The United Nations' Intergovernmental Panel on Climate Change recently released a troubling report, highlighting the irreversible consequences of climate change on humanity. This study is simply adding to the pressures set forth by governments and other entities such as the Task Force on Climate Change-Related Financial Disclosure (TFCD) and BlackRock to hold corporations more responsible for their ecological footprint. Public issuers must be attentive to such environmental concerns as sound environmental practices, strong corporate governance relating to environmental matters, and accountability regarding environmental footprints are each well-recognized trends becoming more prevalent for companies and their respective shareholders. These trends are anticipated to play a significant role in shaping shareholder activism moving forward.

Legal Requirements

In various parts of the world, including here in Ontario, climate change reporting standards are progressively becoming codified as legal obligations through various regulations in an effort to increase the transparency of businesses to shareholders and investors. For instance, the Canadian Securities Administrators (CSA) has published guidance on disclosure requirements relating to climate change. The disclosure recommendations are explained in CSA Staff Notice 51-333 (Environmental Reporting Guidance) and most recently in Staff Notice 51-358 (Reporting Climate Change-Related Risks). These staff notices emphasize the importance of disclosing material climate change-related risks to investors to ensure an informed investment decision is being made and further that there is no one-size-fits-all criteria for determining materiality, which must be discerned based on the circumstances at hand.1

In January 2021, the Ontario Securities Commission (OSC) also participated in the Capital Markets Modernization Taskforce Report, Canadian chaired by Norton Rose Fulbright Canada's Walied Soliman. This report suggested that material Environmental Social and Governance (ESG) data be disclosed, "specifically climate change-related disclosure that is compliant with the TFCD's recommendations for issuers through regulatory filing requirements of the OSC".2

What does this mean for Companies and Shareholders?

ESG related initiatives are important issues garnishing high priority amongst companies' management and investors. Companies must pay greater attention to their ESG initiatives for the purposes of regulatory compliance as well as to avoid any potential ESG-related shareholder activism measures. Indeed, as seen most recently in the oil industry, activist shareholders are relying on and effectively utilizing ESG themes to apply pressure on corporate entities to dictate corporate strategy and ultimately control of the entity.3 While the COVID-19 pandemic may have appeared to slow down shareholder activism, companies should recognize the importance of maintaining strong corporate governance with respect to their ESG initiatives to ensure their future success and sustainability.

ESG related disclosure is a quickly expanding area that, if not closely managed, can put your entity in jeopardy of falling out of compliance with regulatory regulations and create tensions with investors. Our team at Norton Rose Fulbright Canada can provide the expertise necessary for your business to stay ahead of the curve on all ESG related matters.


1 Canadian Securities Administrators, CSA Staff Notice 51-358: Reporting of Climate Change-related Risks (2019)

2 Capital Markets Modernization Task Force: Final Report (2021) at 70

3 Derek Brower & Anjli Raval, "Climate Activists Hail Breakthrough Victories over Exxon and Shell", Financial Times (May 26, 2021), online

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