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At first glance, it looks like Canada’s biggest pension funds are laying down the law on corporate disclosure of environmental, social and governance issues.

Eight of them, representing $1.6-trillion of assets, called this week for consistent corporate reporting standards on what have become the paramount criteria used by many investors to screen the assets they buy.

This is no ragtag band of social justice warriors plotting to drag corporate Canada into an anti-capitalist utopia. The group - which includes such heavyweights as the Canada Pension Plan Investment Board, the Caisse de dépôt et placement du Québec and Ontario Teachers’ Pension Plan - is demanding the kind of consistency that’s already enforced in financial disclosure.

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But a big question remains: Just who is going to police this? The ESG reporting world is rife with various standards and recommendations by governments and regulators on how to use them.

As Canada’s biggest investors demand ways to analyze performance and risks, it is time to move beyond the Wild West, as the situation is characterized by some experts.

This will require an official, and presumably national, body to set regulations on a host of important items, from the impact of climate change on corporate health to gender and racial diversity to which executives and directors are responsible for setting and achieving targets.

So far, the depth and breadth of such disclosure is largely left up to companies themselves. As it stands, Canadian reporting lags behind the United States.

The largest corporations have sizable resources for entire departments to deal with these issues and provide mountains of disclosure on them.

Indeed, Canada’s big banks and large energy and mining companies are among those that have been lauded for placing a priority on producing deep ESG reports. Suncor Energy Inc., for example, has 25 employees dedicated to gathering data and producing its ESG report, not including numerous others spread throughout the company’s operations who contribute.

For smaller companies, it has proven to be more problematic to devote money and staff to pumping out the data in similar volume and complexity.

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If there’s one thing that’s become clear, it is companies ignore these issues at their peril. Access to capital increasingly depends on adherence to a range of standards that fall outside tried-and-true profit and loss items.

A major problem has been deciding which international standards companies should use, according to a Globe and Mail investigation into ESG reporting.

The ESG consultancy Millani found that about two-thirds of companies used what is called the Global Reporting Initiative to guide their reporting, while about one-third used a framework from the Sustainability Accounting Standards Board, or SASB. This is the guide supported by the Canadian pension fund group.

Meanwhile, the Financial Stability Board’s Task Force on Climate-related Financial Disclosures is seen as the gold standard.

It issued its first recommendations in 2017, with billionaire and former New York mayor Michael Bloomberg and former Bank of Canada and Bank of England governor Mark Carney leading the effort to arrive at consistency. The Canadian Coalition for Good Governance, a group of institutional investors, has endorsed the TCFD framework.

An Ontario government task force that reviewed the province’s capital markets recommended that that the Ontario Securities Commission mandate the disclosure of “material ESG information” in compliance with either TCFD or SASB standards.

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Meanwhile, TMX Group Ltd., which runs the Toronto Stock Exchange, has said it doesn’t want regulators to be “prescriptive” on such issues, partly to avoid the financial burden it would place on smaller companies.

Bank of Canada Governor Tiff Macklem said he supports the group of eight pension funds’ efforts, and welcomes “leadership from Canada’s financial sector.”

Yes, leadership is needed, and it should also be coming from government or regulators that can decide on a standard the financial and corporate worlds can agree on - and see that companies meet it.

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