Trade has never been so sexy.

At least, that’s what Minister of International Trade Maninder Sindhu said at our Future of Business Summit in April. And it’s true — trade is a hot topic these days, with the conversation typically revolving around trade with the U.S., particularly as it relates to CUSMA and trade diversification.

The “Fourth Option”

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Historically, Canada has faced three trade options:

1. Relying heavily on trade with the U.S.
2. Deeper integration with the U.S. through agreements like NAFTA/CUSMA
3. Diversifying trade beyond the U.S. 

But there is a fourth option.

We share a continent with the U.S. and over the decades have massively — and intentionally — integrated our economy with theirs.

• 2.6 million Canadian jobs are supported by exports to the United States, and 1.4 million American jobs are supported by exports to Canada.
• Over 63% of Canada’s exports to the U.S. and around 50% of America’s exports to Canada are intermediate inputs — goods used to produce other goods.
• Over half of the total value of exports from Canada to the U.S. is between related companies.

Which is why the fourth option is the yes/and trade scenario. Yes, we want to maintain U.S. market access — because, though it may not feel like it right now, the relationship with the U.S. continues to be overwhelmingly good for workers, consumers and North American competitiveness — and we want to expand trade with non-U.S. markets.

This is why the Canadian Chamber organizes international, business-led trade missions to the U.S. and markets around the world. In 2025, we led six business missions to the U.S., England, and South Africa. In 2026, we’ve already gone to Mexico and the U.S., but we’re also heading to Belgium, Japan and France later this year.

Yes: Trade with the U.S.

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While we won’t be cutting ourselves off from the U.S. market, we can and should acknowledge that we are in new situation that involves managing the strategic risk of continuing and even deepening our relationship with the U.S. 

CUSMA

CUSMA took effect in March 2020, replacing the North American Free Trade Agreement (NAFTA). It’s up for review in July at which time the three countries will decide whether to extend it for a new 16-year term. If they choose not to, there will be a review every year until the Agreement terminates in 2036.

The July 1 deadline has been spoken of as if it were some magical turning point, but the truth is nothing effectively changes. A vast majority of goods and services remain under CUSMA’s low-to-no tariff rates — utilization of CUSMA remains at a 20-year high with 83% of goods exports claiming CUSMA preferences this year already.

The Americans have been signaling for a while that they aren’t expecting to see an agreement or an extension by July 1. Even so, the negotiation work to get a deal that keeps or modernizes the existing one continues.

While moving into monthly or annual reviews won’t provide the much needed and desired certainty for businesses, the agreement will still be in place unless one of the three participating countries legally withdraws. Such a withdrawal requires that the country provide written notice to the other parties. The withdrawal takes effect six months after the written notice is provided.

Bolstering Canada’s Economy

At the same time as we continue our trade with the U.S., we should also bolster our own economy in ways that are not dependent on our relationship with our Southern neighbour. Integral to that is significantly increasing our overall appeal as a place to do business so that we can better attract international investment, keep domestic investment at home, and be a competitive player on the global stage.

And: Trade diversification 

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Trade diversification is about building economic resilience. Businesses know that you can’t survive long with just one customer. By expanding the markets we trade with, Canadian businesses will have more options when things get rocky in certain regions.

Canada has 15 free trade agreements that give us preferential access to 51 countries, representing 1.5 billion consumers and 61% of global GDP. Governments may sign the free trade deals, but it truly is up to business to turn them from paper into prosperity.

As we were reminded at our first Future of Business Summit in April, trade diversification is a multi-year journey that Canadian businesses need to start on today.

Canada’s trade diversification story so far

At the national level, exports to the U.S. declined between 2024 and 2025, while exports to the rest of the world sharply increased. On the surface, this looks like a meaningful shift toward diversification, but the underlying structure of Canada’s trade economy is changing less than the headline suggests.

The findings from our Business Data Lab’s Q1 2026Business Insights Quarterly reveal that in the past 12 months, only 3% of businesses have diversified their sales outside of the U.S. In response to U.S. tariffs on Canadian exports, most businesses are taking no action (62%) or raising prices (13%).

Export growth outside the U.S. is being driven primarily by existing exporters trading more, not by more businesses trading internationally.

Much of the growth in trade outside of the U.S. is concentrated in a handful of Census Metropolitan Areas (CMAs), including…

• Calgary with almost 65% net new non-U.S. export growth (2024 to 2025).
• Ottawa-Gatineau with around 64% net new growth.
• Toronto and Saskatoon with over 32% net new growth.

Diversification is happening, but it’s generally happening within a concentrated group of firms and cities.

The role of SMEs

Canada’s diversification challenge is not just about market access or geography — many of the traditional barriers to exporting like distance, logistics and scale are becoming less restrictive — but also about helping more businesses see global growth as achievable and increasingly necessary.

As reported in BDL’s “Pivot or Peril: Are Canadian Cities Diversifying or Doubling Down on America?”, if Canada wants diversification to be structural, more firms — especially SMEs — need to participate in global trade.

Roughly 90% of non-exporting SMEs still describe their operations as “local” in nature, even though many may produce goods or services with international potential.

Learn more

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Now, more than ever, it’s essential to double down on collaboration and global partnerships. Learn about our upcoming business-led missions by visiting our International Missions page.

Visit Export Development Canada’s website for helpful resources on growing your business internationally.  

This blog was provided by ATB Financial, Member, Western Executive Council

There’s a train getting ready to leave the station. And in the words of Fatih Birol, Executive Director of the International Energy Agency, “the cost of missing this train will be incredible.”

