Director Responsibility for Climate Risk Management

Kristyn Annis:

I think that the disclosure requirements will fundamentally change the way boards approach climate change for three reasons. So firstly, all their proposed regulations really focus on governance. And then secondly, the effect of having to disclose information and publicly file documents will actually force boards to look at climate change in a much more serious way if they haven't already. And then where the disclosure is required to be made per the new proposed regulations is also important.

Narrator:

Welcome to Accounting for the Future, a BDO Canada podcast for financial leaders to navigate change and achieve business growth. We'll uncover the challenges financial leaders may not have dealt with yesterday but will definitely have to manage for the future.

Armand Capisciolto:

Hello and welcome to Accounting for the Future. I am your host, Armand Capisciolto, BDO Canada's National Accounting Standards partner and leader of Accounting Advisory Services. On today's episode, I'm joined by Kristyn Annis, a corporate and commercial lawyer at BLG, specialising in energy and climate change. Kristyn, welcome to Accounting for the Future.

Kristyn Annis:

Thank you, Armand. It's good to be here.

Armand Capisciolto:

Yeah. So, you and I have chatted quite a bit on this topic. We co-authored a short little publication together on sustainability reporting, and we appeared on another podcast as co-guests talking about what's happening in the area of sustainability reporting. What I wanted to do today was something a little bit different and just talk about director responsibility for climate risk management and talk about it regardless of what happens with mandatory sustainability or climate risk disclosures.

Kristyn Annis:

Definitely, a hot topic when I say we're getting more and more questions from our clients on it. But the good thing is, good thing or bad thing, you really just..climate change isn't different; it is different from other risks, I guess, in one sense, but in another sense, it's a risk that a director, and to some extent offices are meant to manage. And you just go back to first principles right now; it's not like there's some special climate change law that has evolved since we started tracking climate change in a serious way.

So, there were direct the duties. If we do go back to first principles, they're pretty clear and easy to understand. The duties of directors originated probably originally in the courts and Canada's common law. However, both the Canada Business Corporations Act and the Ontario Business, well, the Business Corporations Act over Ontario, which is the OBCA, have actually enshrined the core duties of directors in law and, in some cases, modified them a little bit. And so, although I'll refer to the CBCA and the OBCA as I'm talking, other provincial statutes, I'd say, are more or less modelled after the CBCA. And so, it's fair to say that what I say here today probably has some general application, although if you are a company that's in Alberta or Quebec, I would encourage you to reach out to your council there just to double check and make sure that it's the same.

Armand Capisciolto:

Yes, it's always difficult on these types of venues. We're speaking in generality, but the specifics matter obviously when the individual board and board members are thinking about this. And because you talked about the courts and from a legal standpoint, and you did talk about the risk, it's maybe similar to other risks, but my understanding is from a Canadian court standpoint. The Canadian courts would say climate risk is uncontroversial and beyond reasonable dispute. So, as you're talking about what this means from a board responsibility related to climate risk management, your personal views on climate change are somewhat irrelevant as a board member. Correct?

Kristyn Annis:

Yeah, and I think, so climate change has been around for decades, right? We've known about it; the IPCC issued their first report in 1990, so that was quite some time ago. I think what has changed over the past, I would say maybe decade, but maybe five to six years, but we've really gotten to a tipping point globally and around the world. And we know that climate change was a politically charged issue for a long time. I think it's made it's way, to some extent, in some jurisdictions. It still is, the US I think, is one of those places, but it's really gotten to a point where it's not like you said; the courts look at it, and they say climate change is here, it's not controversial, there's no controversy there. And so, it's gotten to a point where previously directors could rely on the broader discussion or framework in which climate change was happening and say, well, there's some uncertainty as to whether or not it's really happening or whether or not it's really humans that are causing it and da, da, da.

