Legal news and trends for Canadian in-house counsel and c-suite executives
Issue link: https://digital.canadianlawyermag.com/i/50160
Pilot project to study adaptive responses to climate change in Alberta I f the average temperature in Alberta rises the four or five degrees climate scientists are projecting by 2100, what will the impact of that increase be on the province's businesses and communities? That's the kind of question Kirk Andries asks himself on a daily basis, as the managing direc- tor of Alberta's Climate Change and Emissions Management Corp., a non-profit organization with a mandate to expand climate change knowledge and develop and implement new "clean" tech- nologies. Until now, the CCEMC has worked primarily on projects that reduce greenhouse gas emis- sions, but this year, the organization will fund four major projects in the area of adaptation. They have solicited proposals for projects that address specific areas of natural resources affected by climate change: agriculture, forestry, water, and ecology. "Adaptation is accepting the notion that things are going to change, and if we model and forecast those changes into the future, what will our living environment look like?" says Andries. "When we talk about changes in water, what is significantly different will be the frequency and severity of droughts and flooding and the timing of moisture arriving in our system," he explains. "In the future the prediction is that (precipitation) will come at different times than it does today." One of the projects the CCEMC will present to its board of directors in December is in the area of forestry, looking at the blending of the impacts of climate change and the effects of ecology at dif- ferent locations in Alberta. "It's about seeds and seed sources and looking into different species of trees that can survive and thrive in a climate where the average temperature is four to five degrees higher than normal," he explains. He points out that the driver for the forestry industry in the past was productivity — extracting the highest volume of fibre from the trees — but that's changing. "Now, they're shifting their interest from not just a volume perspective, but rather a perspec- tive of these trees' ability to adapt to climate change," he says. CCEMC will allocate about $7 million of its $70- to $90-million annual operating budget to the four adaptation projects in 2012. The addi- tional $15 million required to fully fund the proj- ects will come from industry, the federal govern- ment, and other pots of provincial funding. that are able to successfully adapt to changes in the environment, they'll see tangible returns on their investments." Cleall advises in-house counsel to study the issue and identify the risks and opportunities for their organizations now. "Ensure there are policies and measures in place to deal with it, and put those into your planning process so when the climate change impacts become bigger, they won't seem insurmountable." Meanwhile, MacWilliam points out that adaptation initiatives fall under the domain of an organization's overall risk management strategy, and this issue could provide in-house lawyers with an opportunity to lead the charge. "Over the years, I've noticed that sophisticated companies are involving in-house counsel more and more in policy discussions," he says. "There was a time when in-house counsel got involved strictly on an operational basis, but more and more they're involved at the policy level and quite often involved with discussions their companies are having with industry associations or governments." Cross-border implications While many businesses are starting to recognize the need to deal with adaptation issues, only a few truly understand all the risks and opportu- nities it represents," says Radha Curpen, a Toronto partner with Bennett Jones LLP. Curpen's firm works with clients who have both Canadian and U.S. operations, many of which are publicly traded. Bennett Jones, she says, is seeing a lot of client activity in the area of disclosure. For public companies, investors are increasingly interested in how com- panies are managing their risk," says Curpen. "They are seeking disclosure on the adaptation front on both sides of the border. If you're a mining company, you need to look at the impacts of physical climate changes on water resources, for example." There are continuous disclosure obligations for the environment, both in the annual information forms that are filed and in the management dis- cussions and analysis, Curpen adds. She points to two cases that have set the stage for environmental considerations having a more critical profile in a company's public reporting process. The Supreme Court of Canada's 2004 decision in Peoples Department Stores Inc. v. Wise, ruled that "it may be legitimate . . . to consider . . . the interests of shareholders, employees, suppliers, creditors, consumers and the environment. The 2008 Supreme Court decision BCE Inc. v. 1976 Debentureholders stated: "directors acting in the best interests of the corporation may be obligated to consider the impact of their decisions on corporate stakeholders. This is what we mean when we speak of a director being required to act in the best interests of the corporation viewed as a good corporate citizen." For in-house counsel, Curpen recommends a thorough assessment of their current governance system to begin with. Both the Securities Exchange Commission in the U.S. and its Canadian counterparts have clearly stated that boilerplate disclosure is not sufficient. "Companies need to specifically report how their operations could be impacted if they are material," Curpen says. In-house lawyers, she adds, are often the first line of defence in identifying, assessing, and managing those risks. "Some companies may have cost projections in the event of climate risk," Curpen explains. "Start with your existing processes and you may need to build on those. There may be opportunities in terms of market needs. There may be other stakeholders in the company who have taken a leadership posi- tion with respect to climate change. Start engaging those partners in the discussion." IH INHOUSE DECEMBER 2011/JANUARY 2012 • 31