Those words were shared at the Canada Growth Summit on May 7, 2026. Weeks later, Prime Minister Mark Carney and Alberta Premier Danielle Smith announced a major policy breakthrough at a joint press conference. The landmark MOU between Alberta and Canada—which ultimately lays the groundwork for a West Coast Pipeline—had officially cleared its biggest hurdle yet, with both parties agreeing on an industrial carbon pricing trajectory that will reach $130 per tonne by 2035.

This step towards regulatory certainty arrives at a key moment for industry. Pressure is mounting for safe, reliable energy from stable nations like Canada. Ongoing geopolitical shifts mean supply-chain risks will likely keep energy prices elevated for years to come. Capitalizing on this disruption gives the Carney Government a critical window to fulfill its most ambitious goals: stimulating a trillion-dollar capital infusion within five years, doubling global trade outside the United States by the mid-2030s, and solidifying Canada as a preeminent global energy leader.

Still punching our ticket

While the carbon pricing agreement is a vital step forward, a signed memorandum does not equal steel in the ground. The reality is that the West Coast pipeline remains conditional on a complex web of regulatory and industrial moving parts:

• The Stalled Pathways Deal: Prime Minister Carney has made it clear that the pipeline is strictly contingent on the progress of the Pathways Carbon Capture and Storage (CCS) project. While Ottawa and Alberta reaffirmed their support, a crucial trilateral agreement with the energy industry, originally planned for April 1, has yet to be signed.
• The Regulatory Clock: To secure the powerful “project of national interest” status under the Building Canada Act by the government’s October 1, 2026 deadline, several major conditions must be met—most notably, achieving sufficient and meaningful consultation with Indigenous communities.
• Timeline vs. Forecasts: The government’s ambitious target of a September 2027 start date applies healthy pressure to get a deal done. However, economic forecasters are holding their breath. Until a final investment decision (FID) is reached and an official corporate proponent steps forward, these numbers cannot yet be factored into growth projections.

But if federal, provincial, and Indigenous partners can collaborate with the energy sector to move through these hurdles, the economic payoff will be massive.

Unlocking the bottleneck

As global demand for energy supply safe havens grows, the ability for Canadian energy producers to meet that demand remains constrained. While the industry currently enjoys a window of spare capacity to Pacific markets following the TMX expansion, a survey conducted in Spring 2026 by ATB Cormark Capital Markets found that 67% of energy industry respondents now expect Canada to face crude export constraints before 2029—a sharp increase from the 51% reported in Fall 2025.

The stakes for resolving these bottlenecks are significant. A recent joint study by ATB Economics and Studio.Energy, The GDP Payoff of Additional Oil Pipeline Capacity, concluded that expanding Canada’s oil export infrastructure by 1.5 million barrels per day could inject an average of $31.4 billion into national real GDP annually over the next decade—representing a vital 1.1% structural boost to the economy. The report also estimates the buildout will support an average of 112,000 additional jobs in Canada.

At a time when Canada’s political decision-makers are looking for ways to reverse stalling national output and move past a decade-long struggle to raise per capita GDP, Canada’s energy sector offers us our ticket to ride.

On June 4, business leaders from across Canada gathered at The Ritz-Carlton, Toronto for an evening of connection, celebration and recognition as part of the 2026 Canadian Business Leader Awards Dinner Series.

Together, attendees paid tribute to two remarkable Canadian business leaders whose vision, dedication and impact have helped shape their industries and strengthen Canada’s business community.

This year’s Toronto honourees included:

Throughout the evening, guests reflected on the importance of strong and forward-looking leadership during a pivotal moment for Canada’s economy. Conversations centred on resilience, innovation and the role Canadian businesses continue to play in strengthening the country’s competitiveness both at home and abroad.

Our President and CEO, Candace Laing, delivered opening remarks, welcoming guests and highlighting the importance of recognizing leaders whose work continues to inspire progress across Canada’s business community.

Remarks from both honourees emphasized the value of investing in people, embracing innovation and creating opportunities for future generations of Canadian business leaders. Their reflections reinforced a shared sense of optimism about Canada’s economic future and the importance of bold, long-term leadership.

The evening also featured entertainment from the Supersonic Hearts Band, a talented local group that has become a beloved fixture of the Toronto awards dinner over the years, helping bring energy and celebration to the evening.

The event provided an opportunity for leaders from across sectors to connect and celebrate the accomplishments of this year’s recipients alongside colleagues, partners and members of the Canadian business community.

We would like to extend a special thank you to The Ritz-Carlton, Toronto and all of our event sponsors for their support in making the evening possible.

As published in the Hill Times, an English-only outlet.

Since 1946, the United States has relied on the National Petroleum Council to provide advice to the secretary of energy on issues affecting the country’s energy future. Its membership includes leaders from industry, Indigenous and environmental organizations, academia, labour, finance, and research institutions. The purpose is not to allow industry to dictate policy, but to ensure governments are making decisions with access to operational expertise, investment realities, and long-term strategic insight.

Canada has no equivalent institution, despite energy and mining representing some of the country’s most strategically important sectors.

Canada’s energy and mining sectors are foundational to the national economy and increasingly strategic in a more unstable world. Together, they contribute approximately $399 billion to Canada’s GDP — about 14% of the economy — and support well over 1.4 million jobs. These sectors drive prosperity across the country, and supply resources essential to modern economies.

Recent years show Canada’s energy and mining sectors are strategically vital beyond economics. As geopolitical competition grows, their importance to secure supply chains and Canada’s long-term prosperity and resilience will continue to increase.