But we've gone beyond that. And so, I think that that is what has changed. So, these duties that I'm about to speak of have always been there. And to some extent, some people will say, well, the duties of directors were these, the climate change and the duties of directors applicable to climate change should have been applicable 20 years ago when we actually started talking about climate change. But I think what's changed now and what's happened in the past decade, especially in five to six years, like I said, is that we really have gotten to a point where the science is really firm on it. Globally there's an acceptance. You've got the Paris Accord and things that have happened on the data side, the science side, and then, of course, just the events that are front and centre.

You only need to spin the globe, put your finger on it and pick, and there's probably a forest fire or a drought or a heat wave. Look what's happening in Europe. France has no water. There's a hundred municipalities that have no water, no drinking water. So that I think is what's changed. I think the earth is changing.

Armand Capisciolto:

Yeah. It's no longer this long-term risk that there's tons of uncertainty related to. We're unfortunately experiencing-

Kristyn Annis:

We're in it.

Armand Capisciolto:

We're in it. It's here.

Kristyn Annis:

Yeah. And so that's the context, that's the new world order, so to speak. And so now it's a question of, okay, well, what do our laws say about this? Now that we've confirmed that it's uncontroversial and it's something that companies and directors and officers can't ignore. So now, what are their duties? And so there are two core principles that are enshrined in the CBCA and the OBCA, and that's the fiduciary duty or the duty of loyalty and the duty of care. And so, the fiduciary duty just says, it says that every director and officer must act honestly and in good faith with the view to the best interest of the corporation. And the duty of care states that every director and officer must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. So, if we look to the fiduciary duty first, the OBCA and the CBCA are identical in the language there. And I think the most important takeaway, or one of the most important takeaways, is that the fiduciary duty is actually owed solely to the corporation. Okay.

So, it's not actually owed to the shareholders; it's not actually owed to employees or other stakeholders. However, courts have ruled that the interest of stakeholders can legitimately inform the decision of directors. And they go and the CBCA, this concept has been enshrined in the CBCA, and it lists the stakeholders that are for consideration, and they are in no particular order, shareholders, employees, creditors, consumers, governments. The environment has actually made its way into that law.

Armand Capisciolto:

Wow.

Kristyn Annis:

Yeah. And then others not listed above. So, in considering the best interests of the corporation, the Supreme Court has stipulated that the fiduciary duty of directors and officers is not confined to short-term profit or share value. Rather it looks to long-term interests where the corporation is a going concern. And at a minimum, the duty requires directors to be, meet their statutory obligations. So, we'll circle back to that later to the extent that there are regulations that are coming into place, directors definitely have to meet those, but those are the same duty that would otherwise be required for any other law.

Armand Capisciolto:

It's really interesting how you describe that, though. The responsibility is to the corporation, but in considering the responsibility to the corporation, if I'm interpreting it right, what you're saying is you can't ignore the stakeholders because the stakeholders ultimately have an impact on the corporation.

Kristyn Annis:

Yeah, that's right. I mean, it's nuanced, but I think where the distinction comes into play is when there is... You might not... So, for instance, the shareholders and the corporation, for the most part, their interests will be aligned, but maybe they're not when you're talking about a long-term view of the corporation, and the corporation meant to be as a going concern, something that's supposed to be around for hundreds of years versus a stakeholder that's looking to quarterly returns or dividends. And in that situation, not in that situation particularly, but the courts have said that where you have conflicting interests of your stakeholders and the corporation, the directors must really look to protect the corporation. That's where their fiduciary duty lies.

Armand Capisciolto:

The other interesting thing that you talk about, this long-term going concern of the corporation, is really, really interesting to me as well, because to me, sometimes we use the term sustainability to talk about all this reporting, and people think, well, we're talking about the sustainability of the planet, but we're actually talking about the sustainability of the company, and that the company is a sustainable business that's here for the long term.

