ESG law is becoming the new legal scene that has been making rounds across board rooms and workplaces. From carbon cuts to social issues, every corporate decision now carries legal weight that the public will surely keep an eye on.
To assist companies and their upper management in dealing with ESG law, lawyers are there to help at every stage. Read further to learn about ESG, the different laws surrounding it, and the lawyers who can help you with your ESG matters.
ESG stands for "Environmental, Social, and Governance." These are sets of standards, or point-by-point agenda, regarding the environmental, sustainability, and social impact of a company or organization. It can be used either to:
One of its goals is to manage the risks and opportunities regarding the company's relationship with the three standards or factors. This makes ESG very vital for the people behind a company, such as its investors and key personnel.
While the Environmental and Social factors push companies to be involved in sustainability issues, the Governance factor also looks at the sustainability within the company itself.
Canadian laws do not have a specific statute which governs ESG, whether federal or provincial. Instead, ESG law is composed of different laws from different practice areas, all of which companies must be aware of.
Below are some examples of these laws, and how they arch over the three factors composing the ESG:
Several different statutes relate to the ESG laws of Canada, making navigating them tricky for anyone who isn't an ESG lawyer. Some of these laws are the following:
Companies must be compliant with the CEPA, which is the country's main federal law on environmental protection. This law is highly applicable if a company's operations involve:
Through the help of an ESG lawyer, the top heads of a company can align its operations to a more environmentally safe one, maybe even surpassing what is required by the CEPA.
The GHG Pricing Act is a federal environmental law which can come across as an ESG measure. This statute establishes the federal pricing system on carbon emissions, requiring companies to pay the government if they exceed the emissions limit under the law.
Not only does the GHG Pricing Act put large emitters in the spotlight, but this ESG law also pushes them to be intentional in reducing their emissions. Otherwise, they would have to pay the government, aside from the public scrutiny that may come along with it.
Another environmental law that companies must look at as they learn to comply with ESG law is the CNZEAA. This is the law which mandates the Canadian government to achieve its net-zero emissions goals by 2050.
Because of this law, companies must act simultaneously with the government in looking for ways to achieve these net-zero emissions goals. Part of this is to also look at the sustainability of the company itself; as future laws turn greener, companies might want to also turn over a new leaf.
The social aspect of ESG can run into several practice areas, where a company can focus depending on its business, public scope, and internal advocacy. Some examples of these social aspects include:
However, some of these have specific statutes that a company may be governed with. If so, adhering to the statute does not only mean legal compliance, but also following ESG standards.
We'll discuss some of the ways that Canadian social laws and ESG become one:
Matters on renewable energy is one area where the Environmental and Social factors of ESG meet. Apart from looking at the GHG Pricing Act, the CNZEAA, and other environmental laws, companies and organizations switching to renewable energy sources are also becoming a social issue that the public is now looking at.
Resource development and infrastructure projects are required by Canadian law to comply with consultation and accommodation requirements. This can be before and/or during the project's implementation.
This falls under ESG goals, as sustainable development and Indigenous and Aboriginal engagement goes together when it comes to these projects.
Canadian laws impose several duties on a company's directors and shareholders. While these duties may involve technical rules, it also involves ESG law, specifically the corporate governance factor.
Directors are mandated by law to act for the best interests of the corporation, its employees, and shareholders. This is the essence of corporate governance, where the people behind a corporation must act according to their fiduciary duty, which includes:
ESG laws somehow expand this duty to include the public, as the corporation must also be mindful of its environmental and social impacts. This makes the three factors interrelated, where corporate governance also affects how the corporation acts on its environmental and social responsibility.
The duties and liabilities of shareholders, directors, and officers are found in the Canada Business Corporations Act (CBCA). As such, corporations and their senior management must have a good grasp of this law. For this, corporations can get the help of an ESG lawyer to see how the CBCA's provisions apply in real life. Scroll down to see the best ESG lawyers as ranked by Lexpert!
Under Canadian securities laws, a corporation has the obligation to disclose certain information when it becomes a reporting issuer. This disclosure is either to the:
For instance, the Ontario Securities Act requires reporting issuers to disclose information related to their activities and financial status, both regularly and publicly. Similar securities regulators of other provinces have the same requirements.
With the help of an ESG lawyer, companies can refer to the regulations issued by the Canadian Securities Administrators (CSA), such as the:
ESG law pulls together many rules from different federal and provincial statutes that already touch a company's daily life. For example, ESG law links environmental rules, competition law, securities law, and governance standards under one lens.
As an overview, here's how ESG law applies to Canadian companies:
Since there is no single authority which ensures that Canadian companies follow the different ESG laws, several regulators are involved when it comes to ESG. Here's a rundown of some of these regulators:
As ESG meets the law, there's no other professional to call but ESG lawyers. Complying with the law while hitting ESG metrics may sound promising, but the work behind it is not complete without the help of highly knowledgable lawyers.
Here are the ways that ESG lawyers can help corporate clients when dealing with Canada's ESG laws:
Want professional legal help regarding ESG law? Scroll down to see the best ESG lawyers in Canada as ranked by Lexpert.