Prime Minister Mark Carney has correctly identified that Canada must expand its economic reach, while simultaneously strengthening competitiveness at home. The establishment of the Advisory Committee on Canada–U.S. Economic Relations reflects an important recognition that effective policymaking requires deeper collaboration with the private sector and with the industries operating on the ground. If it’s good enough to support our Canada-U.S.-Mexico Agreement review process, why not apply the same principle to the historic challenge of powering a brighter future?

Canada possesses many of the advantages required to become a global energy and resource powerhouse: abundant natural resources, access to three oceans, deep technical expertise, world-class companies, and a highly skilled workforce. Yet, despite these advantages, we continue to struggle with slow project development, fragmented permitting systems, intergovernmental misalignment, and declining investor confidence.

These challenges require not only an unprecedented level of co-ordination between federal, provincial, territorial and municipal governments, but also an unprecedented level of collaboration between governments and industry. Industry is ready to step up. Indigenous communities are also increasingly seeking meaningful participation and equity ownership in major projects. What remains missing is a formal structure capable of bringing these perspectives together consistently and strategically.

A Canadian Resources Advisory Council could help fill that gap.

The exact structure, membership size, mandate duration, governance framework, reporting obligations, and composition of such a body can all be worked out through consultation. The objective is not to replicate the American system exactly, nor is it to create another layer of bureaucracy. It is to formalize collaboration in sectors where delays, policy uncertainty, and strategic misalignment are becoming increasingly costly.

There are legitimate concerns that any advisory body could be perceived as government favouritism, or an attempt to pick winners and losers. Those risks should be acknowledged directly and addressed through transparent governance, balanced representation, and clear mandates. But refusing to institutionalize collaboration because of those risks would ignore a larger reality: major nation-building objectives cannot be achieved if governments and industries operate in silos, making key decisions independently from one another. Moving with speed increasingly requires moving in lockstep.

The American example demonstrates the practical value of this type of collaboration. In late 2025, the National Petroleum Council released a report examining how permitting delays and regulatory fragmentation were slowing energy infrastructure development in the U.S. The report offered concrete recommendations to improve interagency co-ordination, streamline approvals and reduce unnecessary duplication in project reviews that are now actively informing discussions around American infrastructure competitiveness and industrial strategy.

Canada would benefit from a similar forum capable of identifying bottlenecks before they become crises, and helping policymakers understand the real-world consequences of regulatory and investment decisions.

Ottawa has already taken meaningful steps through initiatives such as the Major Projects Office and the “One Project, One Review” initiative. These efforts have also reflected sustained, co-ordinated calls from industry that we have been hearing for years. However, they do not fully address the absence of a permanent, structured mechanism through which industry and the federal government can jointly assess long- term strategic priorities and emerging risks.

The stakes are becoming too high for fragmented policymaking. Canada does not need governments and industry to agree on everything. It does, however, need them working at the same table.

Bryan Detchou, Senior Director, Natural Resources, Environment and Sustainability, Canadian Chamber of Commerce

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Visit the Energy Security Council and Critical Minerals Council to learn more about the Canadian Chamber’s advocacy.

On June 2, our Executive Vice President and Chief of Public Policy, Matthew Holmes, and our Senior Vice President, International Policy & Global Partnerships, Catherine Fortin Lefaivre, appeared before the House of Commons Standing Committee on International Trade to discuss Canada’s approach to the forthcoming review of the Canada-United States-Mexico Agreement (CUSMA).

They emphasized that CUSMA remains the foundation of Canada’s economic relationship with its largest trading partners, with utilization at a 20-year high and approximately 85% of Canadian goods continuing to move tariff-free across the Canada-U.S. border.

The Canadian Chamber’s message was clear: Canada should prioritize the continuity of the agreement, strengthen North American competitiveness and economic security, and work toward reducing trade barriers, including Section 232 tariffs that continue to impact Canadian businesses.

At the same time, Canada must continue pursuing strategic trade diversification opportunities around the world, ensuring Canadian businesses have the tools and support they need to succeed in both North American and global markets.

As published in the Hill Times, an English-only outlet.

Canada’s clean advantage is not adequately discussed, even when the opportunity could not be more apparent.

The closure of the Strait of Hormuz has brought renewed momentum and urgency to discussions around conventional and clean energy. On one hand, it calls on countries rich in oil and gas, like Canada, to step up and support allies overdependent on Middle-Eastern energy. On the other hand, it has strengthened the case for clean energy to lower exposure to external supply disruptions and bolster energy security. Unlike many countries, Canada can respond to both.

We have the potential to simultaneously position ourselves as a reliable supplier of conventional energy, and as a global leader in the technologies that will advance the future energy system. That dual capability is an enormous strategic asset.

We are the fourth largest producer of crude oil, the fifth largest producer of natural gas, and the fourth largest producer of renewable energy in the world. We are also the third largest exporter of electricity, with around 80% of the electricity we produce coming from clean energy. That is an attractive feature to many global partners — especially Europe, but also south of the border. New England has been eyeing the immense wind energy potential of Atlantic Canada for many years.

Atlantic Canada is home to the highest tides on earth in the Bay of Fundy, and to wind speeds that rival the North Sea. Whereas offshore wind farms in the North Sea have been powering grids in Europe for more than 25 years, not a single offshore wind farm has been deployed in Canada to this day. Our track record with tidal power is no better. Projects have come and gone, and turbines have been installed without ever producing energy. The passage has been characterized by endless regulatory processes and a lack of investment leading to technical, financial, and execution failures — and even bankruptcies. Yet, the La Rance Tidal Power Station has been supplying electricity to France since the late 1960s and the Sihwa Lake Tidal Power Plant in South Korea has been functioning since 2011. Countries with fewer options and less energy potential have been spearheading clean energy infrastructure development, even as we repeatedly fail to reach the execution stage. 