Kristyn Annis:

Yeah. Yup. And not every business will have that. Not every business will be a going concern. There might be some that are here for the immediate. And so it's all nuanced, and the board and management is going to take into account many factors when they're considering it. But when we look at something like climate change, which can be thought of as relatively new, a new concept for directors and officers to understand and manage and monitor, it is important to actually go back to first principles to help identify how you are going to move forward and keep those first principles in mind.

So the other thing, and so the courts of law, they're not saying that directors have to be perfect. There's something called the business judgment rule, which is a concept applied by Canadian reports when they review decisions of a board of directors. And so what they're saying is that they're going to give appropriate deference to the business judgment of directors who are in the best position. There's so many variables coming into play; they have to manage how the company's going to going to carry out it's strategy, et cetera. And so, as long as this business decision lies within the range of reasonableness, the courts aren't going to find that the directors were liable or negligent in their duty. But it does mean though, the courts have been pretty clear about stating that there are limitations to this. So directors cannot be unduly passive. They can't just pretend that the problem doesn't exist, which I think for a long time, many people have. And then they also must have informed themselves of the material facts relating to a decision. So with respect to climate change, that might mean to some extent, actually understanding the latest science. So there's a lot out there.

I mentioned the IPCC, they released their first report in 1990, but each report that they've released, and they're now up at six, there's increasing detail and specifics regarding the impact of climate change. So, for instance, part two of the latest assessment report is focused on impacts, adaptation and vulnerability. So it has 18 chapters, and one of which is focused on North America, and another that is focused on key risks across sectors and regions. So it's that kind of information that is out there and readily available where that the courts are looking at that and saying, okay, it's now uncontroversial and undeniable because they have that. It's not that they've just made this decision that they want to; they think that climate change is something that needs to be addressed now. There's a whole background to why we've gotten to that decision, which is generally accepted, I guess.

Armand Capisciolto:

And Kristyn, when you talk about these, the IPCC reports, and you talk about 18 chapters on risks and one focused on... No one, you're not saying a director needs to understand every single word in these highly technical IPCC documents, but at a minimum, has to understand the risks that are relevant to the company they're a director of, right?

Kristyn Annis:

Yeah, I think that's right. I think it's an area that is developing, right, and so we're still developing best practices, but the directors, the board needs to make an effort to understand the risks that climate change is going to impose on their firm. And firm, I just use broadly for the company or whatever corporate entity is at stake there. And there are other things; the federal government here in Canada has released a few reports that have been pretty region specific. So, if you're somebody that's got operations exclusively in Canada, that's a place that you can look. But I think there are also multitude of engineering firm's consultants out there that are starting to pull together this information, and it starts to become a bit more digestible, I would say. But I think the point isn't that a director needs to read the IPCC reports, but they may want to read the summary to understand what is out there in terms of some of the information.

Apart from publicly available information, I think a lot of firms are having their own risk assessments carried out to look at their operations portfolios, et cetera, and the leading global reporting standard on climate change risk, and so that's the task force on climate-related financial disclosure or the TCFD. So in their disclosure recommendations, they speak specifically to two types of risk, which are physical and transition risks. And so you'll see that in the literature and everything that's in the climate change discussion, you'll see the mention of both physical and transition risks. And so that's where if you choose as a firm to follow the TCFD in terms of your reporting and be aligned with the TCFD, then part of that is actually understanding those risks and governance overlies all of the TCFD. And so it actually isn't. It's management and the directors and officers, the board, that is meant to understand those risks. So if you are reporting in line with the TCFD, you will... It's going to...

Armand Capisciolto:

Yeah, it automatically brings you there. Given governance is one of the key pillars, it's hard to have governance without director responsibility.

