On August 1, 2019, staff of the Canadian Securities Administrators (CSA) issued a public notice on the principles and rules governing the disclosure of information concerning climate change-related risks (CSA Staff Notice 51-358 - Reporting of Climate Change-related Risks) (Notice 51-358).
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With the increased concentration of share ownership by institutional investors over the past several decades, the influence of proxy advisory firms on shareholder votes has grown dramatically, all while the proxy regulatory process has become more complex. As noted by Chairman Jay Clayton of the US Securities and Exchange Commission (SEC), "Commission rule changes, state law changes, corporate governance practices, technology and other factors have all increased the significance of shareholder voting in our public capital markets."
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New CSA guidance highlights the importance of climate change-related disclosure to securities regulators and investors and aims to assist issuers in identifying, and improving disclosure of, material risks posed by climate change.
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Business Roundtable reveals corporations to drop idea they function to serve shareholders only.
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Demands for better reporting on climate change risks and opportunities by investors and the public have been increasing, prompting the Canadian Securities Administrators in March 2017 to launch a climate change disclosure review. One result of that review was the issuance on August 1, 2019 of CSA Staff Notice 51-358 Reporting of Climate Change-related Risks [PDF] (the Staff Notice). The Staff Notice provides guidance, but the CSA has chosen not to make any changes to existing requirements for disclosure, although the door is left open for changes in the future.
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The Principles for Responsible Investment, the United Nations-supported body, has highlighted the need for better environmental, social and governance data, especially through convergence of reporting standards.
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According to this recent study from consulting firm McKinsey, investors want to see a different kind of sustainability reporting. The authors observe that, in light of mounting evidence "that the financial performance of companies corresponds to how well they contend with environmental, social, governance (ESG), and other non-financial matters, more investors are seeking to determine whether executives are running their businesses with such issues in mind." Although there has been an increase in sustainability reporting, McKinsey's survey revealed that investors believe that "they cannot readily use companies' sustainability disclosures to inform investment decisions and advice accurately."
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