Governance Insights 2025 A Preview of 2025: 10 Legal Updates GCs, Boards and Investors Need to Know
As was the case in 2024, we expect that climate-related “advocacy” shareholder proposals will garner limited shareholder support in 2025. However, we expect issuers facing thoughtful and well-articulated climate-related proposals will, where appropriate, engage constructively with the proponents, in some cases resulting in formal withdrawal of these proposals. This is particularly so in light of crystalizing guidance on mandatory climate disclosure, which will allow issuers to reference a clear set of standards for disclosure that is consistent with stakeholder expectations.
ANTI-ESG SHAREHOLDER PROPOSALS
Anti-ESG proposals appeared as a small but growing trend in Canada during the 2024 proxy season, reflecting an emerging backlash against ESG and more particularly corporate D&I initiatives. A handful of these proposals came forward in Canada, including proposals requesting detailed disclosure of the costs and feasibility of decarbonisation initiatives and proposals calling for an end to D&I programs. These proposals received very low shareholder support, suggesting that at least for now the Canadian marketplace is much less receptive to anti-ESG proposals than in the United States. Despite the still-solid regulatory and political foundation for ESG corporate initiatives in Canada, issuers should ensure that they are clearly communicating the value and benefit of ESG policies to their shareholders and other stakeholders to avoid polarization and discontent, including by providing transparent and fulsome disclosure of the benefits of their ESG policies, which may address financial benefits and risk mitigation. Diversity at Canada’s Public Companies When the CSA released its first canvas of women on boards and in the executive officer ranks, 51% of TSX-listed companies had no female directors. Only 10% of companies canvassed in the CSA’s latest report do not have a female director. In its first report, the CSA recorded only 8% of Canadian reporting issuers with three or more women on their boards, whereas the 10-year review found 42% of companies having three or more female directors. The 10-year review notes that approximately 29% of all board seats at TSX-listed companies were held by women in 2024. The CSA’s 10-year report gives less space and attention to the relative under-representation of women in executive officer roles at Canadian public companies, which clearly lags progress that has been made on Canadian boards. The report indicates that only 7% of Canadian public companies have adopted targets for the appointment of female executive officers. The CSA’s findings indicate that 44% of TSX-listed mining companies still have no women in their executive officer ranks, with the industry making only a 4% improvement in the participation of women in executive officer ranks since the inaugural report was issued by the CSA 10 years ago.
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Davies | dwpv.com
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