Kristyn Annis:

Yeah. And that, I think, was the point of the TCFD, right, was to elevate climate change reporting disclosure to the management level, the board level. So that was a big objective of theirs. And so that's the fiduciary duty. There's also the duty of care, and unlike the fiduciary duty, which refers exclusively to the corporation, the language of the CBCA at least is open-ended. So it's not just with respect to the corporation; it's just left open-ended. The one difference here is that the OBCA actually does say that in Ontario that the duty of care is with respect to the corporation. So that's one of the key differences between the two acts. But the Supreme Court of Canada has interpreted the CBCA to mean that the beneficiary of the duty of care is, it's open-ended, and it must include creditors. So that was the case that it happened to come up in and was one in which creditors were affected.

But I would say that the Supreme Court's ruling leaves it open to conclude that other stakeholders, such as shareholders, may also be owed the duty of care. And I think the duty of care, it really requires that directors and officers seek competent advice, use care and gathering relevant information, act responsibly after due deliberation and not act with undue haste, which might be a little bit difficult to balance when you're dealing with climate change. But I think the OBCA is also clear that a director will not be liable for failing to meet the duty of care if they relied in good faith on a report or advice of an officer or employee of the corporation, provided again that it was reasonable. And also or if the director relied on a report of a lawyer, accountant, engineer, appraiser, or other person whose profession lends credibility to a statement made by any such person. And so I was just reading verbatim what the law said there, but.

Armand Capisciolto:

But that's interesting, that they can reduce their, not reduce their responsibility, but if you're hiring professionals to help you interpret the law, interpret the risk, help you determine what the risks are, you're doing your due diligence, you're exercising governance in hiring someone to help you with that. Correct?

Kristyn Annis:

Yeah, no, I think that's right. Now I think there's... Climate change litigation is something that is new, newer, I would say but is making its way through courts in various countries, various jurisdictions. And so generally, yes, I would say that's right. But I'll speak, I'll circle back to it because there's this one case, which is interesting. It's a bit of a test case, I guess, but generally, yes, I would say that it's hard to find a director personally liable, but you may have a situation where a company has no transition plan, but they've stated that they do.

Well, we'll see where it ends up. But I would say that it would be difficult to find directors, like the case, to actually prove that directors were negligent and apart from cases of greenwashing, which we've seen enforced, and regulators have actually won, that's a different situation. But there are a lot of safeguards in place to help directors navigate these uncertainties because nobody's an expert on this really, and it's you can only do what you can and make the best decision you can based on the information that you have available. But what they are saying is that you do have to do the diligence to make sure that you are getting the right information, that you are considering the risks, that it is on your agenda at your director's meetings. If somebody reviews your agendas and says that climate change hasn't been talked about once in the past five years and you're a company that has, whether physical or transition risks that are particularly acute, well, there might be a problem there.

Armand Capisciolto:

Yeah, that's really interesting. If you're completely ignoring it and you're in a high carbon producing industry, or yeah, like you said, the transition risks are the ones that I think get understated sometimes because people don't realize the transition of moving to a lower carbon economy will have on them. But if you're impacted, and you've ignoring this, yeah, that seems like not a great recipe.

Kristyn Annis:

Yeah, I think that's that. But it applies to many types of risks, I guess. But climate change is one of them that needs to be addressed now. And so I guess, so practically speaking, what does all of this mean? We've got these great duties; what does it mean? But I think the fiduciary duty of the corporation implies a long-term view to the corporation as a going concern. So this means building resilience and firm strategy and supply chains and even value chains and anticipation of the upheaval climate change might bring, or is already bringing. I think physical risks can be hard to plan for exactly. You don't know where the next forest fire is going to be, but there are certain events that we know are happening with increasing frequencies. So the heat waves, the heat dome out west last year, the heat waves that Europe is experiencing right now, forest fire is another one that are coming.

And so, I guess the question is, what planning is going into understanding these phenomena and adaptation best practices, and what information is the board getting to help understand what the risks are? How specific is your information? And I guess we spoke briefly about transition risk. So in a sense, it's easier to predict, it gets understated, but in a sense, it's easier to predict because you know that transition risk really means we're transitioning to an economy that is hopefully more or less decarbonised by 2050. And so there's a lot of risks there, but there are also a lot of opportunities. And the TCFD they do really focus on climate risk and opportunities throughout their recommendations. And I think that's an important point too. The companies that are aware of some of these opportunities could really capitalize on them and do quite well, I think.

