Economy
Estimates debate with the Premier on demand side measures affecting the price of gas
On Wednesday of this week I rose during budget estimate debates for the Office of the Premier to ask a number of questions concerning demand side measures that affect the price of gas. Prior to me rising, the Leader of the Official Opposition had spent a fair amount of time accusing the Premier of somehow causing the recent rise in the price of gas. I was profoundly disappointed by the behaviour of the Leader of the Opposition. It appeared to me that he was more interested in trying to score cheap political points and finding gotcha moments than he was in trying to probe the supply and demand side of the price of gas.
When my turn came, I asked a series of questions to understand how the recent increase in the price of gas might have affected transit ridership, active transportation and the purchase or electric vehicles. The answers I received from the Premier were very clear — there has been a great effect.
Below I reproduce the video and text of our exchange.
Video of Exchange
Text of Exchange
A. Weaver: I’d like to start by saying I think it’s an important anniversary today. I believe it’s the two-year anniversary of the signing of our CASA agreement. With that I would suggest that this has been a rather unique time in the province of British Columbia with a minority government. I would suggest that the Premier would probably agree that the relationship has been fruitful, collaborative, at times challenging, without a doubt, but nevertheless, reaffirming the commitment that we made in CASA to work together.
That doesn’t mean we agree on everything. It means we that have a process to reflect upon our disagreements, and I would just like to canvass a few of the issues here. In particular, I’d like to start off with some of the issues with respect to the gas prices. I was listening with interest to the comments coming from the official opposition. I was somewhat flummoxed by the kind of apparent petro-stumping that I heard, and somewhat concerned that I did not perceive there to be a desire to actually support British Columbia in standing up for British Columbians, as opposed to supporting the gouging that is going on by certain elements.
I noticed that over the last few months, the Premier and this government have come up under fire, frankly, about the rising gas prices, and the official opposition has done what they can to try to distort the issue — frankly, to blame government — appealing to the worst type of populist politics.
I want to start my questioning by asking the Premier: what tools does he have to affect gas prices?
Hon. J. Horgan: I thank my colleague from Oak Bay–Gordon Head, the leader of the Green Party, for his questions and his interventions here today in the budget estimates for the Premier’s office.
Firstly, I’d like to say that we’re trying to find ways to bring down the cost of gasoline by talking to suppliers, finding ways to bring more supply into our region. That means talking…. Again, as I said to the Leader of the Opposition, we’re working on a plan that has not come yet to fruition, but I think in the next while, if I give it time, I’ll be held to that. But we’re working hard to try to find a way to increase our ability to affect what’s in the pipeline.
What we’ve been trying to do is work with the federal government, get an acknowledgment from our federal government, who now does own the pipe. Although they can’t dictate what goes into it, they have a bunch of mechanisms at their disposal to help us explain how the price went up so high and what we can do to bring it down in the short term.
But in the long term, the member will know, and he and I are both enthusiastic about this, we’re going to be moving away from gasoline in the first place. We want to see more people in electric vehicles. We’re putting in place, as he knows, incentives to see more people using electric cars. I drive a hybrid. You drive a full electric. We’re building charging stations right across British Columbia. I think we have over 1,500 now, or somewhere in that neighbourhood, right across the province.
We’re putting in place infrastructure to reduce the costs over the long term and also have a better environmental outcome. But that’s not happening today. Sorry, Member. The public expects, rightly so, that we will be doing what we can to do to bring on more supply so that prices can go down, so we can make that transition over a longer period of time.
A. Weaver: I concur. I accept the arguments brought forward by the Premier with respect to the ability to affect what’s in the pipeline. I found compelling the arguments that discuss the fact that in fact, the Trans Mountain was not about enhanced refined capacity. It’s all about increased diluted bitumen.
The Premier has referred to a multitude of things that could happen. One of the things that I have a concern on, and I’m going to frame a question in this regard, is that if we look back historically, virtually every year, as long as I have known, gas prices go up in the spring, and they come back in the fall.
