Path Forward

State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 2 An Industry Ahead of the Curve: Looking Beyond the ESG Hype

Consolidate ESG frameworks: The international community must work together to standardize ESG frameworks. While there is now an effort to move in that direction, by virtue of the newly proposed International Sustainability Standards Board, there is still uncertainty around which framework would eventually be supported by governments, investors, and other stakeholders. As per the new mandate letters, the federal departments of finance and environment and climate change should work together to convene and build consensus among key stakeholders on an acceptable ESG reporting framework for Canadian businesses.

Make materiality the foundation of reporting: Not all issues are relevant to all companies and their stakeholders. Before companies undertake any type of measurement and external reporting of performance, they must conduct a materiality assessment to determine the priorities for them and their stakeholders. Reporting frameworks should support these assessments and ensure public ESG reports are anchored on materiality. Support the adoption of ISO-standards: The federal government should facilitate the adoption of international standards related to ESG. The electricity industry is a leader in adopting ISO 14001-consistent standards to manage environmental impacts and in supporting the use of ISO 26000 to address issues related to social responsibility. These managed frameworks allow companies to not only report on ESG, but also integrate ESG into their decision-making and governance models.

Align government data collection processes: The federal government collects a significant amount of ESG-related data from companies; it should streamline and align mandatory climate change and ESG-related disclosure requirements to reduce duplication of efforts. This responsibility to align data collection processes should be given to the Canadian Centre for Energy Information, which is led by Statistics Canada.

“If you look at the economic regulatory system, it is not set up to be innovative. However, there's a lot of good from the regulatory structure that we don't want to lose. How do we create more of an opportunity for innovation to come from that? We need to provide an opportunity to change how processes, procedures, policies rules or regulations are applied such as through Innovation Sandboxes.”13