Approximately 1,700 attendees gathered in Toronto for the PRI in Person annual conference – the first time in 10 years this event was held in Canada. The Principles for Responsible Investment (PRI) is one of the larger global organizations for the investment community focused on responsible investment or ESG. For those less familiar, PRI was formed in 2006 as a partnership between investors and the United Nations at the request of then Secretary-General Kofi Annan. What began as a very small investor group has now grown to over 5,000 signatories globally.

The PRI in Person annual conference rotates to various locations each year and offers a glimpse into what is on the mind of the investment community when it comes to developments in ESG. After attending several of these events over the last 20+ years, I offer the following reflections from my time with global peers in Toronto in [add month, not date] 2024. With an agenda that included human rights due diligence, Indigenous perspectives and global sustainability reporting regimes, among others, conversations were rich and engaging.

Climate Remains the Dominant Issue for Investors

Judging by the conference agenda, climate change remains the dominant issue of concern for investors. While there was some time devoted to emerging issues like Artificial Intelligence (AI), the conversation was overwhelmingly about climate. Some attention was given to the social dimension of climate, with the need for a Just Transition and the role of emerging markets addressed, but essentially all roads led back to climate. The attention on climate change is not surprising when hurricanes Helene and Milton both hit this fall and are expected to reach the US$50 billion mark for direct losses, providing further evidence of the need for attention to climate mitigation and adaptation.

Just as important as what was on the agenda were the topics absent from it – namely governance. There seemed to be little focus on the role of the Board of Directors in overseeing environmental and social performance, let alone traditional governance issues like compensation. This was a missed opportunity in my mind, given that Boards are grappling with how to oversee some of these enterprise risk issues and understand how they can be integrated into the corporate strategy.

Since the event was just prior to both COP 16 in Colombia and COP 29 in Baku, there was also a growing recognition of the need for investor engagement with policymakers. Ultimately, we cannot ask companies to get too far ahead of regulation, and governments need to drive the net zero transition through policy using both carrot and stick approaches. It was great to see Canadian regulators present, as the reporting regime on climate-related risks is set to advance in 2025.

Preaching to the Converted

PRI conferences are not the only ones that suffer from the problem of gathering those who have already bought into the agenda. This was evident to me as a long-time attendee; I encountered few corporate representatives and other stakeholders who have the ability to contribute to the broad debate. Too many conferences are afraid of diverging views, but this is actually what can be most effective in getting to solutions. If we continue to talk to ourselves in an echo chamber, we are lacking many stakeholder voices, while also missing out on opportunities to problem solve by sharing perspectives. It would have been great to see more active debate as part of the conference, since we know there are alternative views to consider. The voice of corporate Canada in particular was missing for me and including it would have been beneficial for global attendees looking for the best jurisdictions to deploy capital.

Canadian Leadership Announcements

The leadership shown by the Canadian government was certainly a highlight for many attendees, especially those who have contributed to the Sustainable Finance Action Council (SFAC) work on a Canadian green and transition taxonomy. Deputy Prime Minister Chrystia Freeland announced at the conference both the intention to establish a sustainable finance taxonomy in order to attract capital to Canada and mandatory climate change reporting through changes to the Canada Business Corporations Act (CBCA). This will mean mandatory disclosure for both public and private companies of a certain size – yet to be determined – while encouraging voluntary disclosure for small- and medium-sized businesses.  

There should be no more delay on mandatory disclosure in Canada. Despite what might happen south of the border at the federal level, jurisdictions are moving ahead with the International Sustainability Standards Board (ISSB). Information aligned with this global baseline is important for both corporate directors and investors to have when making decisions on long-term strategy. The time for this debate is over.

Takeaways for Investor Relations Professionals

If they are not already, I encourage IROs to seek out similar conferences to both monitor investor trends and also engage directly with those in the investment community whom they might not regularly encounter. This event would have greatly benefited from more corporate presence and perspectives on topics of mutual interest. Not to sound like a broken record, but IROs should also be preparing for mandatory disclosure. We expect the securities regulators to finalize their approach in 2025, following the Canadian Sustainability Standards Board (CSSB) release at the end of 2024.

Finally, in terms of emerging topics, IROs should be prepared for questions on AI. These questions will be focused not only on business strategy but also on responsible uses of AI and how this is governed in your organization. I encourage you to review a recent paper from the International Corporate Governance Network (ICGN) on AI. You are likely to receive questions in the next year as we all grapple with the implications of AI.

While climate change will probably remain the dominant issue for investors, we cannot lose sight of other relevant and material ESG risks, including the fundamentals of good governance.

Jennifer Coulson is Vice President, ESG, Public Markets, at BCI.