The Premier will remember back in…. I forget. Whenever the Axe the Tax campaign was initiated by a previous government, it was during the summer months, right at the peak price, when there were record prices being set. The kind of rhetoric associated with that campaign kind of fell flat as the fall approached, because the price of gas came down.
My question to the Premier is: does he think it is prudent for a government to have a market intervention along the lines of what the member of the official opposition is stating, in light of the fact that essentially every year, we know that the price of gas goes down as we move out of the summer season, and in fact will fall naturally because of traditional supply and demand arguments and enhanced refining after, basically, the long weekend in September?
Hon. J. Horgan: I agree with the member’s premise, but this year seems to be, without any doubt, anomalous relative to others. That 40 cent increase, when only one penny a litre can be put to the carbon tax that we increased on April 1 — that is unusual. There is always an increase in demand during the travelling season. You and I have talked about that. I agree with you. But it’s never been that large. That’s why, when I asked my deputy minister about the margin question, the refining margin, why it had gone from 2½ cents to 24 cents, what happened there? And we did our best through inquiries to get an answer to that question, but we can’t compel people to testify. The Utilities Commission can, and that’s why we’ve punted the question over to them.
In the meantime, we need to continue to talk about how people can get out of their cars. That means investing in transit, which we’re doing in a big way, not just in the Lower Mainland but right across B.C. It means giving incentives to get off of fossil fuels and on to cleaner energy alternatives for our transportation needs. These are all long-term goals that we have in our plan, that you and I worked on together with the Minister of Environment as part of CleanBC. But for today, when people are looking at their summer season, they’re pretty unhappy about this, and I absolutely feel that and understand it. And we are trying to find ways to have temporary relief through mechanisms that we’ve been working on as well as coordination and cooperation from the federal government.
But you’re absolutely right: these cycles are traditional. And the Leader of the Opposition and his crew are saying that it’s a tax question, among others. That’s not the case. Do we have a significant amount of tax in our gasoline — federal transportation, TransLink and so on? Yes, we do, but that does not explain these wild swings, seasonal swings that you’ve suggested.
A. Weaver: I agree with the Premier. The refining margin in British Columbia seems to be out of whack with the rest of the country. I’m hoping that the B.C. Utilities Commission is able to explore this. I look forward to the results.
But on that note, I noticed that the official opposition was focusing on increasing supply, increasing supply, increasing supply. And at one point, they kind of walked away from that. They started introducing this kind of Marxist logic about introducing a price cap, which was just outrageous coming from a free market party. Unbelievable. I think they’ve walked away from this price cap.
Anyway, my question is on the demand side then. I suspect, knowing that, the last time we had some price hikes and the widespread move towards alternate forms of transportation, which did have a legacy effect…. I’m wondering if the Premier has any statistics about uptakes of electric vehicles, uptakes of transit ridership or uptakes of other modes of active transportation that have arisen as a direct consequence of the rising price of gas, and whether or not this has affected the demand side of the equation and whether or not, in fact, demand is dropping in British Columbia.
Hon. J. Horgan: I’m just asking if we can get the uptick in people using transit, because it will be significant. The member is quite right. In times of crisis, people modify their behavior. They do different things. They don’t go, maybe, out to the grocery store every other day. They wait, or they buy larger amounts so they’re not travelling as much.
But I can say, on our incentives to get people into electric vehicles, as you’ll know, we had to increase that budget three times last year, which means that there’s a big demand for people to get out of the lineup for gasoline and a big demand to get into the future, which is electric vehicles. Prices are coming down. They need to come down further so that more people can get into electric vehicles. But people are voting with their feet on this question, taking up the incentives that government is providing. The federal government is now involved as well. This is very good news.
Interjection.
Hon. J. Horgan: The transit numbers are coming. Because we’re short of time, perhaps I’ll just make sure that I can get those numbers to you and I can quantify the three increases. I think we had the budget number in February. We increased in September, Minister of Finance? And then again in November.
