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Feb 19, 2021

ESG reporting in Canada doubled between 2016 and 2019, study finds

GRI appears to be favored reporting framework

The adoption of ESG reporting has increased significantly since 2016, with the Global Reporting Initiative (GRI) being the most-used reporting framework, according to a new study from Millani.

More than two thirds (71 percent) of companies included in the S&P/TSX Composite index published a 2019 ESG or sustainability report, according to Millani’s analysis, which was completed in December 2020.

The number of Canadian companies publishing ESG or sustainability reports has doubled since 2016, showing a gradual uptick for full years 2016, 2017 and 2018, followed by a more substantial increase for full year 2019.

  Dedicated ESG report Speak to ESG Report on or speak to ESG
2016 36% 42% 78%
2017 39% 41% 80%
2018 48% 32% 79%
2019 71% 21% 92%

Source: Millani

During the same time period, the number of companies that either produce a report on ESG or speak to ESG during investor interactions has increased from 78 percent to 92 percent.

One of the biggest questions for corporate reporters is which ESG framework to use. Millani’s study finds that in Canada, the GRI framework is used by 64 percent of reporters, making it the most popular. There’s little to separate the other frameworks and standards: 51 percent use the Sustainability Accounting Standards Board’s standards, 46 percent report according to the UN Sustainable Development Goals and 45 percent use the Task Force on Climate-related Financial Disclosures.

Nine out of 10 Canadian issuers disclose diversity metrics, while half have a dedicated section on water usage and 44 percent mention the company’s purpose.

Investor engagement priorities in 2021

Millani also ran a concurrent survey of the investment community to understand its evolving approach to ESG integration. In April 2020, 74 percent of investors surveyed by Millani felt the Covid-19 pandemic would have a positive impact on ESG integration. But even with such high expectations, 93 percent of those respondents are surprised by how much ESG has been a talking point, according to a follow-up survey with the same investors conducted in December 2020.

This will feed into investor engagement priorities during 2021, according to the study. Climate change continues to be a big issue for investors this year, with 81 percent of respondents saying it’s in their top three engagement priorities. Diversity and inclusion is also flagged as a priority by 75 percent of respondents.

One asset owner told Millani that its focus will be on how issuers can track human capital management issues like mental health and employee well-being, in light of Covid-19.

‘In all of our engagements since March, one topic is always corporate culture, mobilization of employees and mental health,’ the asset owner said. ‘How do you track, measure and monitor? What new initiatives have been put in place to be proactive in terms of human capital management?’

Ben Ashwell

Ben Ashwell was the editor at IR Magazine and Corporate Secretary , covering investor relations, governance, risk and compliance. Prior to this, he was the founder and editor of Executive Talent , the global quarterly magazine from the Association of...