And the duty of care, it really requires that a board get informed and stay informed.

So for large firms, a best practice that is emerging is at least one director be specifically trained and knowledgeable on climate change risk and developments. And so that means science, keeping up on the science data, best practices, regulatory developments that you and I have tracked a little bit, and then the litigation, right? And so I think these are all areas that need to be monitored and understood, and the litigation can tie directly back to the directors. I caveat that with it is hard in most cases to, difficult rather to prove a director personally liable on these things. But there are claims alleging that there was a claim alleging that a board failed in its fiduciary duty by allowing the company to make allegedly misleading disclosures or they failed to disclose climate risks. And that was brought against ExxonMobil a while back. And I think some estimates put the number of climate change litigation-related cases in the US currently at about 1,800.

Armand Capisciolto:

Oh wow.

Kristyn Annis:

Yeah, that's a lot. It might not be, climate change might not be the central focus of the case, but it's somehow brought into the pleadings in one way or another. And these are all on the public record, and so they can come up with that data. And I would say that the arguments are getting increasingly sophisticated and cross-jurisdictional. And there's also arguments that are not necessarily pro-climate. So that's an interesting, maybe you can talk about that on another podcast, but it is going the other way too, where they're saying your strategy on climate is affecting our profitability or what have you.

Armand Capisciolto:

Oh wow, Yeah, no, I could definitely see that.

Kristyn Annis:

Yeah. Yeah. And so the other case that I alluded to earlier, so this is a bit of a test case. It's happening in the UK, and the plaintiff is an environmental NGO, and they're seeking to hold the company directors of an oil major personally liable for failing to protect, prepare for the energy transition. And so specifically because their whole business is oil, and specifically the NGO argues that the directors have breached their fiduciary duty to act in the best interest of the company by failing to develop and implement a climate strategy that aligns with the Paris Agreement goals, increasing its risk of stranded assets and having to make write-downs due to both physical and transition risks. So we'll see where that case goes. It's an interesting one to watch, but I would definitely say that the cases are getting much more sophisticated, and you will see more of this, I would suspect, with the disclosure that is going to be required.

Armand Capisciolto:

It's interesting you, just in that case and bringing up stranded assets, because when I talk about it from an accounting financial reporting standpoint, if there's a stranded asset, that means there's likely assets that should be written off and an impairment to deal with from a financial reporting standpoint. So as you were talking about this, this very much impacts me and what I think about on a day-to-day basis when I'm dealing with companies that are thinking about the financial reporting implications of this.

One of the things I found really interesting about the discussions so far is you've focused very much on the various corporations acts, whether it's the Canadian or Ontario, and all the different jurisdictions have to; we'll have to look at their different acts. And that applies, so that's all companies. That's all companies. That's not public companies, but it's the public companies, the ones listed on Toronto Stock Exchange or the Venture Exchange, or in the various exchanges in the US where we're talking about the SEC, where there is the discussion of mandatory reporting on this. And I know I said I didn't want to talk about mandatory reporting, but I'm going to ask your question about mandatory.

Kristyn Annis:

How can you not?

Armand Capisciolto:

Yes, ask you a question about it. Does this change anything? Now if I'm a board member, does the fact that I have to report publicly change anything for me?

Kristyn Annis:

Yeah, I think the answer is yes, probably an unqualified yes, actually, on that one. So I think, yeah, when the original reporting obligations, I think they came up after the WWII, the stock market crash, you started having this regulatory oversight. And I think the world changed for a lot of companies at that point. But I think there's a number of things that are happening. So you and I did a publication dealing with the IFRS draft climate change exposure, and then even if you just go to my website at BLG, it also contains a number of articles outlining some of the key developments when it comes to rules and regulations. And so for public issuers, you've got the US Securities and Exchange Commission; they propose a draft rule around climate change disclosure, as has the Canadian Securities Administrators. The EU, I would say, although I'm really not qualified to speak on it because they've got very advanced and it's very complicated.

