CANADA Law and Practice Contributed by: Laura Duke, Will Shaw and Emma Russell, Lawson Lundell LLP
6. Corporate Liability 6.1 Liability for Environmental Damage or Breaches of Environmental Law Corporate entities that damage the environment or breach environmental legislation can be held liable for the harm caused. Among other things, this can include damage caused by oil spills and sewage pollu- tion, as well as breaches of regulations around wildlife, fisheries, the transportation of dangerous goods, the disposal of hazardous materials and contaminated sites. 6.2 Environmental Taxes Canada has environmental taxes in place, which are imposed on activities or products that have a nega- tive impact on the environment. They are designed to limit environmentally harmful behaviour through a price incentive, and are levied on the tax bases of energy, transportation, pollution and natural resourc- es, among other things. Examples include federal and provincial fuel consumption taxes and provincial taxes on mineral use, waste management and carbon emissions. Other provisions may allow businesses to recoup costs or receive accelerated depreciation write-offs for pollution control or energy conservation equipment and machinery. 6.3 Incentives, Exemptions and Penalties In Canada, many government programmes at both the federal and provincial levels offer incentives for companies seeking to improve their environmental performance and reduce emissions. In some cases, where compliance with new environmental obligations will require significant changes to processes or facili- ties, exemptions may be granted. 6.4 Shareholder or Parent Company Liability It is uncommon in Canada for the shareholders or the parent company of a polluting corporate entity to be held liable for the environmental damage. However, certain Canadian contaminated sites statutes contain broad liability provisions that could capture sharehold- ers or a parent company that owns, controls or man- ages a contaminated piece of property. Also, in very rare circumstances, a party or government may seek permission from the court to “pierce the corporate
veil” and sue the parent company or shareholders for actions taken by the subsidiary. 6.5 ESG Requirements At a high level, there is no blanket mandatory ESG reporting in Canada. The federal financial institution authority recently mandated climate-related report- ing for federally regulated banks and insurance com- panies, with the first reports due in 2024 and 2025 (depending on the size of the institution). Other ESG- related subjects, including corporate diversity and human rights in supply chains, are subject to manda- tory reporting in some circumstances. 6.6 Environmental Audits Environmental audits are generally not required by law in Canada, but are promoted by governments as a tool for organisations to identify compliance concerns and environmental risk. In recognition of the value of envi- ronmental audits, regulators will generally not request access to environmental audit results during the course of routine inspections, but may seek access if the regulator believes that an offence occurred. Environmental regulators may also refer to routine inspections as “compliance audits” or similar. For more detail on this type of audit, see 4. Environmen- tal Incidents and Permits . Environmental legislation often allows for pursuing personal liability against directors and officers of an organisation for environmental breaches. Penalties for environmental damage or breaches of environmental law can include: • being fined or imprisoned for the corporation’s pollution, even if the corporation has never been prosecuted or convicted; • being fined for the corporation’s failure to obtain the necessary permits or approvals, follow required environmental processes or report spills; • being prosecuted for failure to take all reasonable care to prevent the corporation from causing or permitting pollution; 7. Personal Liability 7.1 Directors and Other Officers
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