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Regulations

Bill 64 on modernizing Québec privacy law – Why it matters and how to prepare for it

Oct 14, 2021

Bill 64 sets a precedent for important reform in Canadian private sector privacy law. Organizations should prepare for the changes it brings, even if they do not consider themselves governed by the Quebec law.

Québec’s Bill 64An Act to modernize legislative provisions as regards the protection of personal information, was adopted unanimously, on September 21, 2021, receiving assent on September 22, 2021. The clock has started running to prepare for its implementation in covered organizations. While most new provisions will come into effect only two years after assent, the organizational transformation they entail is significant and will require time and resources. To comply with Bill 64, organizations must:

  1. establish data governance processes, including ones to assist individuals in exercising new privacy rights
  2. develop corporate data management policies
  3. adopt technological solutions to de-index or transfer personal information upon request; and
  4. issue internal guidelines to support staff and service providers in the implementation of the new privacy regime.

Review a summary on Dentons' website.

Why the SEC should limit its mandates on ESG disclosures

Oct 05, 2021

Mandates by the Securities and Exchange Commission (SEC) requiring disclosures on environmental, social, and governance (ESG) compliance should be limited to matters that directly affect the cash flows of firms, according to a statement released last week by the Financial Economists Roundtable (FER), a worldwide group of 50 senior financial economists including Wharton professors.

According to the group, the SEC should refrain from measuring the broader societal impacts of ESG compliance by listed firms because those matters are outside the regulator’s areas of expertise. “While several members of FER expressed concerns over lack of progress on environmental and social issues, the group agreed the costs of the SEC mandating these kinds of disclosures could be substantial and the potential gains would likely be slight,” said Richard Herring, Wharton professor of international banking and professor of finance, who is one of the 30 signatories to the FER statement.

Review the article on Wharton's website.

COSO Releases New Guidance: Realize the Full Potential of Artificial Intelligence

Sep 30, 2021

​Recognizing the accelerating need to identify and manage the risks of Artificial Intelligence (AI) effectively, the Committee of Sponsoring Organizations of the Treadway Commission (COSO), in collaboration with Deloitte, has issued “Realize the Full Potential of Artificial Intelligence.”

This new guidance leverages the principles from COSO’s Enterprise Risk Management (ERM) – Integrating with Strategy and Performance Framework (2017), and serves as a guide to help organizations align risk management with strategy and execution of their AI initiatives.

The project, commissioned by COSO and co-authored by Deloitte, focuses on the need for organizations to design and implement governance, risk management, and oversight strategies and structures to realize the potential of humans collaborating with AI.

Review the press release and publication on COSO's website.

Canadian Centre for Policy Alternatives releases report highlighting increased executive officer compensation during Covid

Sep 30, 2021

The Canadian Centre for Policy Alternatives (CCPA) released its report "Boundless Bonuses: Skyrocketing Executive Pay During the Pandemic", which reviewed Named Executive Officers compensation for 209 publicly traded companies on the TSX Composite Index.

Executives across these companies are paid through multifaceted compensation programs where “salary” is typically the smallest component of overall pay. Beyond salaries and pensions, the rest of their pay is generally made up of “pay for performance” bonuses, which is hypothetically based on how the company is doing. The performance measures differ by company but can include revenue, profit or stock price goals and they can also include things like low workplace deaths and how much employees like working for a company.

They found many executive officers in Canada actively benefited from the pandemic—either because their companies were on the right side of COVID-19 and made a profit from it or because their bonus formulas were changed.

For the Canadian Coalition for Good Governance's (CCGG) ongoing engagement and policy priority with respect to the use of non-GAAP measures in executive compensation was the observed practice of excluding poor financial results from determinations of executive compensation or “adjusting away the impacts of the pandemic”.  While expressly not impugning the practice of the use of non-GAAP measures in executive compensation, since releasing its position paper in late 2019, CCGG has been incorporating discussions of their use by boards during engagements, advocating for greater oversight and transparency as to how boards consider and implement adjustments for the purposes of compensation, paying particular attention to patterns of only “adjusting away” financial measures with negative performance implications.

Review the press release and report on the CCPA's website.

A seat at the table: Worker voice and the new corporate boardroom

Sep 30, 2021

Perhaps more than any time in the last forty years, the needs and interests of workers now occupy the attention of corporate directors, CEOs and investors. Whether the focus is on wages, worker health & safety or diversity, equity & inclusion, the year 2020 elevated a wide range of worker interests and concerns, and opened up new conversations about how our modern economy treats workers. American corporate governance has been forced to survey a new frontier.

While boards are discussing worker-related issues more today, they still rely on indirect channels of information like employee engagement surveys and the opinions of senior executives. Absent direct worker engagement, it is difficult to know whether boards are having the right conversations to address worker concerns and receive worker insight about business operations.