Recent government efforts on permitting and regulatory reform are important and deserve recognition, but success depends on whether we can build at the speed the moment demands. Though much of the discussion has focused on pipelines, these reforms are just as critical for clean energy projects like offshore wind, tidal power, geothermal, transmission, hydrogen, carbon management, and small modular reactors.

Exporting clean technologies and infrastructure would create high-value jobs, expand this country’s industrial base, increase GDP, and reinforce long-term competitiveness in sectors expected to grow substantially over the coming decades.

Today, with two major global energy crises in the span of four years, Canada’s stability has become a competitive advantage, and the government must marshal all resources to capitalize on the opportunity. Canada can help meet the needs of allies seeking to diversify away from unstable suppliers and secure affordable low-carbon energy sources while strengthening our own economy. Equally important is preserving our first-mover advantage from technologies like small modular reactors to carbon management to much more. In carbon direct removal alone, Canada — with our 78 active companies and enormous geological storage capacity — is well-positioned to capture a share of a global market projected to exceed $1 trillion USD by 2050. Helping other countries decarbonize their grids and industrial systems would amplify this country’s contribution to global emissions reductions far beyond our domestic footprint.

Rather than treating conventional and clean energy as competing priorities, Canada should recognize that both are central to establishing ourselves as a true energy superpower capable of delivering energy security, economic growth and emissions reductions simultaneously.

We won’t just do this in one fell swoop with one innovation. It’s going to take coordination and determination across the board. Canada must also take a more strategic approach to supporting its clean energy industry by attracting foreign direct investment, strengthening domestic supply chains, and helping Canadian firms scale globally. In particular, small- and medium-sized companies developing promising technologies need support to move beyond pilot projects into large-scale deployment and exports.

We can do it and cement it as our national advantage — but will we do it in time before the next crisis emerges?

Bryan Detchou, Senior Director, Natural Resources, Environment and Sustainability, Canadian Chamber of Commerce

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Visit the Decarbonization & Clean Technology Council to learn more about the Canadian Chamber’s advocacy.

Environmental, social and governance (ESG) concerns have been increasingly on the radar of Canadian companies in the past few years, garnering significant attention and discourse. The factors that have created the greatest liability risks to date represent the “E” in ESG and, in particular, risks related to climate change disclosures and allegations of “greenwashing” – the concept of conveying a false impression or providing misleading information about how an organization is environmentally sound, or has a greater positive environmental impact than it actually does. With increased regulatory enforcement and a growing concern and activism relating to environmental issues, litigation risk is increasing for Canadian companies and their directors and officers.

Regulatory Focus on Greenwashing

ESG enforcement is on the rise. Over the past year, the Competition Bureau of Canada (the Bureau) opened several greenwashing inquiries prompted by environmental groups. In November 2022, for example, the Bureau opened an inquiry into the alleged deceptive marketing practices of a Canadian natural gas association. This was prompted by a formal complaint filed by a group of doctors, nurses and public health advocates, supported by an environmental group, under provisions of the Competition Act that require the Bureau to initiate an inquiry where six Canadian residents file an application alleging contraventions of that statute.^[1] As a result of the complaint, the Bureau will be seeking to determine whether the association’s representations in an advertising campaign in respect of natural gas being “clean” and affordable were false and misleading.^[2]

A few months earlier, in September 2022, the Bureau had opened an inquiry into a bank’s environmental representations based on a similar complaint from six individuals supported by environmental groups.Of all organizations, banks may be particularly exposed to ESG risk as their potential role in funding industries with a higher carbon footprint puts them in a unique position when making climate-related representations. Among other things, the complainants argued that the bank’s continued financing of certain energy projects made its representations with respect to being a climate leader materially false or misleading. The complainants contrasted public statements made by the bank detailing its support of the Paris Agreement’s net-zero by 2050 goals, and that it would provide billions toward sustainable financing by 2025, against its funding of such projects.^[3]

More recently, on March 16, 2023, Greenpeace Canada filed a further “six resident” complaint with the Bureau alleging that an advertising campaign by an alliance of Canada’s largest oil sands producers involved false and misleading representations with respect to the producers’ net zero commitments.^[4] Among other things, the complaint takes issue with the producers’ emissions accounting, expanding production levels and claims regarding carbon capture and storage technology. If the Bureau were to accept the complaint’s allegations and pursue further action following an inquiry, a potential penalty in the millions or even billions of dollars could be pursued following recent increases in maximum penalties under the Competition Act.^[5]

The outcome of Bureau inquiries in these cases could potentially change how Canadian organizations, financial institutions and industry organizations discuss their environmental and climate initiatives. In the meantime, the rise in greenwashing complaints underscores the growing scrutiny ESG commitments are facing in the current environment.

Ready, Set, Class-Action

There is precedent for public enforcement around ESG issues to be followed by class-actions premised on the same conduct or allegations pursued by the relevant regulator. This is likely to become an increasingly prominent trend into the future, given the increased regulatory enforcement and oversight that is emerging in this area globally and in Canada.

For instance, in January 2022, the Competition Bureau reached a settlement agreement in a “greenwashing” case in which a coffee pod company paid a CA$3 million penalty following a Bureau investigation into the company’s claims that its single-use coffee pods were recyclable.^[6] These claims were determined to be false and misleading on the basis that they created the impression the pods were easily recyclable despite consumers often needing to take additional steps to properly recycle the pods. The Bureau also found the company’s claims to be false or misleading due to the pods not being accepted in most Canadian cities’ recycling programs.

