11 - Green but Not Enough

Summary

Canadian law adopts the corporate social responsibility model of environmental sustainability. This represents a weak sustainability approach, where environmental sustainability is justified only if there is a net positive impact on a company’s long-term financial performance. Corporate law constraints, such as the duties of loyalty and care, and the oppression remedy, have not traditionally required corporations to consider sustainability. However, courts have begun to move the common law in that direction, expanding the duty owed by the board of directors from shareholders to the corporation as a whole, including a consideration of stakeholder interests. Meanwhile, securities regulators have begun requiring environmental disclosure. Institutional investors, such as pension funds, have adopted climate change policies, and shareholder proposals regularly address environmental sustainability, although both tend to adopt a weak sustainability approach. Overall, under Canadian law, environmental sustainability appears to be important only insofar as it impacts the financial performance of companies.