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How ESG Investing is reshaping the Canadian industries

March 1, 2023
By CSE
How ESG Investing is reshaping the Canadian industries

ESG Revolution in Canada is affecting most of its industries

Over the past year, Canada has experienced significant developments in ESG investing, leading to a rapidly changing business landscape. Companies and investors have had to adapt to increasing demands for transparency and accountability on ESG issues. As a result, new opportunities and challenges for businesses across a range of industries have been raised.

canadian industries

What are the Top ESG Trends Reshaping the Canadian Business Landscape?

  1. Disclosure of climate-related risks and opportunities

The disclosure is becoming increasingly important to investors, allowing them to assess a company’s exposure to climate-related risks. In January 2023, the Canadian government announced its plan to introduce legislation, making the disclosure of climate-related risks and opportunities mandatory for all large companies.

       2. Guidance on climate change-related disclosure for public companies

The Canadian Securities Administrators (CSA) announced the publication of a new guidance document on climate change-related disclosure for public companies. The guidance encourages companies to provide more detailed and consistent information on climate-related risks and fosters alignment with international standards on ESG reporting.

       3. Incorporating climate risk management in the financial sector

The Bank of Canada announced that considers climate risks in its monetary policy decisions. This is a major step towards mainstreaming climate risk management in the financial sector. It also signals to businesses and investors that they need to take ESG reporting seriously and incorporate it into their decision-making process. The bank has also committed to developing its modeling tools and data sources to meet future challenges.

Which sectors have been most affected by the ESG regulations in Canada?

Energy

The energy sector is likely to be one of the most affected by the new ESG regulations in Canada. With the country’s commitment to achieving net-zero emissions by 2050, the government is expected to introduce more stringent regulations and incentives to reduce emissions and transit to renewable energy sources. This could impact the profitability of Oil and Gas companies and their ability to attract investment.

Financial Services

The Financial Services industry is also likely to be significantly affected. The proposed legislation requiring large companies to disclose their climate-related risks and opportunities will affect a wide range of industries. Financial institutions will need to incorporate this information into their investment decisions and risk assessments. Additionally, the new guidance from the Canadian Securities Administrators will require companies to be more transparent about their ESG reporting.

Mining

The next industry that is expected to have a great impact by the updated ESG regulation landscape is mining. Companies in this sector will need to improve their sustainability practices and reduce their carbon footprint to meet the government’s net-zero targets. There may also be more scrutiny regarding the industry’s impact on local communities and indigenous peoples.

Real Estate

Building retrofits and energy efficiency will probably have a great impact on the real estate sector. The government’s green recovery plan includes investments in building retrofits, and companies in this sector will need to adopt more sustainable practices to meet new regulations and consumer demand.

There is a growing need for Canadian companies to integrate ESG factors into their decision-making processes. Canadian companies are under increasing pressure from investors, customers, and other stakeholders to demonstrate their commitment to ESG principles.

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Upcoming Programs: Certified Sustainability (ESG) Practitioner Programs

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