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ESG and Sustainability Toolkit (Canada)
Practical Law Canada Toolkit w-034-8588 (Approx. 21 pages)
ESG and Sustainability Toolkit (Canada)
by Practical Law Canada
| Maintained • Canada (Common Law) |
A Toolkit setting out Practical Law Canada's key materials on corporate responsibility (CR), corporate social responsibility (CSR), and environmental, social and governance (ESG) factors.
The terms corporate responsibility (CR), corporate social responsibility (CSR), and environmental, social and governance (ESG) refer to broadly similar concepts and are sometimes used interchangeably. However, there are important differences in application and context.
This toolkit links to the main Practical Law resources on common CR, CSR and ESG factors. This is not a complete list of relevant resources but a starting point to highlight key issues.
The resources listed largely relate to Canada, but an international organization, or one with an international supply chain, will need to consider the relevant regimes for all the countries in which it operates. See Global ESG and Sustainability Toolkit.
ESG and Related Terms
What Is ESG?
ESG is an umbrella term for a broad range of environmental, social and governance factors against which investors can assess the behaviour of the entities they are considering for investment. ESG is the term often preferred by the investment world when using these types of factors to assess corporate behaviour, evaluate the future financial performance of companies (particularly in the long term), and to manage risk.
The terms corporate responsibility (CR), corporate social responsibility (CSR), and sustainability are also sometimes used to refer to a broad range of environmental and social responsibility behaviours demonstrated by businesses.
Illustrative Diagram of ESG Factors
The following diagram illustrates the types of factors that are commonly included in the concept of ESG. However, the ESG factors that are relevant to a particular business will differ depending on the sector and the countries in which the business operates and its supply chain. The later sections of the toolkit list key Practical Law materials on the legal aspects of these factors.
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Addressing ESG in Business
ESG, CSR and CR Strategies and Governance
Environmental
Environmental factors relate to how a company performs as a steward of the natural environment.
Climate Change
Climate change can affect a wide range of organizations. The risks include direct physical risk from flooding or other extreme weather events, impacts on international supply chains, distribution networks and global markets, increased regulatory requirements, litigation, and reputational risk.
Social
Social factors relate to how a company manages relationships with its employees, suppliers, customers, and the communities it operates in.
Human Rights
Complicity in the violation of human rights is a significant issue that has been gaining more attention in recent years. Businesses that are associated with an adverse human rights impact could be open to civil and criminal liability in some jurisdictions and risk a significant impact to their reputation. Businesses are increasingly required to identify and manage their involvement in adverse social impacts throughout their organizations and supply chains. For more information, see:
Diversity and Inclusion and Equal Pay
Businesses may be required to comply with legal requirements relating to equal pay, inclusion and non-discrimination. Managing these issues is considered to support talent attraction, retention, and development. For information, see:
Governance
Corporate governance is the system by which companies are directed and controlled. Governance factors relate to the company’s leadership, executive pay, audits, internal controls, and shareholder rights.
Bribery, Corruption and Anti-Money Laundering
Bribery is illegal under international law. However, the risk of corruption, money laundering and bribery is higher in some countries and sectors than others. For information on the Canadian legal regime, see:
Board Independence, Diversity and Structure
It is generally considered that an independent, diverse board can provide objectivity, mitigate conflicts of interest, and better protect shareholders' interests. For information on key Canadian requirements, see:
Executive Pay
The level of remuneration of directors and other executives, how this is calculated, and how it compares to remuneration of other employees are part of corporate governance. For information on the key Canadian requirements, see:
Economic Sanctions
Economic sanctions can be imposed by national governments or by international bodies (for example, the UN). They are a tool for exerting political and economic pressure on states through restrictions on trade relationships or travel. For more information, see:
Russia Sanctions and Related Considerations Toolkit is a toolkit to help counsel working in the US, UK, EU, Canada, Australia, and New Zealand guide their clients through the business interruptions caused by the Ukraine crisis, including key sanctions imposed on Russia and other countries, persons, and entities. It covers a wide range of resources, including on business operations, crisis management and disaster preparedness, cybersecurity, employment matters, financial services, fundraising, insurance, oil and gas, sanctions compliance, supply chain disruptions, and social governance.