Armand Capisciolto:

They have a lot going on in the EU.

Kristyn Annis:

Yeah, there's a lot going on there. And it's far-reaching. So anybody that has even a client or a customer in the EU should look into whether or not the EU rules apply because the EU rules are far-reaching, and they've gone beyond just reporting issuers to private entities and funds. So definitely check in on those. And then, but here in Canada, we've also got the Office of superintendent for financial institutions or OSFI, that's Canada's banking regulator. They've recently published guidance around what they expect federally regulated financial institutions to disclose. And across the board, I think all of these regimes have put a strong focus on governance and including board oversight. And this is because all of these that I've just mentioned are all in some way, shape or form based on the TCFD, maybe with the exception of the EU rules, because again, I don't know the details of those.

And so, like we talked about earlier, the TCFD, it's got the recommendations and then over it's got four pillars, which each of the recommendations fit into. And then the overarching pillar is governance. So it's meant to bring everything back right to the top, to board to management. And so, I think that the disclosure requirements will fundamentally change the way boards approach climate change for three reasons. So firstly, all of their proposed regulations really focus on governance. And then secondly, the effect of having to disclose information in publicly filed documents will actually force boards to look at climate change in a much more serious way if they haven't already because they're saying, okay, now we're putting this out to the world. It's going to be looked at by our investors. It's going to be looked at by people that may want to cause problems, what have you. But mostly, they'll be focused on what's the story to investors as they're bringing people in.

And then where the disclosure is required to be made per the new proposed regulations is also important. So in the SEC's proposed rule, the disclosure is required to be made in a multitude of forms, but one of the key forms is the 10K. And then, in the CSA's proposed National Instrument 51107, which is their draft rule on climate change, the reporting issuer, they're meant to report the climate change information or disclosure in the management information circular with respect to the governance aspect. And then, if there's no management information circular, the annual information form or the annual MDNA. And so these are documents that have to be actually signed off on by the board. And so again, it's like it forces the issue.

And then thirdly, I think for boards that are looking, or companies that are looking to comply with the regulations and guidance in both the letter of the law and then in the spirit of the law, it can fundamentally change the way a firm is managed in their strategy when they seriously start putting this kind of climate change lens to all of the discussions that they're having, not just five minutes at a board meeting. So you can see that happening with some firms, and it's just really shifting to a new paradigm, which I think eventually we will all get to. It's just that some companies are going to be leaders in this, and hopefully, they're the ones that can show what best practices are for the rest of-

Armand Capisciolto:

Yeah, and I think it's important. You mentioned earlier the TCFD and TCFD focuses on both risks and opportunities. We started talking about this in the climate risk disclosures, but it really is climate risk and opportunities that need to be considered. And I think the companies that are thinking about it in a strategic way, thinking about fundamentally changing the business, they're the ones seeing the opportunities and seeing that, wow, if I do this, there's a lot of things that have short payback periods, are going to put them in a position that they're going to be more profitable than they were before. So I think the boards that look at it that way and force management, not force management, but encourage management also to look at it that way, are the ones that are probably going to be a little bit more successful going forward.

Kristyn Annis:

Sure. Yeah. The first the question that they ask you in business school as an entrepreneur, what is the problem that you're trying to solve? Well, there's a lot of problems out there that need solving right now with respect to climate change. So collectively, putting the intellect, the capital that we have in behind solving some of these problems could really take us a far away. And you're seeing some of it happen. If you follow some of the technological advances that are being made in the areas of decarbonisation or electrification or what have you, there's a lot happening really quickly.

