Environmental, social and governance (ESG) practices have gained prominence to the point where “the rubber is hitting the road,” says Lynn McGrade, national head of the Investment Management Group at Borden Ladner Gervais LLP (BLG).
“ESG used to be tied to social license, to doing the right thing, but now it is an essential business imperative.”
This is evident across all areas of practice at BLG, which focuses on business law, commercial litigation and arbitration, and intellectual property solutions. Providing advocacy-related services to organizations across all sectors, the firm regularly assists a wide range of clients on ESG matters with increasing frequency. “Our clients are taking comfort in knowing that BLG has deep knowledge of international ESG best practices, strategies and solutions,” explains John Vellone, national leader of the firm’s ESG initiative.
The heightened attention on climate change, sustainability and social justice brings greater scrutiny on companies to align their performance with calls for responsible action.
Jennifer Archer, a partner in the firm's Private Equity Group, adds that while observers may dismiss ESG considerations as simply the latest hot market trend in business, that view fails to account for a shift in societal climate. According to Archer, thoughtful consideration and management of ESG factors has potential to assist in achieving two key goals: driving value and limiting risk.
For McGrade, this means helping firms tell their ESG stories, track and measure outcomes, and present this information to institutional investors who consider ESG an important indicator for economic success.
“Larry Fink of BlackRock stated that not a day goes by when he doesn't get asked about ESG,” shares McGrade. She believes this speaks to the importance for companies raising capital to focus on ESG issues to remain attractive to investors.
At the end of March 2021, the value of sustainable funds in Canada was $18 billion, which represented a 160-percent increase from 2020. “Investment fund managers are stepping up efforts to build ESG-focused funds or integrate ESG screens into their products,” McGrade says. The burgeoning market has also attracted the attention of regulators, who are working to advance transparency and clearer definitions.
Another driver of change is shareholder activism, notes Fred Pletcher, corporate practitioner and leader of BLG’s national Mining Group and shareholder engagement. “Governance practices are among the key things we focus on when we conduct assessments for shareholder activists.”
Investors and stakeholders are increasingly looking to influence strategic and operational decision-making as well as board and management makeup as a means to improve outcomes and, Pletcher says, these efforts leave an impact.
“We've seen remarkable change and improvement in governance standards, including diversity on boards, across Canadian public companies over the course of the last 15 years.”
Pletcher has observed significant forward momentum in mining, calling the Canadian mining industry an international success story. “Mining companies have long been reporting on environmental actions,” he says. “They also have extensive experience in consulting with rural and Indigenous communities in order to secure social license.”
Indigenous Law Counsel, Chris Roine, relates to the S in ESG by highlighting how relationships between the Crown and First Nations are increasingly taking on the form of partnerships. “This was highlighted by the November 2019 passage of Bill 41, which saw B.C. become the first province in Canada to embrace the United Nations Declaration on the Rights of Indigenous Peoples(UNDRIP) in legislation, followed by similar federal legislation in June 2021”, says Roine. The passage of UNDRIP legislation has been acknowledged as “historic,” with the important caveat that “the hard work is yet to come,” i.e., implementing the declaration and following through on relationship-building.
For Environmental Law Partner Jonathan Cocker, a focus on environmental outcomes can help to mitigate challenges and capture opportunities.
“Clients are adjusting, disclosing and reconciling their future operations by reacting to conditions on the ground,” says Cocker.
BLG is committed internally to ESG practices including a commitment to conducting responsible business, reducing environmental impact and improving access to justice.
Borden Ladner Gervais LLP (BLG) is featured in the 2021 Environmental Excellence in B.C. magazine.