Evidence of meeting #130 for Environment and Sustainable Development in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was esg.
A recording is available from Parliament.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Thank you, Mr. Chair.
Mr. Tingle, I'd like to pick up where you left off in talking about the SEC using fines for fraudulent claims or greenwashing. We've seen this here in Canada, when Liberal adviser Mark Carney admitted that Brookfield had “overstated” that their trillion-dollar enterprise was net zero. He certainly had to walk that statement back.
In Canada, what body would actually investigate false claims like that currently?
N. Murray Edwards Chair in Business Law, Faculty of Law, University of Calgary, As an Individual
It would be the securities commissions.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Then in Canada, it would be the same sort of thing.
Have we seen any activities like that undertaken? Have there been any fines that you're aware of?
N. Murray Edwards Chair in Business Law, Faculty of Law, University of Calgary, As an Individual
No. That's characteristic of a generally less active enforcement regime in Canada, compared with the United States, which tends to be much more aggressive.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Do you think greenwashing and making these sorts of claims for a company, as Mark Carney did, should be investigated more in Canada?
N. Murray Edwards Chair in Business Law, Faculty of Law, University of Calgary, As an Individual
Yes. The truth is that these investment funds are sophisticated entities that should be obliged to tell the truth, the way every other actor in our capital markets is. We haven't particularly looked into this sort of thing, but there's no principled reason why we shouldn't.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
It seems to me that we should remain skeptical when major companies are making these sorts of claims. In your opening remarks, you certainly made it clear that, in your view, these disclosures don't improve outcomes. The scientific and academic studies back this up.
Is there any way that imposing these sorts of ESG disclosures can help Canada meet any of its climate obligations?
N. Murray Edwards Chair in Business Law, Faculty of Law, University of Calgary, As an Individual
No. I think the corporate governance channel is too weak to produce meaningful change. The truth is that companies, including financial institutions, are embedded in competitive markets. Those markets constrain their behaviour. They're not in a position to make lower-return investments in the alternatives, which is what we ask them to do when we ask them to voluntarily—
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
You're talking about our pension funds. It would be putting our pension funds at risk.
N. Murray Edwards Chair in Business Law, Faculty of Law, University of Calgary, As an Individual
I'm talking about every institutional investor. They're all subject to the same pressures to improve relative performance compared with each other. The energy and time they put into improving the outcomes in one company will raise the value of the index they're being marked against, but they tend not to be involved in firm-specific governance of any kind.
ESG is not unusual in this respect. They just don't do it. When we look at the way they do ESG investing, we see a similar sort of lack of attention. They tend to be more focused on picking stocks and trading them.
Liberal
Adam van Koeverden Liberal Milton, ON
Thanks very much, Mr. Chair.
Thanks to our witnesses for being here.
We've spent much of our time and effort litigating the virtues of ESG investing. For those watching, those are the environmental, social and governance standards big companies claim in order to attract attention and investment.
Unfortunately, we're missing the point a bit. The politicization of ESG investing in the United States led to a very polarizing series of headlines. I'll read one from The New York Times: “How Environmentally Conscious Investing Became a Target of Conservatives: The business world has been pulled into partisan politics, with Republicans bringing their battle against socially conscious investing to Congress”.
For over two years, there was a conversation in the United States as to whether or not ESG investing is worthwhile. It was my hope that we could avoid this here on the committee, mostly because this study isn't supposed to be on whether or not ESG standards are worthwhile; rather, it's about to what degree companies need to be honest and truthful if they say they have renewed commitments to environmentally sound practices or a new governance practice that ought to be seen as more ethical. That's what disclosure is going to report on.
Monsieur Chenet, am I mistaken? Are sustainable finance disclosure and taxonomy about honesty, or more about litigating whether or not companies ought to be sustainable?
Associate Professor, IESEG School of Management, As an Individual
Thank you, Mr. van Koeverden.
I think it's about everything. The taxonomy is good. To me, it's the translation of a policy goal that is not in the policy. It's better than nothing.
It would be clearer to have an industrial policy. Disclosure is for transparency and honesty, in order to make the markets more efficient.
The question for me is this: We cannot rely only on markets. That's why regulation and plans for the economy—“Where do we want to go?”—are important: They give a signal so that investors can make good decisions.
Liberal
Adam van Koeverden Liberal Milton, ON
Thank you, Mr. Chenet.
Mr. Tingle, you pointed out that ESG has been proven to not necessarily improve standards. Are you hopeful that improved disclosure standards will improve outcomes? Could you answer in about 20 seconds?
N. Murray Edwards Chair in Business Law, Faculty of Law, University of Calgary, As an Individual
No, they won't. The problem isn't so much that disclosure is bad; the problem is that the incentives are bad and the freedom of companies to behave differently doesn't exist. They have to maximize, so I agree completely with Professor Chenet's last remarks.
Liberal
Adam van Koeverden Liberal Milton, ON
Thank you very much to both of you.
If I could, Mr. Chair, I've already tabled my motion for a prestudy of Bill C-73. With my remaining time, I'd like to retable it. I'm hopeful that we can vote on it quickly so that we can get the minister here.
I would just say that over the last couple of meetings, the Conservative members have indicated their desire to have the minister come to committee. I'm hopeful that he can come Wednesday if we can pass this motion.
Liberal
The Chair Liberal Francis Scarpaleggia
Thank you to the witnesses. You're free to go. We have a little bit of committee business. Thank you for contributing to the discussion.
Do we have the motion in front of us?
Liberal
Adam van Koeverden Liberal Milton, ON
You should. Everybody should have the motion before them. I've tabled it twice, actually. I moved the motion at a previous meeting.
I can read it again, if you'd like.
It is, “That this committee undertake a prestudy on Bill C-73, an act respecting transparency and accountability in relation to certain commitments Canada has made under the Convention on Biological Diversity, and that to this end, the committee hold a minimum of five meetings and invite the Minister of Environment and Environment and Climate Change Canada officials, and that this study begin within seven days of the adoption of this motion.”
I think there were previously stated amendments. I'd entertain those now so that we can vote on them and get to our second panel.
Liberal
The Chair Liberal Francis Scarpaleggia
We have the original motion, and Madame Pauzé, I believe, has an amendment.
Ms. Pauzé could read it to us.
However, we first need to vote on whether we want to resume debate. It's dilatory. Let's just vote on whether we want to rediscuss this motion. Apparently we have to do that. The faster we do it, the better. Then we can go to Madame Pauzé's amendment.
Bloc
Monique Pauzé Bloc Repentigny, QC
I wanted to move an amendment, Mr. Chair, so I won't take the floor now.
Liberal
The Chair Liberal Francis Scarpaleggia
First of all, we have to agree to review the original motion. If we agree, we will then move on to your amendment.
The question is on the motion.
(Motion agreed to: yeas 7; nays 4 [See Minutes of Proceedings])
Liberal