New guide helps Canadian directors of retail companies to oversee and manage climate risks and opportunities

February 25, 2022
Canada Climate Law Initiative

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


“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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