The money is available, which is unprecedented to have a program that you increase not once but twice during the course of that fiscal year.
A. Weaver: I just want to canvass just a little more on the gas prices. I think it’s important, because we had so much focus on the supply side and, I would argue, not enough focus on the supply side. The numbers I had heard I got from good sources. I’m hoping to confirm. I recognize that it may be a little outside the scope of the Premier’s estimates and be more into Energy and Mines.
I’ve heard that this year, upwards of 10 percent of all new vehicles in British Columbia have been electric, and pushing 15 percent in the last month. Can the Premier confirm these numbers, as to whether I’m in the right ballpark?
Hon. J. Horgan: The member is quite right. We’ve seen a continued increase in demand, and supply is now having challenges. Providers are having longer wait times to get vehicles. Actually, the member for Delta North managed to get his electric vehicle ahead of you. That’s because there is so much demand.
That, of course, means that Detroit — I say Detroit as the amorphous auto sector — is changing their production plans because they see a change in the marketplace. We see that with the incentives that I talked about, and we’ll be able to provide those numbers to you in some detail afterwards. But there has been a steady increase in demand for non–fossil fuel transportation mechanisms, and I think that is all good news for us. That, of course, requires industry to recognize that, and they have. But because of these longer wait times, they realized they have got to build more cars faster.
A. Weaver: The Premier mentioned the member for Delta North, and I am very jealous. The member for Delta North and I both ordered Hyundai Konas. I did about three months beforehand. He got his about one month before, and mine isn’t even here yet. He was able to go to a dealer that actually ordered them proactively instead of reactively. The Premier is quite right. The supply for these vehicles is troubling.
I’m wondering, on the issue of demand again, to what extent the Premier has explored or with his office explored the work that was done, the report that was done on mobility pricing in the greater Vancouver area. I’m wondering if he’s had any thoughts about where government is going in terms of the issue of mobility pricing — whether or not they’re thinking of that in Metro Vancouver or not.
Hon. J. Horgan: Just on the previous question, May is not finished yet, as you know. So 15 percent of the vehicles sold in May were light-duty EVs. That is unprecedented, as the member knows, and speaks well for the future. I think gas prices are a part of that, absolutely. People are saying: “Well, this might be the time to make that leap.”
We’ve been reducing costs for people — reducing medical services premiums, eliminating them; eliminating tolls; reducing fees for child care. But then on the toll question, the reason we eliminated the tolls…. It was just one area, one piece of infrastructure. When other pieces of infrastructure were being built, there was no toll ascribed to them. And the federal government, of course, has a policy that they will not fund infrastructure that has tolling on it. That meant that the Massey project, for example, was solely on the back of the provincial government.
TransLink has established a mobility committee, and they’ve been working diligently, I guess, for quite some time now. They were supposed to report back in the summer of 2019. We look forward to hearing from the region, the densest part of the province, with what their plans are. This is going to be largely an issue to be dealt with by residents in the Lower Mainland. Of course, we need to work with TransLink, with the Mayors Council to make sure that any mobility program that comes forward makes sense to the travelling public and that it is not onerous.
A. Weaver: To explore this a little further, the Premier mentioned the issue of the Massey Tunnel replacement, and he’s referred to this recently. As an issue, of course, we support the Premier in this regard. The bridge was…. I just didn’t quite understand it; twinning of the tunnel was more sensible.
My question to the Premier is this. As government is exploring this option — and I understand they’re doing it through consultation — are they considering active modes of transportation in the Massey Tunnel as well? Right now you can’t really get across that south arm of the Fraser with bikes and walking. I’m wondering if that is in the cards for a Massey Tunnel expansion if it happens.
Hon. J. Horgan: Yes, it is, Member. I was excited last week when I learned that the regional mayors have come to a consensus that they need to work together to address the congestion problem at Massey. Both the member and I are Vancouver Island members, so when we enter into the Lower Mainland, our first introduction to the challenges of transportation is the Massey Tunnel. That’s our way off the island. Get off the ferry, go through the tunnel, and you’re on your way into Metro. So we’re very seized of that.
