Faculty Author Type

Emeritus Faculty [Janis Sarra]

Document Type

Response or Comment

Publication Date



Climate change, governance, ESG, fiduciary, disclosure, sustainable finance


While there are numerous strategies to be deployed to move Canada to a financially sustainable future, this study addresses two critically important issues: fiduciary obligation of corporate- and pension-fiduciaries, and national action on environmental, social and governance (“ESG”) financial disclosure, including climate-related financial risk disclosure. The Canadian economy is facing significant challenges and disruptions in the transition to a lower carbon world. Absent clear and innovative steps to ensure our corporations and financial institutions act to address carbon emissions and other environmental, social and governance risks and opportunities, we will be seriously prejudiced in a world that is rapidly moving towards greener and more sustainable economic activity. The study offers a comprehensive set of recommendations on these fiduciary obligations and disclosure, specifically, amending corporate, banking and insurance law to embed ESG factors, including climate-related risks and opportunities, in the fiduciary obligation of directors and officers. Institutional investors and asset managers, including pension funds and mutual funds, should be required to disclose how their portfolio management, voting and engagement activities are contributing to a lower carbon economy. The study endorses the TCFD disclosure framework, suggesting ow government could work with accounting standards setters and securities authorities to align climate-related financial disclosure. Imprecision in respect of information available on long-term climate-related financial risk or other ESG risks is not a bar to directors and officers acting now with a view to the best interests of the corporation. The Supreme Court of Canada has held that the defences of good faith and acting on a prudent and reasonable basis are very strong, even in the face of less than full information. Material ESG risks, costs and assets should be included in the company’s financial statements and notes thereto.



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