Armand Capisciolto:

Yeah. It's not all doom and gloom. There's a lot of things to be positive about related to this topic. If start taking advantages of opportunities. One last thing I just wanted to explore a little bit was again, and when I think about you mentioned the OSFI requirements, and I think about who OSFI regulates, and I think about the insurers are one of the companies they regulate. And I started thinking about institutional investors and whether I'm talking about insurers, pension plans, large private equity funds, and we're starting to see institutional and investors almost take on an activist role with climate. Is that doing anything in the boardroom?

Kristyn Annis:

Yes, for sure. And I think I guess one of the things that is pushing, some companies are wanting to get to net zero if we're just talking about GHG emissions specifically of their own accord. But there are a lot of other entities out there that a corporate may deal with that is also setting up their net-zero targets. And so, for instance, and you use the word institutional to describe your investors there, and I think institutional investors, they'll generally take a material equity holding in a company, and some of them, such as the pension funds or the life goals are really in it for the long haul. So they're looking, their investment horizon is quite long, and they themselves have committed to net zero like I said.

So consider, for example, the CPBIB. So in February of this year, the Canada Pension Plan, they committed to having their portfolio. So everything that they've got invested in and operations to be net zero GHG emissions across all scopes by 2050. So 2050, I would say it's one of the longer time horizons. We're seeing a lot of people making 2030 as the stake in the ground. And there's probably a good reason for that because I think in a lot of cases, we may have what they term runaway climate change to the extent where it's like, well, if we don't get our emissions down by 2030, then there might not be an opportunity to actually get them down, period, because your permafrost starts melting and then the methane starts going, and then your oceans just reach a capacity where they can't absorb any more carbon and et cetera. So that is doomy and gloomy, but there's a good reason that 2030 but. There are others that have done 2050, and that's also a very reasonable goal to be setting.

But the CPVIB, they intend to achieve this by continuing to invest in and exert their influence in the whole economy transition as active investors. And so active investors, those two words are on their website. You can go look it up. And they're looking to achieve carbon neutrality for their internal operations by the end of fiscal 2023. So, I can't speak to what their exact carbon footprint is, but there's an example of a company that's saying, excuse me, we would like to buy some through virtual power purchase agreements, ensure that our energy is completely green while Ontario's having a, they're looking to have an RFP on energy, and in the next kind of three to five years, you can anticipate what that will also incentivize. So, you can see the trickle effect. And then they're also looking to increase investment in green and transition assets to at least a 130 billion by 2030.

So, I would say that absolutely inform directors, management, CEOs that are aware of this. And I think the other thing too with institutional investors is they communicate, based on their positions, they communicate with their portfolio companies, as do the BlackRocks of the world and the asset managers like the State Street and people like that. So, they are having an active conversation with their portfolio companies, at least the ones where they have a significant position and discussing with them, okay, what's your transition plan? How are we moving this? How are you going to decarbonise? How are you going to ensure that we're not going to have to pull out our investment in order to meet our net zero goals by a certain timeframe? And so, you know that those conversations are definitely happening. And if you speak to any institutional investors, they all have a plan.

And you mentioned, well, we both talked about OSFI, but I think on the other side, so on one side, you've got your equity saying, yeah, hey, we want net zero by a certain timeframe. We want to understand what your transition plans are and how are you treating climate change. They're all asking for this. And then the guidance that OSFI just really released, and I think banks are also looking for this. So your debt is looking for it, your equity is looking for it. Chances are your employees are looking for it too and wanting to be part of accelerating change and really driving the company towards a place that's green and profitable. So I think it's a good time for the board to really focus in on what the issues are and try to get a handle on it as-.

Armand Capisciolto:

Yeah, no, I talked with this topic all day long. It's such an interesting topic and an important topic. And we're talking specifically about board responsibilities today, but it has broader reaching for people in the financial reporting. So like me, broader implications into general financial reporting. It's just such an important topic. So Kristyn, thank you so much for taking the time today to chat with us.