Although the Bureau matter came to a close in 2022, a year later, a Canada-wide class-action lawsuit was filed in Court against the company on behalf of individuals who had purchased its single-use pods. Canada is not the only jurisdiction where this company faced a class-action; this same company has been fighting class-actions with class members in the United States (one of which it resolved by paying US$31 million into a settlement fund).^[7]In the Canadian class-action, class members are claiming damages under the Competition Act based on allegations the company knowingly made false or misleading representations that the coffee pods were environmentally friendly and recyclable, while also claiming damages under the Consumer Protection Act on the basis that the representations constituted an “unfair practice.”^[8] The class members argue that the Bureau’s settlement did not compensate the purchasers of the single-use pods and related machines.

Funding of class-actions around environmental issues appears to be top of mind for various stakeholders, including municipalities. In July 2022, the City of Vancouver voted to allocate nearly CA$700,000 in funds toward a future potential class-action lawsuit against energy companies in Canada.^[9] This vote followed a “Sue Big Oil” campaign initiated by environmental groups to encourage municipalities to use class-actions to recover alleged costs borne by them in connection with climate-related repairs, adaptation and mitigation.^[10] However, as of March 2023, the litigation funding was apparently not included in the City’s operating budget, nor added in as an expenditure.^[11] The future of this funding remains unclear as various council members appear to believe that such funding should instead be considered at the provincial and federal government-levels or obtained through private fundraising.

Things Are Getting Personal – Directors and Officers Exposed

In addition to ESG claims at the corporate level, directors and officers of corporations must also be aware of the increased risk of ESG-related liability and public accountability. Directors and officers may be named as defendants in actions in tort, securities class-actions, as well as in regulatory investigations related to their duties in relation to harm caused to the environment by the organization. They may also be engaged by a regulator to implement company-wide changes. For instance, to resolve the Bureau’s inquiry into its marketing of coffee pods, the senior leadership of the coffee pod company signed personal commitment letters to the Bureau under which they agreed to implement, monitor and report on a corporate compliance program to promote compliance with the deceptive marketing and other provisions of the Competition Act.^[12]

However, the biggest ESG litigation risk for directors and officers may be claims brought against them under corporate law statutes. Such claims arise from concepts relating to duties of fairness and acting in the best interests of the corporation and can take the form of derivative actions against a company’s officers and directors in their personal capacities. These are litigation claims in which any company stakeholder – shareholders, debt holders, directors or creditors – claims against a corporation’s management, board of directors or controlling shareholders, typically alleging breach of a fiduciary duty, conflict of interest, fraud, breach of the duty of care or mismanagement. The procedure for derivative actions stems from the corporate statute under which the corporation is incorporated, such as the Canada Business Corporations Act or its provincial counterparts.

Any directors or officers make decisions that may intentionally or unintentionally lead to failure to meet environmental and climate-related responsibilities must pay attention. Under the Canada Business Corporations Act, directors and officers in Canada are subject to a fiduciary duty of loyalty, in that they must act honestly and in good faith with a view to the best interests of the corporation, as well as a duty of care, in that they must exercise the care, diligence and skill that a reasonably prudent individual would exercise in comparable circumstances. Similar duties exist in the provincial business corporations legislation across Canada. As these duties are comparable to those being cited in various derivative complaints in the United States and the UK, Canadian directors and officers could be subject to similar proceedings taken against them with respect to allegations of ESG-related actions or inactions of the companies they serve.   

Derivative actions against directors and officers related to ESG issues have been common in the United States. For example, a board of directors of one of the largest international energy companies has faced several class-action derivative complaints alleging a failure to mitigate the anticipated impacts of climate change on the company’s long-term business prospects, and alleging that it has been misleading shareholders on these issues, providing investors with materially misleading descriptions of the company’s efforts to account for climate change-related risks associated with the company’s assets. These proceedings are still ongoing.

In a first-of-its-kind case filed in the UK on February 9, 2023, an environmental charity commenced a derivative action against 11 members of the board of directors of an oil and gas company for failing to adopt and implement a climate strategy that aligns with the Paris Agreement goals, and for breaching its duties under sections 172 and 174 of the UK Companies Act.^[13] The claim is supported by institutional investors of the company worldwide. The charity alleges that the net emissions reductions expected by the company do not comply with the 2021 order of the Dutch Court to implement a 45% reduction in group-wide emissions by the end of this decade.^[14] This alleged failure to comply with the Dutch Court’s judgment (which is currently under appeal) is argued to also be a breach of the company’s corporate law duties. The claim seeks an order for the board of directors to adopt a strategy to manage climate risk in line with its duties under the Companies Act, and in compliance with the Dutch Court judgment. Currently, it is up to the High Court of Justice in the United Kingdom to determine whether to grant the charity permission to bring the claim. This case may pave the way for future claims against directors and officers from a wider class of potential stakeholders.

Mandatory ESG Reporting Creates Risk

Similar to voluntary statements and claims made by Canadian organizations, enforcement and litigation premised on allegedly false ESG claims or misrepresentations can arise from publicly listed organizations’ mandatory disclosure requirements. Whenever companies are required to disclose material information, there is a concomitant risk of litigation with respect to any misrepresentation related to that information. This can be an untrue statement of material fact, or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made.

