Skip to content.

Mandatory ESG disclosure is a must for transition to net-zero economy: McCarthy Tétrault’s Wendy Berman speaks to Canadian Lawyer

There’s a “critical need” for mandatory global baseline ESG disclosures and Canadian businesses should embrace the opportunities from applying a sustainability lens to governance, corporate strategy, enterprise value and risk as governments and regulators move towards mandatory ESG disclosure, McCarthy Tétrault partner Wendy Berman tells Canadian Lawyer

Wendy, head of McCarthy Tétrault’s Securities Litigation Group, talked to Canadian Lawyer about the complex, evolving ESG disclosure landscape and the important opportunities arising from a mandatory ESG disclosure framework, especially as we move towards a net-zero economy.  

“Instead of wringing our hands in dismay, you can embrace the opportunities from applying the ESG lens throughout your enterprise – it’s an exciting, rapidly evolving area, with opportunities to lead and you are not alone,” Wendy says. 

Wendy, who advises companies on ESG and sustainability issues, explains that companies should view the overall movement from a voluntary to mandatory framework as a positive development and one which will mitigate both “capital flight” and “greenwashing” risks. 

“I think the debate is over between mandatory and voluntary disclosure, despite the time that has been spent over the years debating the pros and cons of both,” says Wendy, who was recently appointed as a member of the Ontario Securities Commission’s Advisory Council to the CEO. 

“The reason I think that the debate is over is that we’ve seen the result from the absence of mandatory frameworks, which clearly show the critical need for mandatory global baseline disclosures. Because without it, you don’t have consistent and clear rules of the road for disclosure of sustainability-related risks and opportunities.” 

Planning for the transition to Net Zero 

According to Wendy, who will be speaking at the October 12 Canadian Lawyer ESG Summit this year, ESG disclosure is “so critical to ensuring we address a just transition to a net-zero economy”. 

While there is difficulty in creating a harmonized global disclosure framework that works for everyone, Wendy adds that the voluntary regime has “fallen short of ensuring the kind of consistency and comparability needed to provide decision-useful information for investors.” 

Still, Wendy warns that a one-size fits all system isn’t the answer. Instead, the framework must be part of a global solution that allows for a rapidly evolving ESG landscape and recognizes unique regional and industry interests.  

She says that all companies need a sustainability plan. There is “no company or industry sector out there” that won’t feel the impact of the climate-change, that won’t need to look at their business through “a sustainability lens and embed meaningful governance processes to assess and manage short, medium and long-term ESG-related risks and opportunities that may impact corporate strategy and enterprise value.” 

Wendy also says that once an ESG plan is in place, companies need to “proactively engage with their stakeholders.” Regulators, institutional shareholders, and customers “are watching the response to sustainability-related risks and opportunities, and they are tracking performance against what you say you’re going to do, what you actually do, and what your peers are doing.” 

Wendy warns that “greenwashing” is also becoming a “very large risk” in the capital markets, which is why businesses need to be proactive in developing meaningful ESG governance, strategy and risk processes. 

For more information, see author Zena Olijnyk’s article, “Mandatory disclosure on ESG is necessary, but also provides opportunity: McCarthy Tétrault partner,” in Canadian Lawyer.