Luania Gomez-Gutierrez, Assistant Professor in the Department of Accounting Sciences at HEC Montréal, led a jury made up of students. The latter were asked to comment on the disclosure practices of Canadian companies for the 7th edition of the FM-FSI Award for Best Sustainable Development Report. Their evaluation highlighted the excellence of TC Transcontinental and Nutrien in reporting on environmental, social and governance (ESG) criteria.
Methodology and results
By imagining the perspective of investors with no expertise on the subject, the students used an analysis grid which proposes to attribute 30 bonus points to the best responsible investment performances, in addition to the 105 main points.
“Those companies that stand out most use the Global Reporting Initiative (GRI) to write their social responsibility reports,” says Gomez-Gutierrez. “Nutrien particularly impressed us as they very often scored A and A+.”
Another finding was that the ESG requirements of the various stakeholders are sometimes contradictory, thereby undermining corporate transparency. “Winning companies have turned ESG into a competitive advantage,” says Gomez-Gutierrez. “They have put in place strategies that are as useful for the environment as they are for society, in addition to being profitable from an economic point of view. This becomes possible by incorporating environmental and social issues into corporate governance.”
Also, the relevance of the information presented in the Sustainable Development Report (SDR) was discussed. The students determined that beyond concrete elements, such as environmental fines and provisions for ESG risks and litigation, the tone adopted has an undeniable impact.
“In addition to allowing readers to predict future gains and confirm past gains, the best SDRs appeal to the emotions of investors by saying: ‘See how good we are at doing things’. Do you want to invest in our project?,” says Gomez-Gutierrez. “This latitude in content and form reveals the more human side of companies, although there is a danger that the reports may more serve promotional purposes than accountability.”
A Competition for the Next Generation
Imane Chafry, a B.A.A Accounting graduate, notes that the Competition complements quite well the notions they were taught. “We studied accounting for greenhouse gas (GHG) emissions and decontamination data, but looking at the plans developed for sustainable development gave context to it all,” she says.
The Competition also allows students to meet managers who can become good role models. “Specialized professions in responsible investment are meaningful and it is very rewarding to participate in the creation of a better world,” says Ms. Gomez-Gutierrez.
In collaboration with two colleagues, she aims to further integrate sustainable development into the undergraduate and graduate accounting curriculum. As early as 2021, they plan to create a course that could make use of the Competition’s evaluation grid for the practical implementation of the concepts taught. “I would like students to see, in concrete terms, that there are people who want to invest in companies with social and environmental priorities,” she says.
She also believes that the academic community and financial institutions must team up to better plan their orientations and offer tomorrow’s professionals new specialties in responsible and sustainable finance and social and environmental accounting.
Indeed, while young accountants like Imane Chafry are noticing career options in sustainable investment and are interested in green accounting theories, the positions offered are still rather new. “From my third year at university, I started thinking about a career in sustainability reporting, but I don’t yet know what role I will play as an accountant,” she says. This is a world to discover for new graduates.
TC Transcontinental: materiality at the heart of the company’s strategies
A leader in flexible packaging in North America, Canada’s largest printer and the leading Canadian French-language educational publishing group, TC Transcontinental won the award for Best SDR in the Services category as it was completing a pivotal year in which it chose to review some of its objectives.
In response to the realities affecting its new lines of business, the company conducted a major analysis in 2018. Surveying approximately 1,500 employees, investors, customers, suppliers and environmental groups on 24 ESG topics, TC Transcontinental drew up a materiality matrix to determine the themes, targets and indicators for its 2019-2021 strategy.
“Since TC Transcontinental is a manufacturing company, many of our objectives are related to our operations and to our use of resources,” said Charles David Mathieu-Poulin, Senior Advisor – Circular Economy.
Although the calculation of the various indicators for its 44 business units is a time-consuming task, the company pays due attention to it. “We report GHG emissions data through the Carbon Disclosure Project (CDP),” says Mathieu-Poulin. “We are also thinking about integrating requirements of the Task Force on Climate-related Financial Disclosures (TCFD) and the Sustainability Accounting Standards Board (SASB) in our future reporting.”
TC Transcontinental sees its paper and plastic procurement as an opportunity to play an active role in creating a circular economy for plastics and to positively influence forest management practices. In March 2019, TC Transcontinental became the first Canadian manufacturer to join the Ellen MacArthur Foundation’s New Plastics Economy Global Commitment. To this end, the company is committed to ensuring that 100% of its plastic packaging is compostable, recyclable or reusable by 2025. It also commits to achieving a weighted average usage rate of 10% post-consumer recycled content for all plastic in its product portfolio.
In February, the Corporation also created a Recycling group within TC Transcontinental Packaging to transform flexible plastics recovered from sorting centres and other commercial, industrial and agricultural sources into recycled plastic granules. As a matter of fact, the Company’s first acquisition to that effect was announced a few days ago.
Make way for women
Moreover, gender diversity is very important at TC Transcontinental. “Isabelle Marcoux, who is the Chair of our Board of Directors, is exercising her leadership by mobilizing the company
to ensure that women hold a prominent place,” said Mr. Mathieu-Poulin. Nearly 40% of the Board of Directors is made up of women. Three women sit on the Management Committee, and the company is aiming at 30% women among the managers of its plants and head office.
Nutrien: Supporting the development of sustainable agriculture
Elected by HEC Montréal students as one of the companies in the Resource Processing sector, Nutrien is the world’s largest provider of crop inputs, services and solutions.
In order to identify the most relevant data from an ESG perspective, Nutrien conducted research with its top 20 shareholders and looked at the risks that particularly affect the company. “We then established our set of non-financial ESG indicators and a centralized data collection process managed by teams that monitor the environmental footprint of our operations, human resources who deal with social issues, and other stakeholders who manage governance,” says Todd Coakwell, Director, Sustainability and ESG at Nutrien. A working group is currently developing an innovative analytical dashboard that will bring all this data together in a faster way.
Nutrien leverages the CDP, GRI, TCFD and SASB platforms. Some of the data disclosed for Scope 1 and Scope 2 GHG emissions are moderately assured, and the company plans to do the same for Scope 3.
Vision in Agricultural Sustainability
In the coming year, Nutrien will be announcing to its shareholders and other stakeholders a comprehensive sustainability strategy focused on climate, its most important risk factor, which is of interest to investors around the world. “We want to enhance the content of our SDR by presenting our targets for reducing emissions coming from our fertilizer production facilities, as well as the products and solutions we offer our customers to limit their carbon footprint by sequestering carbon in the soil,” says Coakwell. “We are working through a climate scenario analysis and are developing sustainable business opportunities for our business and our grower customers.”
Mr. Coakwell also believes that greater global convergence of ESG disclosure platforms must be achieved through the regulation of current standards. “This would ensure comparability and accountability for all companies,” he says.
Proud of its achievements in sustainable development and disclosure, Nutrien wishes to demonstrate that it takes ESG issues seriously. “We look forward to sharing Nutrien’s sustainability strategy and targets in the near future, and I think it will be a great time for our company and our employees to share our defining story and talk about the impact it can have on all ESG platforms and agriculture,” says Coakwell.
Mélanie Pilon, journalist for Finance Montreal’s Finance and Sustainability Initiative.