ESG, SDGs, Bill S-285: A Push to Adopt Green Intellectual Property?

Senate public Bill S-285 - the 21st-Century Business Act - introduced by Senator Julie Miville-Dechêne, underwent a first reading before the Canadian Senate on May 24, 2024. The legislative proposal seeks to amend the Canada Business Corporations Act (“CBCA”) to provide that a corporation’s purpose is to pursue its best interests while also operating in a manner that: 

(a) benefits the wider society and the environment in a manner proportionate to its size and the nature of its operations; and 

(b) minimizes any harm that the corporation causes to the wider society and the environment, with the objective of eliminating such harm.

As noted by business law firm Davies, if Bill S-285 were to be adopted, it:

“would transform the CBCA’s approach to a corporation’s stakeholders from an incidental consideration to a central one, whereby the benefits provided to various stakeholders would no longer derive from pursuing the best interests of the corporation, but would instead form part of the corporation’s purpose, enshrined in law, and would be protected through redefined directors’ and officers’ duties. The proposed amendments are twofold: they would (i) integrate the notion of purpose, which implicates the wider society and the environment, within the definition of the fiduciary duty of directors and officers, and (ii) place under the duty of care of directors and officers, the stakeholder constituencies that may currently be considered when determining the best interests of the corporation - thus making their consideration mandatory.”

The reference to environment doesn’t appear to come “out of the blue”, especially considering the importance of environmental, social, governance (ESG) and achievement of sustainable development goals (SDGs) in industry. ESG helps address issues relating to climate change (OECD - Climate change and corporate governance), resource scarcity and social inequality that are impacting its ability to function effectively. Having a comprehensive ESG strategy makes companies more attractive to investors and consumers, and therefore has an impact on their bottom line. ESG reporting and disclosures help companies get access to capital markets and secure their license to operate. Strong ESG performance leads to preferential treatment from investors compared to companies whose environmental or other practices may pose a greater financial risk.

In the same vein, in 2015, the United Nations Member States adopted 17 sustainable development goals (“SDGs”), as part of the 2030 Agenda for sustainable development, of which clean water, clean energy and climate action are of paramount importance. These SDGs are intertwined and essential for a thriving planet. Clean water is the foundation of life, crucial for health, sanitation, and economic growth. Clean energy is essential for reducing pollution and combating climate change. Climate action is necessary to mitigate the devastating effects of global warming, such as extreme weather events and rising sea levels. 

As noted in Sustainly, “SDGs allow businesses to create, drive, and share their sustainability goals and initiatives, aligning them with a shared and specific purpose. They can even guide sustainability marketing efforts. By placing strategies alongside the SDGs, companies can engage consumers, stakeholders, and staff, find inspiration for products and services, address their image, future-proof the business, and partake in corporate social responsibility (CSR).”

The critical role of intellectual property (IP) in E (environment) 

Understanding the relationship between ESG and SDGs (Soni, Khaled et al.), businesses are called upon more than ever to innovate and find robust solutions to solve environmental challenges, such as global warming, food and water insecurity, melting ice caps and rising sea levels to name a few. The Arctic is more than twice as fast as anywhere else on the planet.

Various technological solutions may find themselves disclosed in patent applications, which are directed to inventions. Inventions are defined as “any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter”, and can be protected by patents - a form of intellectual property right. 

As noted by the World Intellectual Property Organization (WIPO) in a 2023 address, “intellectual property - such as patents, trademarks, industrial designs and others that promote innovation and economic and social development - can serve as a powerful enabler across all 17 SDGs.” (see here). That said, one can find:

1. Data-driven technologies to help the world adapt to climate change, which range from IoT devices, drone tech, and AR/VR technology to drive climate adaptation; 

2. Climate mitigation technologies to reach net zero-emissions (Probst et al.), e.g., solar photovoltaics;

3. Water technologies that can lead us to a zero water waste future,

amongst other solutions, which can all be located in various IP-related disclosures. Some of these solutions can also be found in marketplaces for sustainable technology, amongst other databases, which are worth being consulted.

What is key in achieving ESG and SDGs objectives, within a complex regulatory framework, is  implementing a clear IP and business strategy to adopt green innovation, with a focus on  maximizing value and making use of grants and incentives, such as Canada's big five clean investment tax credits to support a sustainable made-in-Canada clean economy. These ITC’s include: 

• a 15 percent refundable Clean Electricity Investment Tax Credit for eligible investments in technologies that are required for the generation and storage of clean electricity and its transmission between provinces and territories, which is available to taxable and tax-exempt entities.

• a refundable Clean Technology Manufacturing Tax Credit to cover 30 percent of costs in new machinery and equipment used to manufacture or process clean technologies and extract, process or recycle critical minerals.

• the Clean Hydrogen Investment Tax Credit, which supports between 15 and 40 percent of eligible projects’ costs to produce clean hydrogen.

• the Carbon Capture, Utilization, and Storage Investment Tax Credit for equipment used to capture carbon dioxide emissions for storage or other uses in industrial processes.

• the Clean Technology Investment Tax Credit to include geothermal energy systems, further supporting the growth of Canada’s clean technology sector.

These clean investment tax credits, which should total over $60 billion over the next decade, were conceived by the Government of Canada to support green innovation.

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Other useful references:

• P. Vimalnath, et al. Intellectual property strategies for green innovations - An analysis of the European Inventor Awards, Journal of Cleaner Production, Volume 377, 2022, 134325, ISSN 0959-6526, https://doi.org/10.1016/j.jclepro.2022.134325, available at: https://www.sciencedirect.com/science/article/pii/S0959652622038975.