The Minister of Transportation is working on that. We’ve got a study underway that will include multimodal transportation. We don’t want to just have the same old, same old, but we need to find a way to get it done in a cost-effective manner. The federal government will participate provided there’s no tolling infrastructure. Now, how mobility pricing fits into that, I think, is a discussion for, I would expect, after the federal election in October. We’ll see what the outcome is there.
But we’re very much aware that we can’t just keep building infrastructure to move cars and trucks. I will also say that in Metro, transit use is 437 million boardings in 2018, up 7.1 percent from the year before. Again, that speaks to…. We have a population increase, of course, but more and more people are choosing to use public transit. We have a safe, effective means of moving people around in our metro area. It’s cost-effective. People like it. And more success will breed more success.
A. Weaver: Those are impressive numbers. Actually, 7 percent is far and above any population growth for Metro Vancouver, I would suggest. That’s actually quite good news. I thank the Premier for that.
I know that one of the other issues with respect to…. I believe the government campaigned on this. I know we did as well. It was exploring the ways to deal with the affordability issue and somehow to incentivize zoning or taxation policies to incentivize density around transit hubs. I’m wondering if government has any exploration into this area about tools that they might use at their disposal to incentivize the densification in urban areas around transit hubs, whether or not that’s being considered.
Hon. J. Horgan: We don’t believe that incentives are required, but we do know that coordination is. That’s why, when I formed the executive council, I put the member for Coquitlam-Maillardville in charge of Municipal Affairs, TransLink and Housing, so that we could put all three of those critical areas under one roof so that we could coordinate our transportation links with density, ensuring that municipal governments, local governments, were participating and understood our objectives, and we understood their objectives.
But when we designate a transit line, density will come to that. But the challenge then becomes: are neighbourhoods prepared for that? That’s where the municipal activity takes place.
We’re confident that these things will come together, but we are also looking at property taxes and how that’s affecting small businesses. That’s become very topical in the past number of months, and that’s part and parcel of zoning issues that become…. This is what is possible here. All of a sudden, the value of the land goes to the possible rather than the real. That has a negative impact on business and on people.
I will say, also, people are lining up and looking at me. City of Vancouver, 2017 — 52.8 percent of all trips were made by walking, cycling or transit. That’s up from 48 percent the year before. Again, a 4 percent increase in activity.
People are voting on these questions with their feet, literally — walking, cycling. Finding other ways to move around reduces their carbon impact, reduces their costs. I believe government’s role is to work as best as we can — and you agree with this — to put in place a framework that will work to get people where they want to be. It makes for a better society. It makes for better communities.
Impromptu statement on global warming and intergenerational equity
Yesterday in the legislature I rose during Members’ statements to give an impromptu statement on global warming and intergenerational equity. The BC Liberals, as part of their petulant shenanigans during the last day of sitting of the BC Legislature, decided that they would boycott the two minute statements that occur everyday. As a consequence, several members scrambled to fill their normal speaking slots.
Below I reproduce the video and text of this statement.
Video of Statement
Text of Statement
A. Weaver: It gives me a great pleasure to rise, on this, the last day of the session, to deliver a two-minute statement.
Prior to coming up to the Legislature today, I did what I often do. I took a look at the seasonal climate forecast for this part of the world. The seasonal climate forecast for the summer of 2019 in British Columbia is this: extraordinarily high probabilities of higher than normal temperatures and dryer than normal conditions. What does that lead to? That leads to yet another suite of conditions that will lead to forest fires in British Columbia.
I remind members that back in 2004, Nathan Gillett, Mike Flannigan, Francis Zwiers and I published a paper in Geophysical Research Letters where we identified the fact that we could detect and attribute the increased area burnt in Canada of forest fires directly to human activity. Since that time, similar papers have come out for Siberia, for the eastern U.S., for Europe and elsewhere. We know that the increasing forest fires in our country is a direct consequence of global warming.