ESG will become even more important as organizations get ready to comply with formal reporting requirements around environmental issues. The Canadian Securities Administrators (CSA) announced in spring 2021 that new climate-related disclosure requirements were to be implemented in Canada due to an increase in investors’ focus on climate-related risks, and to align Canada with foreign markets to streamline disclosure obligations. National Instrument 51-107 develops mandatory ESG disclosure for federally regulated financial institutions aligned with the Task Force on Climate-Related Financial Disclosures framework.^[15] It requires issuers to disclose four types of climate-related information beginning in 2024, including information regarding management of climate-related risks and opportunities, strategies and risk management of climate risks, as well as disclosing metrics used to assess climate-related risks and targets to be implemented by the company. This instrument also requires issuers to disclose greenhouse gas emissions, or provide an explanation as to why an issuer has chosen not to disclose this information, as well as disclose the reporting standard used for these calculations. This is part of a global change; the International Sustainability Standards Board (ISSB) climate-related disclosure standard is likely to be finalized in 2023 and we have previously written about the importance of the ISSB’s work to the development of the CSA’s Climate Disclosure Proposals. It is expected that ESG litigation, particularly as related to securities disclosure, will start gaining momentum quickly in this area once mandatory standards are formally in place.

What about “S” and “G?”

As ESG-related priorities continue to expand beyond just the “E”, social and governance-related disputes may also become more common in the coming years. Legislative action targeting modern slavery, such as Canada’s proposed Bill S-211: An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff, as well as increased scrutiny on supply chain due diligence, is gaining attention and will, in turn, lead to further reporting and disclosure requirements with respect to company practices.^[16] Bill S-211, if passed, would require every reporting entity to report the steps it has taken to prevent and reduce the risk that forced labour or child labour is used at any step of the production of goods in Canada or elsewhere by the entity, or of goods imported into Canada by the entity. The board of directors of these entities must approve this report while upholding their fiduciary duties and the expected standard of care under corporate law. Increased disclosure in these areas will give stakeholders the opportunity to address discrepancies between what companies disclose, and the actions taken, both through recourse against the company as well as its directors and officers.

Other social factors can include industry health and safety standards, as well as human capital management and access. Governance could refer to corporate governance and behaviour, including ethics, corruption, transparency, anti-competitive practice, corporate sustainability and board diversity. Social and governance-related ESG litigation has also been increasing, examples of which include claims of a lack of diversity on the boards of directors of certain major US technology companies,^[17] as well as the proposed class-action filed by civil service employees in Canada accusing the federal government of systemic racism, discrimination and employee exclusion.^[18]

Where Does This Leave Us?

Canadian organizations, as well as their directors and officers, should now be well aware that stakeholders, regulators and consumers expect ESG considerations to be fully integrated across Canadian organizations’ operations, and that failing to meet such expectations with measurable, verifiable and complete actions is increasingly likely to lead to regulatory action, enforcement or litigation. As this pressure increases, organizations must adapt to the dynamic risks associated with ESG, as well as implement the strategies required to manage these risks. Practically speaking, organizations must be prepared for potential liability by working to provide proper training and meaningful response protocols to ESG-related complaints, and they must review insurance policies applicable to the company, and its directors and officers, in order to know whether ESG related claims will be covered.

For more information on this topic, please contact the authors Dina Awad and Kate Wiltse.

This piece was originally published on dentons.com

To read other articles in the Dentons’ pick of Canadian Regulatory Trends to Watch in 2023 series, click here.

Stay up-to-date with all insights and guidance from our Regulatory team by visiting our Canada Regulatory Review blog here and signing up for future alerts here.

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[1] Competition Act, RSC 1985, c C-34, ss 9, 10(1)(a).

[2] Competition Bureau, Letter dated November 4, 2022, online: https://cape.ca/wp-content/uploads/2022/11/DCPalumbo-Letter-2022-11-04-CB-to-CAPE.pdf.

[3] Competition Bureau Letter dated September 29, 2022, online: https://ecojustice.ca/wp-content/uploads/2022/10/2022-09-29-Notice-of-Inquiry-Commencement-RBC-complaint-to-Competition-Bureau.pdf. 

[4] Greenpeace, ““Let’s clear the air”: Greenpeace Canada launches complaint against oil sands alliance for misleading advertising campaign” (March 16, 2023), online: https://www.greenpeace.org/canada/en/press-release/57725/lets-clear-the-air-greenpeace-canada-launches-complaint-against-oil-sands-alliance-for-misleading-advertising-campaign/.

[5] Previously, the Competition Act provided for penalties under the deceptive marketing provisions of up to $10 million for corporations on a first violation. In June 2022, amendments increased that penalty to the higher of $10 million, three times the benefit received from the deceptive conduct or, if that amount cannot be reasonably determined, 3% of worldwide gross revenues.  See Competition Act, RSC 1985, c C-34, 74.1(1)(c)(ii).

[6] Government of Canada, Keurig Canada to pay $3 million penalty to settle Competition Bureau’s concerns over coffee pod recycling claims (Jan 6, 2022), online: https://www.canada.ca/en/competition-bureau/news/2022/01/keurig-canada-to-pay-3-million-penalty-to-settle-competition-bureaus-concerns-over-coffee-pod-recycling-claims.html.

[7] Keurig Indirect Purchasers Antitrust Settlement, https://www.keurigindirectpurchasersettlement.com/

[8] Tyr LLP, Keurig (2023), online: https://tyrllp.com/keurig-class-action.html.

