Canada and the sustainability standards board…and all our tomorrows…

Canada should be the home of the new global sustainability standards board, announces a recent opinion piece in Canada’s Globe and Mail newspaper.

Here are some extracts:

  • (The) international interest (in hosting the new board) reinforces the prestige and value associated with the new global body. It also provides an opportunity to demonstrate how Canada’s offer signals a dedicated commitment across our economy and society to sustainability, both domestically and internationally. 
  • While each of the interested countries and cities have their own strengths, Canada’s offer is impressive as it features wide-ranging support and a substantive financial commitment. The Canadian offer comes with backing from a collaboration that spans the public, accounting, finance, pension, insurance, regulatory and Indigenous sectors, along with leading business, academic and public-policy organizations.
  • Suncor Energy and Chartered Professional Accountants of Canada are among the many organizations backing the Canadian proposal to host the global headquarters for the ISSB. Collectively, this group is known as the Canadian Champions for Global Sustainability Standards.
  • … On the sustainability front, Canadian companies and organizations have helped shape some of the existing global ESG standards developed by the Global Reporting Initiative and the Sustainability Accounting Standards Board (now the Value Reporting Foundation), as well as international environmental management standards. In addition, sectors such as mining, forest products and chemicals manufacturing are among those active in the sustainability space with specific programs.
  • Importantly, Canada’s varied economy spanning resource extraction, manufacturing, finance, high-tech industries and more means that both the sustainability and standard-setting experts in this country can relate to the needs of the full range of international markets because, unlike in many countries, each of those needs is reflected in our own economy.
  • … Impressively, Canada already has one of the highest rates of sustainability reporting in the world, with almost every top Canadian company reporting on its ESG performance.

The article is carefully and notably short on “save the world”-type rhetoric, observing only that “in a time marked by ever-increasing focus on environmental, social and governance (ESG) performance and disclosure, there is a greater need for standardization than ever before,” and that “the business landscape has evolved to the point where a consistent approach is both needed and wanted by issuers, investors and others.” It’s implicit in this that the “needs” and “wants” may not be particularly aligned with broader environmental goals, in the same way that accounting standards may facilitate investing in lousy companies (that is, if despite their lousiness, they represent a reasonable opportunity relative to their price) just as well as investing in good ones. This might track with the fact (if we accept it as such) that Canada can have one of the world’s highest rates of sustainability reporting in the world, while still being far from a leader in environmental performance by most measures.

One might simply shrug then and say, oh well, these standards might do some good, somehow. But again, that bland reference to what’s “needed and wanted” by issuers and investors (and the one to “(relating) to the needs of the full range of international markets) is a flashing danger sign, in the absence of any suggestion that the needs and wants of those parties (that is, to keep earning high levels of returns with minimal external constraint on their activities) might conceivably be modified and constrained. We’ve previously cited Dr. Carol Adams on that topic – she returns to it in a recent post:

  • …reporting requirements like those proposed by IFRS…that don’t hold companies accountable for their material impacts on stakeholders will encourage (albeit unwittingly), rather than curb, greenwash. This is because they provide insufficient information to investors and others about management approach (and governance oversight thereof) to identifying their impact on sustainable development. They will not lead to improvements in sustainability performance.
  • There are no investment returns on a dead plant.
  • I think everybody knows this, but some are not acting on it. Changes in investment decision making, corporate strategies and business models must occur to avoid it.  They won’t if frameworks, standards, and legislation do not explicitly require it. This is because change is hard and its easy to fall back to the profit seeking motive and other bad habits. This is not opinion; it is informed by rigorous qualitative research examining corporate behaviour in relation to reporting requirements.

It would be a profound ethical lapse if Canada were to seek (and presumably somewhat to bask in) the attention it might attract by hosting the new body, without sharpening its tone to insist that this activity not become a “side hustle,” allowing companies to draw attention to relative pockets of progress, while leaving greater harms unaddressed. But is Canada ready to lead a bitter but necessary (and expensive) conversation about the nature of capitalism itself? I’m listening hard, but don’t hear it yet…

The opinions expressed are solely those of the author

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