CANADA Trends and Developments Contributed by: Bill Gilliland, Dentons Canada LLP
ful assessment of a board’s skills and competencies. Glass Lewis’s analyses of director elections at large- cap TSX index companies include board skills matri - ces to assist in assessing a board’s competencies and identifying potential skills gaps. Where the disclosure of an issuer in the S&P/TSX 60 Index is not sufficient to allow for a meaningful assessment of the key skills and experience of incumbent directors and board nominees, Glass Lewis will consider recommending voting against the chair of the nominating committee, or its equivalent. Glass Lewis may also issue a negative voting recom - mendation in respect of the chair of the governance committee, or the most senior member of the com - mittee in the absence of the chair, if the governance committee did not meet during the year in review. ISS has clarified that former CEOs of a TSX-listed issuer will be deemed non-independent unless there are exceptional circumstances to reassess this clas - sification after a minimum cooling-off period of five years. ISS will continue to recommend against any director who has served as a former CEO and is a member of the audit or compensation committee unless ISS classifies such director as independent fol - lowing the cooling-off period. This recommendation also applies to a director who has served as a CFO within the past three years. Preparing for Mandatory Climate-Related Disclosure – Governance Changes for Public Corporations On 18 October 2021, the CSA published a proposed National Instrument 51-107 – Disclosure of Climate- related Matters and its proposed Companion Policy 51-107CP (together, the Climate Disclosure Propos - als) for comment. The Climate Disclosure Proposals would require dis - closure based on the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), including governance, strategy, risk manage - ment, and metrics and targets. In preparing to comply with the new requirements, corporations and boards should be taking the follow - ing steps:
• Boards of directors should expressly establish oversight of the climate-related risks and opportu - nities of the issuer. • Boards of directors should expressly task manage - ment with responsibility for assessing and manag - ing climate-related risks and opportunities. • Boards of directors should consider board commit - tee roles in the review and assessment of climate- related risks. • Boards of directors should specifically consider the role of the audit committee in the review and assessment of climate-related risks and opportuni - ties. • Boards of directors should be aware that the Cli - mate Disclosure Proposals require climate-related disclosure to be contained in documents that by law must specifically be reviewed and approved by the board (namely, the corporation’s annual information form or AIF, management proxy circular and, in some cases, the management’s discussion and analysis or MD&A). • Boards of directors will need to assess the materi - ality of climate-related risks and opportunities. • Boards of directors should consider the need for scenario analysis as contemplated within the TCFD recommendations. • Boards of directors will need to consider the annual timing of preparation of an issuer’s climate-related disclosure. Since the CSA’s Proposed Climate Disclosure Propos - als, the International Sustainability Standards Board (ISSB) has issued a climate-related disclosure stand - ard as well as a general standard for sustainability- related financial information (ISSB Standards). The Canadian Sustainability Standards Board (CSSB) has also issued its climate-related disclosure standard and general sustainability standard (CSSB Standards), which are substantively the same as the ISSB Stand - ards except for a few transitional matters relating to Scope 3 emissions, quantitative scenario analysis and the general timing of disclosure. The ISSB Standards and the CSSB Standards are voluntary standards. Following the release of the CSSB Standards, the CSA announced that it would continue to work toward a revised climate-related disclosure rule and would con -
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