[9] CBC News, “Vancouver city council passes motion to back climate lawsuit against big oil companies” (July 21, 2022), online: https://www.cbc.ca/news/canada/british-columbia/vancouver-council-motion-climate-change-oil-companies-1.6528285.

[10] City of Vancouver, Report to Council, Standing Committee of Council on Policy and Strategic Priorities (20 July 2022) at 9-10, online: https://council.vancouver.ca/20220720/documents/pspc20220720min.pdf.

[11] Daily Hive, “Vancouver City Council rejects funding for lawsuit against oil firms” (March 1, 2023), online: https://dailyhive.com/vancouver/sue-big-oil-lawsuit-vancouver-funding-rejection.

[12] See Registered Consent Agreement – Keurig Canada Inc., Competition Tribunal File No CT-2022-001 at paras 11–12 and Appendix D, online: https://decisions.ct-tc.gc.ca/ct-tc/cdo/en/item/518827/index.do.  

[13] Sabin Center for Climate Change Law, “The Fiduciary Duty of Directors to Manage Climate Risk: An expansion of corporate liability through litigation?” (Feb 15, 2023), online: https://blogs.law.columbia.edu/climatechange/2023/02/15/the-fiduciary-duty-of-directors-to-manage-climate-risk-an-expansion-of-corporate-liability-through-litigation/.

[14] Hague District Court Judgment (May 26, 2021), online: http://climatecasechart.com/wp-content/uploads/sites/16/non-us-case-documents/2021/20210526_8918_judgment-1.pdf.

[15] CSA, “Consultation Climate-related Disclosure Update and CSA Notice and Request for Comment Proposed National Instrument 51-107 Disclosure of Climate-related Matters” (Oct 18, 2021), online: https://www.osc.ca/sites/default/files/2021-10/csa_20211018_51-107_disclosure-update.pdf.

[16] LegisInfo, Bill S-211: An Act to Enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to Amend the Customs Tariff, online: https://www.parl.ca/legisinfo/en/bill/44-1/s-211.

[17] Francesca Odell, Victor Hou and James Langston, “Shareholder complaints Seek to Hold Directors Liable for Lack of Diversity” (Auguats 11, 2020), online:  https://corpgov.law.harvard.edu/2020/08/11/shareholder-complaints-seek-to-hold-directors-liable-for-lack-of-diversity/.

[18] CBC News, “Government moves to dismiss class-action suit filed by Black civil service employees” (October 4, 2022), online: https://www.cbc.ca/news/politics/government-motion-dismiss-class-action-black-public-employees-1.6606217.

As published in iPolitics, an English-only outlet.

Four in five Canadians polled early this year told Angus Reid that they are more fearful than hopeful. After the overwhelming and exhausting year we’ve had, can you blame them? Our national courage and confidence have been truly tested.

When I started as CEO of the Canadian Chamber in 2024, my first speeches highlighted Boston Consulting Group research that Canadians did not see how their well-being was served by a healthy economy. Today, you could ask almost any Canadian and they would tell you exactly how economic uncertainty is impacting their daily life. When businesses struggle, it doesn’t take long for communities to struggle too.

Our Business Data Lab — an expert team of economists and data scientists — rank the present business outlook as “challenging” in most areas tracked. Their BDL Nowcast expects a contraction in Canada’s real GDP quarterly growth.

From turbulent global trade to seismic technological change to elevated global and local security concerns, the era of permacrisis has brought unparalleled levels of disruption through the doors of businesses. And these compounding challenges are not dissipating as new ones emerge.

What can businesses — especially small ones — do when they are faced daily with these problems that are impacting their hiring, productivity and scaling?

How will they generate the economic activity that our public services depend on? How are business leaders to react when presented with such a bleak outlook?

They know they cannot go it alone. The collective ability of business leaders to move in the right direction when everything seems to be going wrong is increasingly central to our security and way of life.

The success of our businesses, our economy and of Canadians are one and the same. Businesses on Main Street as much as Bay Street are who Canadians are depending on.

Even more difficult in contending with a country-wide shift is the fact that conversations are subdivided into sectors, regions and those of similar scale.

Our silos make for effective short-term organizing units but do not set us up for cross-cutting collaboration.

Thankfully, unity and partnership are the DNA of organizations like ours.

We as businesses and institutions are expected to pivot, and pivot fast, all the while showing resilience and stability despite the mounting pressures.

And we are stepping up.

Across the country, businesses, and the associations and chambers that support them, are acting as problem-solvers. They are tackling issues like addiction, crime and homelessness, and helping safeguard consumers against cyber threats. The grassroots problem-solving happening in communities across Canada must now scale to our national and global context.

The Canadian Chamber may not be a business in the traditional sense, but we are an employer and we represent hundreds of thousands of other employers across the country. And we have one advantage that many others do not — a unique ability to convene a national conversation on what we should do next.

This was the thinking behind our first Future of Business Summit this week, which bring together all our members and partners across the country like never before. We are putting hundreds of entrepreneurs, business leaders and community-minded leaders in a room to do more than hear speakers but to engage on the challenges of our times in the spirit of business agency.

The global economic upheaval and the more local stressors are not for governments alone to steer us through. Governments play a significant role and will do their best, but public policy is not enough. Government counts on the private sector to do a significant amount of the legwork.

Every Canadian recognizes they are in a pivotal moment. From the smallest business to the C-suite, every business leader conversely feels challenged to be a part of this change. Nation building, community building and business building all go hand in hand.

Because business leaders cannot just ignore challenges. Not when those challenges come through their front door. And they have to be courageous to not only stay open but to seek to resolve the issues facing them and their neighbours.

