January 11, 2022
New guide helps Canadian directors of retail companies to oversee and manage climate risks and opportunities
11 January 2022, Vancouver – The Canada Climate Law Initiative (CCLI) is releasing a new guide for directors and officers of Canadian retail companies titled Retail’s Route to Net-zero Emissions: The Canadian Retail Sector and Effective Climate Governance. Authored by Dr. Janis Sarra, Professor of Law at the University of British Columbia and Principal Co-Investigator of the CCLI, the guide provides an accessible summary of the legal duties of retail directors and officers in the transition to a net-zero economy. It offers examples of best practices in climate governance as well as a checklist of issues the board should be considering in its governance and risk oversight and strategic planning.
The retail sector is a significant contributor to Canada’s economy, with total annual revenues exceeding CA$636 billion. It is also a significant contributor to greenhouse gas emissions, estimated at 10.5% of Canada’s total emissions if one includes warehousing and distribution. About 95% of retail emissions are Scope 2 and 3, the indirect emissions from the generation of purchased energy, and all indirect emissions occurring in the retail value chain.
As a result of these emissions, retailers face significant transition risks due to changes in policy, emerging technologies that impact competitiveness, market risks regarding access to capital, and shifting consumer and other key stakeholder preferences. They also face increasing regulatory requirements to lower carbon footprints, engage in effective waste management, eliminate single-use plastics, and develop ethical supply chains.
“Both investor and consumer preferences are changing”, observes Dr. Sarra, “Millennials and Gen Z are speaking with their purchasing dollars, voicing serious concern about climate change, and investors are demanding greater transparency regarding the carbon footprint of retail products and services as they make investment decisions. Effective oversight of climate risks and opportunities is therefore critically important to the retail sector.”
The massive shift to online retail, accelerated during the pandemic, is also requiring new technologies for marketing and distribution of goods, raising challenges for retailers’ carbon footprints.
The necessity for directors and officers of retail companies to address swiftly these new risks and challenges is increasingly important. As stewards of governance, they have a legal duty to be proactive and to critically evaluate and address the material financial risks and opportunities associated with climate change. There are various opportunities for retailers in the transition to a net-zero economy such as energy efficiency measures, moving to circular economy operations, taking advantage of rapidly developing in-store and online digital technologies, and more. Climate initiatives and governance can reinforce a retailer’s strategic position and reputation and support its financial goals and competitive advantage.
“This Guide offers important assistance to retail companies in identifying and managing key climate-related risks and opportunities and will serve as an important resource to investors in their consideration of investments in this sector,” says Catherine McCall, Executive Director, Canadian Coalition for Good Governance.
About the Canada Climate Law Initiative
The Canada Climate Law Initiative (CCLI) is an interdisciplinary research initiative that advances the understanding of climate governance across Canada through research, dialogue, and knowledge sharing. CCLI conducts rigorous legal analysis and consults with a national network of 67 Canadian Climate Governance Experts to bring up-to-date governance knowledge and tools to corporate and pension boards across Canada. CCLI is led by three principal investigators, Dr. Janis Sarra and Dr. Carol Liao from the Peter A. Allard School of Law, University of British Columbia, and Professor Cynthia Williams from the Osgoode Hall Law School, York University.
CCLI acknowledges that the UBC Point Grey campus is situated on the traditional, ancestral and unceded territory of the xʷməθkʷəy̓əm (Musqueam).
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