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.

A guide for boards and companies facing ransomware demands

Oct 25, 2021

On September 21, 2021, the U.S. Department of the Treasury announced a set of actions designed to counter ransomware, principally by discouraging ransomware payments. The Department of the Treasury’s Office of Foreign Assets Control’s (“OFAC”) for the first time designated a virtual currency exchange for facilitating financial transactions for ransomware actors. OFAC also issued an updated advisory about ransomware that, among other things, emphasized that the U.S. government continues to strongly discourage ransomware payments and strongly encourage reporting to and cooperating with government agencies in the event of an attack.

Though the Department of the Treasury’s actions do not prohibit victim companies from paying ransoms, they add another layer of complexity for victim companies deciding whether to pay. Paying a ransom carries short-term and long-term consequences, carries legal and regulatory risk, as highlighted by the Department of the Treasury’s recent actions, and could shape the outlook and reputation of a company for years to come.

Review the guide on Milbank General Counsel'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.

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.

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.

Climate risk panel remarks by OSFI Assistant Superintendent, Mr. Ben Gully, at the C.D. Howe Institute

Jan 28, 2021

On January 28, 2021, OSFI Assistant Superintendent, Mr. Ben Gully, made relevant climate risk remarks as a Canadian financial services regulator during the recent C.D. Howe Institute panel discussion.

Mr. Gully noted that, for OSFI, there is a wide range of possible scenarios to consider when assessing the impact of climate change on financial institutions’ safety and soundness and in setting the appropriate prudential response. When confronted by change on the horizon, OSFI looks to the severe but plausible outcomes, collects information to inform its analysis and risk assessment, and then uses regulation and supervision to preserve financial institution resilience.

He noted that, by definition, the sound management of climate-related risks fits clearly within OSFI’s objectives. As a result, OSFI is taking a number of actions to look more deeply at the prudential impact of climate change in terms of physical, liability and transition risks. In this regard, he noted that transition risks are particularly significant for Canada given its endowment of carbon-intensive commodities and their importance to the Canadian economy.

In recognizing that OSFI does not have all of the answers, he noted that OSFI plans to advance its work through cooperating with domestic and international organizations. By working with others, OSFI will gain a better understanding of what may be appropriate in the Canadian context.

To that end, OSFI has released a Discussion Paper regarding climate-related risks on January 11, 2021. The Paper focuses on risks arising from climate change that can affect the safety and soundness of federally regulated financial institutions (FRFIs) and federally regulated pension plans (FRPPs). Comments are requested by April 12, 2021.

See a com­plete copy of Mr. Gully’s remarks at the C.D. Howe Institute panel discussion which are posted on OSFI'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.

Corporations Canada consulting on proposed corporate governance and disclosure regulations

Jan 29, 2021

On January 29, 2021, Corporations Canada published a consultation on regulatory proposals to implement the corporate governance amendments included in the Canada Business Corporations Act (CBCA) through Bill C-97 (CBCA).

The consultation includes proposals with respect to the regulations necessary to implement an annual say on pay advisory vote for shareholders, the disclosure required for reporting on both clawback policies and on worker, retiree and pensioner “well-being”. CCGG was a strong advocate for the inclusion of an annual non-binding say on pay vote in the CBCA and Corporations Canada cites CCGG’s advocacy in favour of clawbacks as one of its rationales for the increased prominence of such policies in corporate governance best practice. CCGG is reviewing the consultation and intends to submit a response by the March 31, 2021 deadline.

Review the consultation on the Government of Canada's website.

COSO issues guidance on Enterprise Risk Management for Cloud Computing

Jul 29, 2021

On July 29, 2021, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued "Enterprise Risk Management for Cloud Computing", which serves as a guide to establishing cloud computing governance leveraging the COSO’s frameworks on internal control (2013) and enterprise risk management (2017).

Review the publication on the COSO'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.

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.