These trends reveal an opportunity to strengthen America’s corporate governance system. Currently, that system is poorly designed to address worker interests. Workers have no formal role in American corporate governance. CEOs, board directors and investors are far removed from the tens of millions who work at the front lines of business. Worker insights rarely inform board-level decisions and the risks shouldered by workers are too often undervalued. The result is wasted potential that if captured, could benefit companies, workers, and society as a whole.

Review the publication on the Aspen Institute's website.

A Guest Expert’s Guide to SASB Standards

Sep 16, 2021

The Sustainability Accounting Standards Board (SASB) published an eight-step guide to the SASB standards disclosure process. The guide was created to explain how one does practically accomplish releasing an initial SASB standards disclosure.

Review the press release and publication on the SASB's website.

What do investors want to understand about risks, uncertainties, opportunities and scenarios?

Sep 10, 2021

In September 2021, the UK Financial Reporting Council’s Financial Reporting Lab published a report seeking to bridge the gap between the information that users want and that companies provide.

The report addresses four broad areas. First, investors want to understand governance and processes, with regard to how the board and management identify, monitor and manage the risks, uncertainties and opportunities they face. The report then considers reporting needs relating to both the nature of these factors, in terms of characteristics such as context, importance and form, and approach, or how management is responding. Finally, it looks at scenarios and stress-testing and what investors want from them. A particularly helpful aspect of the report is the inclusion of a number of examples of current reporting practice from real companies, highlighting what is useful about them. A one-page summary and a discussion podcast are also both available.

Review the press release and publication on the FRC's website.

IFAC urges stakeholders to prepare now for global sustainability standards

Sep 09, 2021

On September 9, 2021, the International Federation of Accountants (IFAC) published a framework for implementing global sustainability standards at the local level, focusing on the building blocks approach published in May 2021. IFAC believes that jurisdictions must begin examining how global standards that the International Sustainability Standards Board (ISSB) intends to develop, starting with climate, can fit together with sustainability-related reporting requirements set at the jurisdictional level.

IOSCO’s Sustainability-related Issuer Disclosures report proposes a timeline for the ongoing work of the IFRS Foundation–with the ISSB climate standard expected to be completed by June 2022. Jurisdictions that begin engaging with policymakers now will be able to capitalize on the forthcoming standards–and therefore serve the public interest–as soon as they are finalized.

IFAC urges its member organizations to continue their support for the IFRS initiative, to engage now with local policymakers, and to provide feedback on the framework for making global sustainability standards local.

Review the following on the IFAC's website:

Corporate Reporting: Climate change information and the 2021 reporting cycle

Sep 07, 2021

On September 7, 2021, the International Federation of Accountants (IFAC) issued a statement to the Global Accountancy Profession on "Corporate Reporting: Climate Change Information and the 2021 Reporting Cycle". In response to significantly increasing investor demand and regulatory attention on climate-related reporting, this is a call to action to professional accountants to play an active role now in determining the way climate change information is reported in the 2021 reporting cycle and beyond. The increased involvement of accountants and auditors in climate-related reporting will help to bring investors greater transparency and insights on the financial impacts of climate change on organizations.

The Statement highlights the current information concerns of investors, regulators and policy makers, reviews standard-setter responses, and recommends how companies and accountants can address these concerns through: 

  • Aligning and integrating climate-related information and disclosures with company climate commitments, targets, and strategic decisions. 
  • Quantifying, wherever appropriate, financial impacts of climate issues. 
  • Ensuring climate-related reporting complies with reporting requirements without material omissions or misstatements, based on a company-specific materiality determination. 
  • Supporting global initiatives to enhance climate and broader sustainability-related reporting through standards set by a new International Sustainability Standards Board (ISSB) that will address material impacts on a company’s enterprise value. 

IFAC encourages professional accountancy organizations to utilize this Statement in their communications with members to promote their critical role in ensuring companies understand and communicate climate-related financial impacts. As they stated in earlier communications to the profession: no one is better equipped than professional accountants to lead this important work. 

This Statement follows IFAC’s Climate Action Point of View, issued in December 2019, which highlights climate change as an urgent, global issue and outlines the influence and responsibility that IFAC’s 180 member organizations and their 3.5 million professional accountant members have in driving climate change mitigation, adaptation and reporting. With this Statement, IFAC continues to advocate and support the profession’s role in enabling climate action and assisting organizations as they develop their climate commitments and consider ways to decarbonize business models.

Review the publication on IFAC's website.

S&P 500 and ESG reporting

Sep 07, 2021

The Center for Audit Quality (CAQ) published an analysis of S&P 500 ESG reporting.

Here are some key takeaways:

  • CAQ looked at the most recent publicly available ESG data for S&P 500 companies.
  • We found that 95% of S&P 500 companies had detailed ESG information publicly available. The information the CAQ examined was primarily outside of an SEC submission in a standalone ESG, sustainability, corporate responsibility, or similar report. Of the remaining 5%, most companies published some high-level policy information on their website.
  • Roughly 6% of S&P 500 companies received assurance from a public company auditing firm over some of their ESG information.

Review the publication on the CAQ's website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.