Starting at inception, creating a business is an act of courage because it involves taking on risk. Businesses struggle with the goals of opening, hiring, stabilizing, growing and growing again. When you walk through a community and see healthy businesses, it almost always corresponds with a thriving community. That’s no coincidence.

When businesses are hit by things out of their control — like pandemics or recessions or global conflicts — their impulse is to lean in, not duck. In this difficult moment for our economy, we can unapologetically say that business leadership matters — and it matters more than ever.

The path forward is courage, collaboration and shared purpose — among Canadians, government and business. And we’ll find that purpose by first acknowledging that the future of business success is the future of Canada.

Candace Laing, President and CEO, Canadian Chamber of Commerce

Following the Canadian Chamber of Commerce’s Canadian Project Assessment Forum in Calgary, members of the Canadian Chamber participated in a site visit to the facilities of Deep Sky, Co-Chairs of the Canadian Chamber’s Decarbonization & Clean Technology Council.

Located in Innisfail, Alberta, Deep Sky Alpha is the world’s first carbon removal innovation and commercialization centre dedicated exclusively to advancing, testing and scaling Direct Air Capture (DAC) technologies. The facility serves as a collaborative platform where leading innovators from around the globe can validate and deploy their DAC solutions under real-world conditions.

By bringing together multiple technology pathways in a single location, Deep Sky Alpha aims to accelerate the development and commercialization of carbon removal solutions capable of extracting excess carbon dioxide directly from the atmosphere. The site represents an important step in building Canada’s leadership in carbon management and clean technology innovation while supporting global efforts to achieve net-zero emissions and address climate change.

To learn more about Deep Sky Alpha.

The full photo gallery can be found here.

As published in the Hill Times, an English-only outlet.

Imagine you run a Canadian services company, and you want to participate in this country’s new and growing defence industry. One day, a federal procurement opportunity appears: ‘The military is seeking approximately 10 contractors over two years to augment its internal operations.’ How long do you think that request for proposal (RFP) is?

Did you guess 83 pages?

Not 83 pages including appendices and supporting material, but 83 pages before bidders even begin reviewing the additional online requirements, mandatory criteria, and legal conditions attached to the process. A typical industry response to such an RFP will often exceed 100 pages. If 15 companies submit bids, government officials may ultimately review and score more than 1,500 pages of technical material before hiring 10 contractors on an as-needed basis, most of whom are from vendors already pre-qualified to work with the Government of Canada.

What company actually has the time, personnel, and expertise to prepare a 100-page proposal for a relatively modest contract opportunity while simultaneously running day-to-day operations and pursuing other business? For many firms, but particularly for the small firms (with fewer than 100 employees) that make up 98% of all businesses, the answer is they don’t.

Building relationships and obtaining the clearances necessary to participate in federal defence procurement can already take years. Once eligible, companies often spend weeks — sometimes months — preparing highly technical submissions that require specialized procurement expertise, legal review, and dedicated staff resources with no guarantee of success. Those costs do not disappear. They are ultimately absorbed somewhere in the system, including in the prices the government pays for goods and services on other contracts.

After a proposal is submitted, companies can wait months for a decision, and months more before work begins. For innovative Canadian firms attempting to enter the defence sector, that uncertainty and administrative burden can be prohibitive. Many organizations, big and small, will decide the process is not worth pursuing.

At the same time, the government faces its own resource challenge. Public servants at Public Services and Procurement Canada must review, validate, and score thousands of pages of submissions, often for relatively small procurements. The process consumes enormous administrative capacity on both sides while delaying the delivery of services and capabilities the Canadian Armed Forces (CAF) need.

As the new Defence Investment Agency is getting underway, it is critical to start on the right foot, and not overlook opportunities to streamline the purchasing process used for the vast majority of CAF contracts. It is these contracts where the wider Canadian industry can really make a difference.

At the Canadian Chamber of Commerce, with almost 200,000 members across our entire national network, we’re hearing about these challenges in real time. We are also hearing clear examples of our procurement system that is narrowing — rather than expanding — the pool of capable bidders.

Time is also of the essence. Thank heavens the government is using budget-enabling legislation to stand up the Defence Investment Agency. This once-in-a-generation opportunity to broaden defence sector participation across communities in virtually every region of the country is mutually beneficial for the sector and the CAF. However, we risk squandering it if we continue to use procurement structures and systems designed for another era. We have a short window to get this right, and we applaud the government for using every tool in its toolbox to move prudently and efficiently to achieve that objective.

Of course, we are not here to just howl at the moon. Some answers are relatively straightforward, for example: Introducing separate standard boilerplate terms and conditions from project-specific requirements, reducing the size and complexity of RFPs. Don’t require extensive reassessments of vendors that have already undergone lengthy qualifications. Adjust the risk profile of assessments to focus on the company, rather than its resources for smaller projects. Let’s set page limits, commit to decision in 30 days, and commit further to a clear date when the project will get underway. With these, and many other long-discussed changes, Canadian defence procurement will become attractive to a much wider group of homegrown companies.

Our allies have this right. From south of the border to Europe and beyond, the defence industry is seen a regional economic driver, growing virtually every community, leveraging small, medium, and large-sized businesses. Canada needs to replicate this democratized system, solidifying a healthy and vibrant defence sector that is not at the whims of the political winds of the day. Without meaningful reform and thinking from the perspective of the businesses living this maze-like procurement process, Canada risks missing this massive opportunity.

David Pierce, Vice President, Government Relations, Canadian Chamber of Commerce

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Visit the Defence & Security Committee to learn more about the Canadian Chamber’s advocacy.