In Turbulent Times, What’s Next For ESG?

By: Alexa Young, VP of Government and Public Affairs, BC Council of Forest Industries

We live in an uncertain world.

Across the globe, the pandemic, conflict, inflation and supply chain disruptions have upended where and from who customers get their products from and created fears about not having access to the things we all need to live, work and stay connected. That includes everything from the food that nourishes us and the energy that keeps the lights on, to the critical minerals that go into our smart phones and the lumber we build our homes with.

With anxieties high, many are asking – does ESG still matter?

Is investing in and buying things from companies that perform well environmentally, socially and from a governance perspective still relevant? Should corporate leaders and the Boards of resource companies continue to care?

If you have the long-game in mind, the answer is yes – and here’s why.

One. People rightfully expect responsibility. More and more consumers are demanding products that are good for people and the planet. Many investors want to put their dollars behind companies that are walking the talk on ESG. And governments, including our biggest trading partners like the U.S., are driving to net zero.

Delivering on these expectations – despite challenging times – is not just the right thing to do to show corporate values transcend good times and bad, it’s the smart thing to do in the long-term. Planning for ESG risks, opportunities and associated costs strengthens certainty and the ability to weather stormy times. Like we’ve seen with carbon pricing – many corporate leaders have come to embrace the idea of a well-designed price because, when done right, they see value in having a clearer expectation of what costs they’ll face over time. Similarly, accepting ESG as a consistent corporate priority elevates the discussion above day-to-day politics and rhetoric, allowing all to plan better.

Two. What Millennials and Gen-Zers care about matters as the world’s future consumers, investors, voters, talent and leaders. Responsibility is what they think about when they vote, pick a job and decide where to spend their money. They care about the future and see issues like climate change as existential threats that require action – challenging times or not.

Indeed, Deloitte’s 2021 Millennial and Gen Z Survey, found that climate change remained a top concern throughout the pandemic. Nearly half said they’ve chosen to work for organizations that reflect their values, and more than a quarter said businesses’ environmental impact has influenced what they buy.

Three. Tough times present opportunity to be a part of the solution. For instance, there’s acknowledgment from green finance leaders like Mark Carney – who’s leading the US $130 trillion Financial Alliance for Net Zero – that the transition from fossil fuels won’t happen overnight and requires multiple pathways. That means delivering on climate objectives by enabling clean energy growth, while also recognizing supply challenges need practical solutions – including accepting that some sustainably-produced oil, LNG and other sources will also be part of the mix. To ensure a global supply that’s responsibly produced, Canada should be the supplier of choice, while remaining focused on the transition to renewables.

What’s next and how can we maximize Canada’s leadership role?

Celebrate and tell the world what Canada does well.

Canada leads the world in providing sustainably-produced metals, minerals, energy and forest products – products people need are produced with world-class regulatory oversight, and, in places like B.C. where hydro-electricity is abundant, have a low-carbon advantage. The implementation of the UN Declaration on the Rights of Indigenous Peoples will only further strengthen how shared decisions are made with respect to natural resources.

This is globally leading stuff and we should be focused on telling the world we’re the partner of choice using a Team B.C. and Team Canada approach.

Always look to be better. Digital technology will be key.

While we do lots really well, we also need to recognize we’re not perfect and remain committed to continuously innovating to do things more sustainably.

That requires investing in, scaling up and commercializing data-driven tech like augmented and virtual reality, machine-to-machine learning and the Internet of Things. These new and evolving technologies will continue to help us collect and analyze data about how our operations interact with water, land, forests and air. They will help us understand the land base we’re operating on, how much energy we’re using and emissions we’re emitting. They are also going to enable governments, companies, Indigenous Peoples and communities to better share information and make decisions.

At the Supercluster, for instance, this work is already happening through the Earth X-ray for Low-Impact Mining Project, the Forest Machine Connectivity Project, the Mining Microbiome Analytics Platform, the Satellite-Based Environmental Analytics Project and more.

And we can’t forget about how digital technology – like Blockchain  could improve how companies collect and report out on ESG performance on everything from GHG emissions to community investment – particularly as global reporting frameworks increasingly get standardized.

Help Canada rise to the occasion.

Whether it’s considering adopting new tools and tech to become more energy efficient or to diversify into new products, like renewables – companies must make long-term and capital-intensive investments that require them to plan well into the future. Encouraging these investments through smart, fact-based policy and regulation will be critical.

And we need to level the playing field. It’s important to give small and medium sized businesses who don’t have the resources or capacity the tools they need to succeed in a quickly evolving ESG landscape.

Here’s the good news.

While the ESG road ahead will have lots of twists and turns, we’ve got a solid foundation to work from in Canada.

We’ve got great people, a track record of responsible resource development and a continuous improvement mindset. Now we must maximize Canada’s leadership through renewed corporate commitment. Initiatives like Canada’s Global Innovation Clusters and Net Zero Accelerator, along with B.C.’s newly announced ESG Centre of Excellence, can also be vehicles for this critical work.

So let’s keep up the momentum and work together to show the world what we’re made of, and more importantly, demonstrate to the next generation that we, too – care.