2020-2021 Quebec government budget: measures to promote corporate governance practices in favour of the green economy
On March 10, 2020, Quebec Finance Minister Eric Girard tabled his second budget marked by measures to promote the green economy. He introduced significant measures to electrify transportation, reduce GHGs and adapt to climate change. Recognizing that environmental issues and economic development are among the leading concerns of its citizens, the government is addressing a number of the public’s expectations by inviting the private sector to participate actively in the energy and environmental transition.
The government aims to reduce businesses’ environmental impact by creating the impetus for the adoption of corporate governance based on corporate social responsibility (CSR).
To that end, the Finance Minister today announced a record $6.7 billion over six years to fight climate change as part of the Plan d’économie verte (PEV) 2030. The new initiatives are primarily directed toward the electrification of public transport, real estate and vehicles. The key measures include:
- $1.4 billion allocated over six years to the Roulez vert program and designed to support the electrification of vehicles throughout Quebec;
- A $15.8 billion investment in public transit as part of the 2020-2030 Quebec infrastructure plan (PQI);
- A $150 million investment to continue the Chauffez vert program until 2026.
Corporate social responsibility: a crucial stance to attract the attention of policy-makers
The message from the Government of Quebec is clear: companies that want to benefit from government programs will have to quickly make a CSR commitment and contribute to reducing the environmental impact of their activities.
CSR is a commitment by a company to, among other things, manage its environmental impact in accordance with the expectations of the public and of government policy-makers. This entails using the cleanest technologies while providing green products and services. Other aspects of CSR include good working conditions, promoting local employment and diversity, fighting corruption and ensuring the sustainability of operations.
There are many advantages to being recognized as a socially responsible company. In addition to boosting brand image, the adoption of CSR attracts the positive attention of government policy-makers. Furthermore, companies that implement CSR tend to be more innovative, productive and competitive.
In this way, CSR makes it easier to respond to the challenges confronting companies and to the growing expectations of their various stakeholders.
A budget that encourages active corporate governance to power the energy and environmental transition
The measures announced today encourage companies to reduce their environmental impact while pursuing traditional objectives.
Corporate executives face a dual business and social opportunity. The Board of Directors appears to be the governance body of choice for instilling new environmental objectives, and even new values, in Quebec companies.
The added value that effective corporate governance will lend to these objectives will get companies more involved in CSR, active in the energy transition and able to benefit from government stimulus efforts. To this end, on March 9, 2020, the Minister of the Environment and the Fight Against Climate Change, Benoit Charette, published a new sustainable development performance index. The index makes it possible to assess the quality and planning of departments and agencies working toward sustainable development and the fulfillment of their current targets. The information will send a strong signal to clients, who will want to partner with companies who can actively help them improve their sustainable development performance index.
It will be up to directors to adopt new governance practices geared toward the Government of Quebec’s new environmental objectives, just as they do for traditional profitability and risk management objectives. Their role is substantial in this context since it is the directors who will need to instil a new vision of the corporation that is beneficial to the environment, civil society and shareholders, in the context of the green economy.
The time has come to move away from setting CSR performance against financial performance, and to do a better job of measuring the contributions of CSR to company financial performance and value creation. Companies who fail to take into account the environmental and social impacts of their activities face a threat to their sustainability and legitimacy. In short, all stakeholders expect companies to embrace a new vision of their role and responsibility in society.