Rigorous disclosure around environmental, social and governance may be the “ticket to play” as Canada looks to diversify its agricultural trade markets, some experts say.
At a panel titled Sustainability Disclosure in Canada: Overcoming the Headwinds, hosted by the Canadian Sustainability Standards Board (CSSB), speakers discussed the challenges and opportunities for Canadian businesses as international trading partners increasingly look for environmental, social and governance (ESG) transparency.
Eight out of Canada’s 10 biggest trading partners either have or will soon have mandatory disclosure rules — including those in the Indo-Pacific region, an emerging market for Canada’s agri-food sector, said Canadian Sustainability Standards Board chair Wendy Berman.
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She called Canadian Sustainability Standards the “ticket to play” in a global market which may also be moving toward sustainability disclosure practices.
Canadian standards in the global market
Companies do not need to be perfect, only rigorous, Berman said.
“If you communicate that rigour, and you put sunlight around the main assumptions, which our standards tell you to, then that is what you’re communicating to the market.”
Berman said the standards board is helping Canadian companies address the market’s needs by looking at global reporting baselines and adding changes to reflect the uniqueness of the Canadian market.
“What we also have is a Canadian version of proportionality mechanisms,” she said. “What we’re saying to the market is ‘It’s okay, build capacity on these items and continue to do that so that you’re ready to enter the global market’.”
Ontario Securities Commission CEO Grant Vingoe said Canada will need to follow a global baseline if it wishes to continue on the path of market diversification. He said he hears many investors express frustration at a lack of a consistent global framework, forcing them to rely on private sources.
Disclosure fatigue
Canada is in a “pivotal moment for sustainability in Canada,” one “full of complexity and uncertainty and also real possibility,” said Elizabeth Dove, executive director of the UN Global Compact Network Canada.
“Over the last few years, Canadian companies have stepped up,” Dove said. “They’ve adopted climate action strategies. They’ve incorporated ESG into governance and risk. They’ve built systems to measure, disclose and manage sustainability performance. But let’s be honest, it hasn’t been easy.”
There has been fatigue around disclosure, and some businesses are now asking if the measures are necessary — particularly if they seem to hamper the company’s ambitions.
“We cannot allow ambition to be the casualty of uncertainty,” Dove said.
“Climate change is not waiting for regulatory clarity.”
Adoption of ESG will likely increase as the means of measuring climate risks improve, said Peter Routledge, superintendent of the Office of the Superintendent of Financial Institutions.
“Guess what? As you measure the risk more effectively, boards of directors and senior management teams will make really smart decisions about how to invest to counteract that risk,” Routledge said.
“That’s the beauty of market capitalism at work.”
“It is not a regulatory burden for the sake of increasing costs to in pursuit of some abstract virtue,” Routledge said. “That’s the last thing we’re interested in. What we’re interested in is creating management and risk measurement discipline to elevate and improve and sustain shareholder value.”
