Canadian Lawyer

September 2022

The most widely read magazine for Canadian lawyers

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28 www.canadianlawyermag.com As mandatory ESG disclosure becomes a reality, corporate lawyers say companies will need to get their plans ready, writes Zena Olijnyk The winding road to meeting ESG goals IT MIGHT already be on every board director or company CEO's mind these days, but navigating the complex world of ESG (environmental, social, and governance) is not getting any simpler. Governments and regulators continue to unveil mandatory ESG disclosure guidelines as these principles become more widely accepted. "The way I see it, there have basically been two ESG waves," says Conor Chell, counsel with MLT Aikens' ESG practice in Calgary. "The first was more about marketing or promotion, where companies would just pick things that they knew they were doing well on and put that in a sustainability report. That period is over." He notes that govern- ments and regulators are coming down harder on so-called greenwashing – a combi- nation of cherry-picking, boiler-plate plat- itudes, and promises about delivering the goods on ESG goals. What's more, Chell adds, is that "tougher rules around mandatory reporting are coming into play, and with that, there is a huge potential for legal liability.... So now there are strong signals for companies to get on top of their ESG strategy, performance, and reporting." (OSFI) will consult with banks and insurers on developing climate disclosure guidelines regarding ESG disclosure, aiming to grad- ually phase in reporting requirements for financial institutions beginning in 2024. In the budget, the government also announced plans to require federally regulated pensions to disclose the ESG considerations they use in their portfolio construction. However, there were no specific details on how or when the government would roll out that requirement. And while the OSFI guidelines will for now focus on reporting requirements for financial institutions and pension funds, they are expected to have an impact throughout the Canadian economy, regardless of the industry or sector, given the role that regu- lated banks and financial institutions play. Banks and other financial institu- tions will have to collect climate risks and In the latest federal budget, the govern- ment outlined its plan to require federally regulated financial institutions to begin reporting climate-related financial risks under the Task Force on Climate-Related Financial Disclosures (TCFD) framework. Indeed, beginning this year, the Office of the Superintendent of Financial Institutions LEGAL REPORT CORPORATE COMMERCIAL "Tougher rules around mandatory reporting are coming into play, and with that there is a huge potential for legal liability" Conor Chell, MLT Aikens LLP

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