Against the backdrop of ESG’s multi-faceted and ever-changing nature, greenwashing, cybersecurity, and Indigenous rights-based climate change litigation rank among the latest considerations that thoughtful companies and organizations must reflect on as they manage their organizational ESG program. On September 21, 2023, Miller Thomson’s ESG and Carbon Finance Group assembled a panel of experts in Vancouver, Canada to discuss the latest legal developments in these areas. To kick-off the day’s events, guests attending in person and by simultaneous virtual broadcast were welcomed by thoughtful introductory remarks from Vancouver Office Managing Partner Daniel Kiselbach. P. Jason Kroft (Co-Chair, ESG and Carbon Finance, Co-Leader, Structured Finance and Securitization, and Partner, Miller Thomson LLP) then moderated a roundtable discussion between panelists Sarah D. Hansen (Partner, Miller Thomson LLP), David Krebs (Co-Leader, Privacy and Cybersecurity and Partner, Miller Thomson LLP), and Christie A. McLeod (Associate, Miller Thomson LLP). Below is a summary of the key takeaways from this discussion.
I. Greenwashing litigation and associated risks
With increasing demand from consumers for environmentally-friendly products and services has come a rise in greenwashing and greenhushing. Greenwashing is the practice of conveying false, misleading, incomplete, or unsubstantiated information to consumers about a product or business’ environmental credentials. On the other hand, greenhushing is where a company actively withholds information from the public regarding their action or inaction on addressing their environmental impacts.
The Competition Bureau has, and continues to, investigate multiple complaints against organizations regarding allegations of greenwashing as discussed in our previous blog post. In addition to the energy sector, the aviation and fashion industries have also been highly criticized for claims of greenwashing. Besides the Competition Bureau, there is also a fairly new player in Canada who can help counter greenwashing. The Office of the Canadian Ombudsperson for Responsible Enterprise (CORE), established by the federal government in 2018, can review complaints about potential human rights abuses occurring abroad by Canadian companies in the garment, mining, and oil and gas sectors. This past summer, the CORE announced the launch of its first investigations, which concern allegations of forced labour in the supply chains of six Canadian companies. It is hoped that the CORE’s reporting will increase transparency about companies’ operations and counter misleading claims made to the public.
Given that the climate crisis has and will continue to violate internationally recognized human rights, including the right to life, water, sanitation, food, health, and housing, the CORE could investigate energy companies’ overseas production and emissions and play a valuable role in dispelling greenwashing. As of March 31, 2023, however, the CORE had not yet received any complaints regarding oil and gas companies that had moved to an intake or initial assessment stage.
To avoid greenwashing, companies should refrain from making broad claims that something is “green”, “sustainable” or “environmentally friendly” unless they have substantiated information for the entire supply chain or life cycle of a product. Instead of using these buzzwords, companies should be specific and limit their claims to those that they have sufficient evidence to back up.
II. Cybersecurity in ESG reporting
Over the past years, it has become undeniable that gaps in cybersecurity can pose an enterprise risk and threat to Canadian businesses, the Canadian economy, and even the safety of Canadians. Recently, the secretary of Interpol called cyber-attacks a “global threat” that required a coordinated response.
Cybersecurity and privacy considerations have not traditionally been considered topics for ESG. This appears to be changing and for good reason. Having a framework in place that ensures that an organization’s systems are protected from intrusions and service interuptions, and that personal information in the hands of the organization is protected, is good corporate governance. Regulators, investors, and other stakeholders increasingly expect this from an organization, which is why cybersecurity and privacy reporting fit within an ESG framework. Regulation in this area will not decrease over the coming years. Rather, regulations will become more refined, stricter, and with greater penalties. We have already seen recent changes to Quebec’s privacy laws (Law 25) SEC cybersecurity reporting requirements in the US, as well as incident reporting rules by the Office of the Superintendent of Financial Institutions (OSFI). Canada’s federal private sector privacy law is also under review and would, if passed, greatly increase the potential penalties for failing to adequately protect personal information.
