https://www.nationalobserver.com/2019/10/31/news/canadas-chief-executives-call-companies-disclose-climate-risks
[This 'obligation' is not some sort of noblesse oblige that corporations
in Canada are contemplating out of the goodness of their hearts. It is
a LEGAL REQUIREMENT for companies which have securities traded publicly
(annual report) or are seeking new investment (prospectus). There are
both civil and criminal penalties for substantially misrepresenting (or
omitting to disclose) significant risks to future profitability.
It would be useful if some sort of standards were put into place to help
corporations quantify those risks in an apples to apples way, and which
can be relied upon more than each organization making up its own rules
(with the obvious conflict of interest which would push toward
under-reporting the risks - consequences x probability). For example,
how much real income-producing property is at risk from flooding from a
1 metre sea level rise with the attendant damage from storm surges,
saltwater inundation, liability for spills resulting from flooding.
Other climate change impacts should also be estimated, all over a couple
of timescales, e.g. 10 years, 20 years, 40 years, 80 years. Mitigation
plans should also be reported. Then investors and analysts can weigh
those factors into their investment decisions. Also, current use of
GHG-emitting energy sources and cost of fees/permits/taxes, and any
plans to reduce reliance on GHG-emitting fuels. Impacts of court
decisions related to suits by governments against major emitters for
climate-change-related damages also need to be included.
I disagree with the statement that "Canada's energy industry was not
good at communicating." They have been very effective at communicating
with those they care about (government and regulatory decision-makers),
and in disinformation campaigns to sway voters/citizens/consumers. A
quick look at the Business Council of Canada membership -
https://thebusinesscouncil.ca/about-the-council/members/ - shows the
fossil carbon industry is strongly represented there. Therefore,
anything it has to say about disclosing and responding to climate risks
has to discounted due to the large ratio of fossil-fuel industry and
related players in the BCC membership.
And the fossil fuel industry is not 'late to the game on social
licence'. It consciously chose to play the power game and run
disinformation campaigns rather than bother with seeking social licence.
They can't claim they were unaware. Here's a piece I co-wrote for an
industry publication, which received zero interest from the fossil-fuel
or 'energy pipeline' industries:
https://www.restco.ca/McMahon_and_Stewart_SLO.pdf . I was hardly alone
in trying to send this message to industry and government.
The takeaway: the oil and pipeline industries are not serious about
cleaning up oil spills or abandoned wells, it's just part of business as
usual. See also:
https://www.smithsonianmag.com/science-nature/oil-spill-cleanup-illusion-180959783/
It's unlikely they are serious about accurately self-reporting the
likely consequences of climate change on their future profitability, or
their contribution to the impacts.
images and links in online article]
Corporations in Canada have an “obligation” to disclose how the climate
crisis will disrupt their long-term plans, according to a body formed by
big-business leaders.
The Business Council of Canada, a lobby group representing chief
executives of Canada's largest corporations, released a report Oct. 30
that contains this recommendation and others designed to juice the economy.
The report, called “A better future for Canadians,” says the country
needs to develop a “national resource and climate strategy,” in part to
meet intensifying demands for cleaner energy, and Canadian companies
“have an obligation to demonstrate how they are incorporating the risks
of a changing climate into their long-term business strategy."
“There’s increasing demands from shareholders, from regulatory
authorities and so on,” John Dillon, senior vice-president for policy
and corporate counsel at the Business Council of Canada, said in an
interview with National Observer on the sidelines of the report’s
unveiling in Ottawa.
“(Firms) have traditional risks in terms of securities, to disclose any
material risks to their business,” he said. “At the same time,
(climate-related risk) is a growing field of endeavor and study, without
necessarily having clear guidelines on how exactly one assesses the
risks that a changing climate may create to a business.”
A task force formed by the chief executives' group wrote the report,
which also recommends that the government “prioritize” infrastructure
projects like oil and gas pipelines. “All Canadians have paid the price
for inadequate pipeline infrastructure, which seriously constrains
energy exports,” the report says.
Climate risks different from typical disclosure
Carbon pollution emitted by burning fossil fuels like coal, oil and gas
and their products like gasoline is collecting in the atmosphere,
trapping heat and warming the planet. Canadian government scientists say
climate change is increasing the severity and frequency of heat waves,
wildfires and floods, threatening coastlines and decreasing freshwater
availability.
Such consequences will change how Canadian companies can do business in
the future — or even whether they can stay in business. Canada's
financial regulator has said firms may be forced to pay for damages
caused by climate-driven extreme weather, watch their oil and gas
holdings devalued or be hit with class-action lawsuits trying to recover
losses from misrepresented assets.
Dillon said major institutional investors like BlackRock and the Canada
Pension Plan have already started asking questions about how climate
change will affect businesses, and the idea is spreading.
“That’s what companies have to assess, that’s what their boards (of
directors) are asking for, that’s what institutional investors and
others are asking for,” he said. “It’s an area where it’s somewhat
different from what companies are traditionally focused on.”
In May, the Bank of Canada listed climate change as one of six
vulnerabilities in the Canadian financial system. The next month, a
federal panel on sustainable finance said Canada should "formally
integrate climate risks" into how financial institutions are supervised.
In its report, the task force endorsed the work of that federal panel,
saying it "contains some helpful ideas," including drawing on expertise
from banks.
The Chartered Professional Accountants of Canada has also said Canada's
tax system is "not up to the job" of addressing the "business issue" of
climate change.
But with policies like carbon pricing still highly politicized in
Canada, Dillon said, it has been difficult for firms to discern the
future. The new governments in Ontario and Alberta, for example, moved
to scrap the carbon-pricing regimes put in place only a few years
earlier by their respective previous governments.
“We’ve seen a lot of back and forth,” Dillon said, “policies that are
instituted by one government... changed by a subsequent government. So
it’s not always easy to predict what the regulatory environment will
look like.”
Hyder: 'Late to the game' on social license
In addition to prioritizing infrastructure and developing a resource and
climate strategy, the task force recommended Canada “modernize” its
regulatory environment.
Business Council of Canada president Goldy Hyder, speaking about the
report at a luncheon at the Château Laurier hotel in Ottawa on
Wednesday, argued that the "failure" to grow the economy has resulted in
the "outcome" of the election, which produced a minority government.
Canadian companies spend less on research and development, on average,
than those in many other advanced economies — and less per employee on
learning and development than Europe and U.S. firms, the report says.
The group also recommended an “independent review” of Canada’s tax
system that would “simplify” the code, and to adopt a “more pragmatic
and realistic” foreign policy, as well as boost immigration.
It was led by three of the Business Council of Canada's member chief
executives: Chuck Magro, president of fertilizer company Nutrien;
procurement platform OMX CEO Nicole Verkindt; and National Bank of
Canada president Louis Vachon.
Its consultations involved a series of roundtables in Montreal, Toronto
and Calgary.
Hyder also responded to questions from the audience. On a question
concerning pipelines, he said Canada's energy industry was not good at
communicating.
"We were late to the game to realize this thing called social license,”
Hyder said. "We can do responsible reconciliation of the economy and the
environment... You have to punch through all that noise, and all those
headlines.”
--
Darryl McMahon
Freelance Project Manager (sustainable systems)
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