Investors could benefit from disclosure standards for Canadian companies around the issue of ensuring human rights in global supply chains, according to a new report from Vancouver-based Shareholder Association for Research & Education (SHARE) issued on Thursday that examines supply chain transparency legislation around the world.
Corporate reporting transparency in Canada is currently voluntary and inconsistent and the Canadian government has not mandated reporting, or provided consistent guidelines, the report says: "The lack of domestically legislated supply chain disclosure means Canadian investors have difficulty comparing Canadian public equity investments with global competitors and/or privately-held competitors within Canada."
Companies are exposed to a variety of risks stemming from concerns about the protection of human rights within their global supply chains, including reputational, operational and legal risks, which is key information for investors too, the report notes.
SHARE's report examines best practices in supply chain reporting from other jurisdictions and makes recommendations for Canada, including that a reporting regime should be consistent, but flexible; that it should be publicly accessible; updated annually and certified by top management; and that there should be mechanisms to ensure compliance.
"A regulatory framework for supply chain transparency reporting ensures consistency and comparability between the information provided by each company in a sector," says Delaney Greig, an analyst with SHARE and co-author of the report, in a statement. "Reporting requirements should help companies to approach supply chain due diligence in a way that ensures efforts are effective and transparent while allowing companies flexibility to do what is best for their situation."
SHARE reports it's engaging with companies, policymakers, institutional investors and others about the emergence of supply chain transparency legislation and its implications for Canada. It's also addressing these concerns for its clients through proxy voting, shareholder engagement and filing shareholder proposals with Canadian and international companies.
"At the end of the day, investors want assurance that poor human rights practices, and the associated legal, reputational and operational risks are being identified and addressed," Greig says.
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