The Social Investment Organization has called on the Ontario government to introduce a wide-ranging set of reforms to enhance governance and disclosure on social and environmental issues.

The SIO made the recommendations in a brief to the Finance and Economic Affairs Committee of the Ontario legislature, which is holding hearings into the five year review of the Ontario Securities Act.

The SIO argued that the current system is based on the outmoded view that social and environmental issues are not material to the needs of investors.

“Environmental problems, human rights controversies, product liability issues, employee concerns and other reputational issues all hold the potential to create share price discounts over the short-term and into the future,” states the brief.

“Likewise, companies that implement sustainability policies, codes of conduct, employee benefits programs and other corporate citizenship practices are more likely to identify market and production opportunities in the future.”

“Our view of corporate governance is that social and environmental risk is a significant, yet largely unrecognized, factor in determining share value. Because of this, new regulations are needed to require corporations to disclose their social and environmental policies and risks.”

The brief calls for enhanced disclosure requirements on social and environmental issues and a new legal liability system that would enable investors to sue companies on the basis of their continuous disclosure statements.

  As well, the brief calls for rules making Codes of Ethics mandatory for publicly-listed companies. The Codes would include mandatory statements of social and environmental issues. If a company chooses not to include such statements, they would have to explain why.

The brief also calls for a national securities regulator, arguing that Canada needs a national system of regulation and enforcement to keep pace with other jurisdictions in the world that are developing social and environmental disclosure and governance rules. Only a national regulator would have the expertise and resources to develop such a system in Canada, argues the SIO.

For more information, visit  http://www.socialinvestment.ca/Policy&Advocacy/FiveYearReview.pdf.