In 2024, it will become increasingly difficult for a company that wants to attract investors or satisfy the demands of its customers to ignore its impact on society. Whether by obtaining ESG certification or preparing an ESG plan, companies must now have answers to offer them.
Large publicly traded companies and other major institutions often have sustainable investment managers who develop policies in this area. However, not all companies have the resources to put everything in place.
While requirements vary depending on the size and maturity of a company, what revolves around environmental, social and governance (ESG) criteria must now be part of a company’s business strategy if it wants to example, convince the Caisse de dépôt et placement du Québec (CDPQ) to support it financially.
“A consulting services company that has not thought about diversity, equity and inclusion, that would worry me,” explains Geneviève Boutillier, vice-president, medium-sized private companies, at CDPQ Private Placements. I would say to myself: ‘how do they go about finding the best talent?’ If it has a blind spot on one of the important ESG factors, we will have doubts.”
A so-called “B Corp” or “ISO” certification is not mandatory to obtain financial support from Quebecers, even if they see it favorably. The institution wants to give the runner a chance. However, she ensures that the theme of sustainability quickly arises.
“We have developed a tool to facilitate this dialogue with the companies in our portfolio,” emphasizes François Crémer, senior director of sustainable investment at CDPQ. These are four pillars (establishing the structure, deploying the strategy, implementing management and defining targets) intended to help a company structure itself and implement a sustainable strategy. »
The construction giant Pomerleau is named by the Caisse as one of the companies where the support of the institutional investor has made it possible to accelerate the shift in terms of sustainability. The pension plan manager’s initial investment in the Quebec company dates back to 2018.
In just a few years, Pomerleau’s ESG team has grown from a few people to more than 40. Last year, the construction specialist decided to integrate its ESG report into its annual review for the 2022 financial year – a practice that is still not widespread in North America.
“For submissions or won projects that included criteria aimed at reducing the carbon footprint, we went from 14 calls in 2020-2021 to 32 the following year,” says Jean-Philippe Lepage, director of public relations and marketing at Pomerleau. For example, the supply of low-carbon concrete is becoming a requirement. Our ESG team takes steps to find out where the sources of supply are. »
Everything indicates that a turn of the screw is also being prepared regarding financial disclosure in terms of sustainability. The International Sustainability Standards Board (ISSB) published its first financial obligations on sustainability and climate change on June 26. Canadian companies have no obligation to comply, but this could well change, since the federal government has expressed its support for this movement.
“These standards are likely to be the first of several that will be added later,” says Marie-Soleil Tremblay, professor at the National School of Public Administration and organizational administrator. What I can say about 2024 is that there is pressure that is likely to be seen more generally, not just from investors. »
Fasken agrees. In an analysis note released last June, the law firm estimated that these ISSB standards were not mandatory “for the moment”, adding that this “is perhaps only a matter of time “.
If there’s one area where companies have their work cut out for them, it’s how their ESG performance is scrutinized. A PwC report highlighted these issues. The firm had analyzed the ESG targets of the 250 largest companies. Only 8% had subjected their sustainability reporting to the same scrutiny as their financial results.
“For (ESG) information to be useful, it must be reliable,” PwC emphasizes. Companies are increasingly forced to demonstrate the credibility of their reports by obtaining an external opinion. »
Ms. Tremblay participated in the writing of the report of the Independent Review Committee on Standardization in Canada, released last March. The exercise looked at several aspects, including the establishment of sustainability reporting standards.
Due to the proliferation of indicators in ESG policies, the 73-page report notably highlighted that certification should play a “key role” in “building trust […] in integrity and reliability of sustainability information presented by different types of organizations”.