Boards can meet the challenges of the current risk and regulatory environment by implementing a program designed to target these risks.
The main principles of such a program are accountability and board oversight. Being accountable means having the right resources, training, and leadership in place. It also means having tracking and reporting systems in place, the findings of which are then shared with the board on a regular basis. Finally, it means being prepared for the worst case scenario. This includes implementing incident response and disaster recovery plans, as well as training exercises for the board (such as mock incidents/table top exercises). An ESG framework can be used to track, measure, and report on the program and demonstrate good governance and transparency when it comes to protecting Canadian infrastructure and personal information.
III. Indigenous Peoples and rights-based climate change litigation
Indigenous peoples are disproportionally affected by climate change due to their connection with the land and dependence on their ecosystems. To fight against climate change, Indigenous groups around the world are rising up against climate change and protecting their cultural heritage as well as lands, forests, air, and waterways by initiating rights-based climate litigation. Internationally, the United Nations Declaration on the Rights of Indigenous Peoples (“UNDRIP”) recognizes and protects the Indigenous peoples’ right to a way of life, to carry on and teach cultural and heritage to future generations and include the right to participate in cultural life which calls on state actors to respect the principles of free, prior, and informed consent and land recognition. UNDRIP also outlines the Indigenous peoples’ collective rights to maintain their lands, culture and language. In Canada, these protections are enshrined in domestic legislation, including the federal United Nations Declaration on the Rights of Indigenous Peoples Act (“UNDRIP Act”) and the Declaration on the Rights of Indigenous Peoples Act (“DRIPA”) in British Columbia. There is also constitutional protection under section 35 of the Charter of Rights and Freedoms protecting the existing Aboriginal and treaty rights of Indigenous peoples.
There are now hundreds of climate court cases underway worldwide which are grounded on allegations of human rights violations. In Canada, one such seminal case is Yahey v. British Columbia[1], which represents the first time that a court in Canada has found treaty infringement based on the cumulative effects of development within a First Nation’s territory. This case involves Blueberry River First Nation’s traditional territory, located in the upper Peace River region of northeastern British Columbia. Blueberry River First Nation claimed that certain parts of their territory had become polluted by oil and gas and had reduced available water that the animals relied on, and that harvesting was no longer available and the taking up of land was no longer available for hunting. The Province of British Columbia attempted to lay the blame of some of these effects on non-industrial factors, which vary between species, but broadly include increased predation, natural forest fires, climate change, and more. In its decision released on June 29, 2021, the British Columbia Supreme Court concluded that the First Nation’s treaty rights had been breached, effectively putting an end to any further authorization by the Province for industrial activities within the First Nation’s traditional territory. After this successful litigation, Blueberry River First Nation reached a $65 million funding deal with the Province for land, restoration, wildlife, stewardship and cultural and capacity investments.[2] Commentaries have argued that the win for the Blueberry River First Nation could bring about change for resource development in Canada.
Concluding Thoughts
This article is a summary of the September 21, 2023 panel discussion on Greenwashing, Cybersecurity and Indigenous Peoples in Canada hosted by Miller Thomson in Vancouver. If you would like to learn more about this article, its topics, or how our ESG and Carbon Finance Group can assist in providing practical, tailored, and timely advice across the full ESG spectrum, please do not hesitate to reach out to P. Jason Kroft or Bruno Caron (Co-Chairs, ESG and Carbon Finance, Miller Thomson LLP) or subscribe to our ESG and Carbon Finance Communiqué: MT BiosphereTM, featuring bi-weekly publications from our fully integrated, multidisciplinary advisory team. We look forward to working with you.
To view this recording, please click here.
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[1] Yahey v British Columia, 2021 BCSC 1287
[2] https://www.cbc.ca/news/canada/british-columbia/b-c-reaches-65m-funding-deal-with-first-nation-after-supreme-court-ruling-1.6204008
