector come back and how can we work against that trend? Neena, do you think you've got some thoughts on that?

Neena: Absolutely. I do not actually see Quebec's Bill 21 causing a legislative reversal against the strong protections against discrimination. What I worry about is the cultural signal that was set by Bill 21 and as we know when we talk about social licence. Social licence is created by a number of factors and legislation and law is one of them. The signal that Quebec's Bill 21 sent was that certain people defined by their religion and once ... was largely an anti-Muslim piece of legislation are the other. So while I don't expect to see legislative rollback, or even case law rollbacks, I sincerely worry about the impact on the ground when the average person says well they are the other and therefore I'm entitled to behave badly with respect to them. So I do worry about that and I have kept a close eye on it. There's a number of groups that are proposing to take further legal challenges if they see any reversal in that area. So stay tuned for that saga.

Stephen: Thank you very much, Neena, and thank you, Jennifer, thank you, Linda, for your insights and perspectives this afternoon and thanks to all of you who joined us this afternoon. We appreciate your interest and hope that you have a great day. Thank you.