PIAC disappointed ESG, gender diversity, say-on-pay missing from OSC proposed priorities

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sustainable development sustainability growth green economy concept environment vector © Bakhtiar Zein /123RF Stock PhotosThe Pension Investment Association of Canada has written to the Ontario Securities Commission noting its disappointment that the OSC’s proposed 2019-2020 statement of priorities didn’t include corporate governance, reporting and disclosures of environmental, social and governance risks by issuers, say-on-pay or gender diversity.

In an open letter, the PIAC noted the OSC’s latest statement of priorities was extensive and it supports the regulatory burden reduction efforts the OSC has made in the past few years. However, this reduction should not come at the expense of making moves to improve investor protections of corporate governance, ESG risk disclosure and gender diversity, it said.

“We do not see sufficient improvement here, either in regulatory guidance nor issuer behaviour, for the commission to abandon these priorities and therefore urge they be reinstated in the work plan,” the letter said.  “In regulating ESG disclosure, the OSC could reduce the burden to issuers given the many disparate disclosure frameworks that exist. The OSC should therefore develop concise regulations for ESG disclosure.”

As for gender diversity in executive officer positions and on boards, the PIAC noted the OSC has twice designated it as a priority, once in 2014 and again in 2018, and that it should remain so.

“On behalf of shareholders and investors, PIAC believes the commission should provide direction to issuers regarding its expectations for transparency regarding issuers’ practices to achieve gender equality in upper management and governance,” the letter said. It further noted that the current low numbers of women on corporate boards and in executive positions ignores the extensive pool of highly qualified women who could fill those roles.

With regard to executive compensation, the PIAC urged the OSC to include a mandatory vote on say-on-pay. “The say on pay vote is an enormously useful tool for issuers and investors to assess shareholders’ acceptance of the corporation’s approach to executive compensation and it offers an important means of communication between shareholders and issuers,” the letter said.

The PIAC emphasized its disappointment that the issue of say-on-pay remains less significant and urgent to the OSC.

Overall, the PIAC noted its support for the OSC’s priorities of promoting confidence in Ontario’s capital markets, reducing regulatory burden, facilitating financial innovation and strengthening the commission’s capabilities. It also noted support for the priorities regarding cybersecurity, development of data management analytics capabilities and strengthening the skills of the OSC workforce.

The OSC’s draft statement of priorities is open for comment until May 27 and a final statement will be published in June.

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