York University’s Jay & Barbara Hennick Centre for Business & Law and Jantzi-Sustainalytics have submitted recommendations to the provincial minister of finance on how the Ontario Securities Commission (OSC) can begin to improve corporations’ disclosure of their social practices.
In the report, Corporate Social Reporting Initiative, which was produced with the support of the Association of Chartered Certified Accountants, researchers at the Hennick Centre and Jantzi-Sustainalytics address the reasons and scope for and the regulation of corporate social reporting, which applies to topics such as human and labour rights, employee health and safety, local community development and product safety.
The Hennick Centre and Jantzi-Sustainalytics recommend that the OSC clarify existing disclosure obligations to indicate the need to consider the materiality of social issues to investors’ decisions and long-term corporate performance. They also recommend that the OSC facilitate continued dialogue among relevant stakeholders in order to support a shift toward more standardized metrics and reporting in this area.
“The recommendations and discussion set out in this report provide valuable and timely insights on public company social issue disclosure obligations,” said Ontario Minister of Finance Dwight Duncan. “I appreciate the efforts of those who contributed to this report and look forward to reviewing the recommendations in greater detail."
“There is growing momentum in a number of jurisdictions around the world to enhance corporate disclosure on ESG [environmental, social and governance] performance,” said Kevin Ranney, global director, Responsible Investment Services at Jantzi-Sustainalytics. “The OSC has an opportunity to play a leading role in this area, and our recommendations suggest some concrete steps that it can take in doing so.”
This report is the outcome of a December 2009 consultation held in response to the April 2009 non-binding resolution by Laurel Broten, MPP for Etobicoke-Lakeshore, passed unanimously by the legislature of Ontario. That resolution called on the OSC to conduct a consultation into best practices on corporate social responsibility and ESG reporting standards.
“The knowledge gained through enhanced disclosure provides better protection for individual investors,” said Broten. “I appreciate the work put into examining the issue of corporate social performance, given the many complex social issues investors are increasingly considering.”
The round-table consultation and subsequent solicitation of comments drew on the expertise of more than 50 representatives from the investment community; government agencies such as the Ministry of Finance; non-profit organizations such as the Social Investment Organization and the Canadian Coalition for Good Governance; and business, including the mining, energy and banking sectors.
“Increasingly, corporate leaders and investors alike are focusing on sustainable performance and effective risk management. Both will require heightened levels of social disclosure,” said Ed Waitzer, director of the Hennick Centre for Business & Law, and Jarislowsky Dimma Mooney Chair in Corporate Governance at York's Osgoode Hall Law School and Schulich School of Business.
The Globe and Mail wrote about the report on June 15:
Regulators should encourage companies to report more information about their social practices, but do not need to adopt new rules forcing higher disclosure standards, a new report prepared for the Ontario Securities Commission concludes.
The report was prepared for the OSC by the Hennick Centre for Business & Law at York University and by Jantzi-Sustainalytics, a private firm that does research and analysis on environmental, social and governance (ESG) practices.
Toronto lawyer Ed Waitzer, Jarislowsky Dimma Mooney Chair in Corporate Governance in York’s Osgoode Hall Law School and the Schulich School of Business, and a former chair of the OSC who helped spearhead the review, said that investors want more disclosure but that there is no clear consensus about which social reporting factors are most relevant. He said companies and other stakeholders are still experimenting with various disclosure options. “In this area, we just don’t have the standards yet,” he said in an interview. “So part of the exercise is how the OSC can take a leadership position in developing the standards.”
Waitzer said existing reporting rules – which require companies to disclose information that is “material” to investors – give ample scope for greater disclosure, but companies have chosen to narrowly interpret what sort of information is material.
The complete article is available on the Globe's website.
Republished courtesy of YFile– York University’s daily e-bulletin.