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30 www.canadianlawyermag.com ESG Index, a broad-based index of publicly traded securities deemed sustainable based on their S&P DJI ESG scores. Tesla's ESG score ranked in the bottom quarter of its industry peers, with the lower ranking largely relating to competitors such as GM improving their ESG scores and controversies at Tesla regarding claims of racial discrimination and poor working conditions at the car manufacturer's plant in Fremont, California. Another factor that hurt Tesla's ESG score was the company's handling of a National Highway Traffic Safety Administration investigation into multiple deaths and inju- ries linked to its autopilot vehicles, and the company's lack of a low-carbon strategy. However, just because a company is in the mining or energy sector, considered "dirty" industries environmentally, doesn't mean it can't perform well from an environmental perspective. MLT Aikin's Chell notes that Exxon Mobil recently announced an ambi- tious plan to reach net zero emissions by the year 2050 – the same type of plan that Tesla was penalized for not having – following a successful campaign by activist investors in 2021 to advance decarbonization. Ravipal Bains, a Vancouver-based partner with the capital markets and securities prac- tice with McMillan LLP, says it's not always appropriate to take a "black-and-white" approach to ESG, particularly in Canada, where the natural resources industry plays a significant role in the economy. CANADIAN COMPANIES' ESG REPORTING Looking at the whole ESG picture also means companies may find they are doing more on ESG than they realize. "ESG is an extremely broad topic, and one that might be a bit daunting to companies," he says. "But as they dig deeper into what they are doing on the ESG front, organizations will often realize that they are probably farther down the road than they might have thought." For example, areas such as good health and safety practices, working with Indigenous communities to get support for projects, and encouraging more diversity in hiring are all areas that are part of an ESG framework. Not paying attention to the broader view of ESG, and focussing on just one of the letters, could also backfire. One might assume, for instance, that electric vehicle manufacturers would have high ESG ratings. But earlier this year, Tesla, the world's largest manufacturer of elec- tric vehicles, was taken off the S&P 500 "We wouldn't be talking about ESG as much if we didn't have pension funds and large governance groups … being open advocates for taking ESG more seriously" Aaron Atkinson, Davies Ward Phillips & Vineberg LEGAL REPORT CORPORATE COMMERCIAL Has a sustainability plan Discloses a net-zero target Discloses timeframes for ESG targets Identifies material ESG issues in their organization Explicitly identifies ESG opportunities Report is externally assured 75% 35% 30% 28% 20% 62% Source: PwC (based on publicly available ESG reporting information from Canada's top 150 publicly traded companies) Regardless of what sector it is in, "If a company is working to demonstrate its lead- ership and to demonstrate its improvement from a sustainability perspective, the market is paying attention," Bains says. Fewer large investors are now considering divesting entirely from a particular industry if indi- vidual companies within that sector have a solid commitment to their ESG goals. The road ahead for companies, inves- tors, pension funds, and banks may not be straight. Regulators and governments in