In fact, the science of global warming goes back to 1824, when Jean-Baptiste Joseph Fourier was the first to recognize that the atmosphere was transparent to incoming solar radiation but was effective at blocking outgoing longwave radiation and kept the surface area of the planet warmer to allow life to flourish.
In 1861, John Tyndall, best known for his incredible sideburns, actually developed an amazing instrument that allowed us to detect the different radiative absorption properties of a diverse array of greenhouse gases.
In 1896, Svante Arrhenius, a famous Swedish Nobel laureate was the first to actually directly calculate the increasing warming associated with increasing carbon dioxide levels.
And in 1936, George Calendar was the first to make multi-century predictions as to what would happen as a direct consequence of increasing carbon dioxide.
In fact, the very first national assessment was done in 1979 — the year they graduated from high school — where Jule Charney from MIT was tasked with assessing what human contribution to climate change was. At that time, the best scientific estimate of the warming associated with increasing greenhouse gases was between 1½ and 4½ for a doubling of carbon dioxide. That number has not changed for 35 years of scientific research.
As we leave to the summer, I ask members to consider this. The question of global warming boils down to a single question. Do we the present generation owe it to future generations, in terms of leaving behind to them the quality environment that we were blessed with inheriting?
Intergenerational equity is the question — for those who make the decisions today don’t have to live the consequences of the decisions they made if the next generation will. I suspect those in the gallery, those children in the gallery looking down upon us today, would suggest that indeed it behooves us to put intergenerational equity front and centre in our decision-making.
Calling for a closer look into construction industry labour code policy
Today in the BC Legislature we continued our debate on Bill 30: Labour Relations Code Amendment Act, 2019 at committee stage. Recall from my second reading speech, this bill amends the labour relations code to make a number of changes to enhance protections for workers and implement the recommendations of an independent expert review panel.
During debate on section 6 of the bill, the BC Liberals proposed an amendment concerning when and how raids can and should be allowed for. In particular, their amendment to section 6 was designed to bring the government’s proposed changes more in line with the recommendations of the independent panel.
Supporting evidence-based policy that restores protections for workers and ends pendulum swings in the labour code have been priorities for the B.C. Greens.
My colleagues, staff and I engaged numerous stakeholders to develop a deeper understanding about the forces at play and concluded — as did the panel — that construction labour law is particularly unique. Because of these unique challenges, which include the transient versus stationary nature of the work place, we believed that it was essential to not simply pass Bill 30 legislation and move on. The construction industry and its workers deserve a thorough review; this hasn’t happened since at least 1998.
The B.C. Green caucus is in strong support of creating an independent panel mandated to address the unique realities of the construction sector, and to expand upon the recommendations of the current Labour Relations Code Review Panel. Until such an independent review is conducted, we felt it was prudent to follow the advice set out by the current review panel, and therefore supported the amendment (which allowed it to pass – see vote above). If a deeper dive identifies challenges with this, I hope that all members of the House would be prepared to support additional changes. We have heard loud and clear that there are numerous questions that remain unanswered and want to ensure a process is established that can get politicians objective analysis and recommendations to act upon.
More than anything, BC Greens believe that the legislation, which passed committee stage today, will go a long ways towards ending the ideological labour code tug-of-war that has been allowed to dominate labour code policy in BC for the past 30 years. We believe it will bring fairness, certainty and stability back to the labour code.
The BC Liberals also introduced a second amendment to section 8 of this bill that we could not support (for reasons outlined below – see vote to the left) as we believed it strayed from the intent of the independent panel’s recommendation.
While this bill took up an enormous amount of our caucus and staff time, I personally found the debates to be an excellent example of how the BC Legislature functions at its best. At all times, and at all stages of the debate, the decorum in the chamber was one of mutual respect. It was clear that Harry Bains, the BC NDP Minister of Labour and the opposition critics were passionate in their views but respectful in understanding the difference of opinions in the room.
I look forward to working with both government and the official opposition to further advance a labour policy review for the construction sector.
Below I reproduce the video and text of my speeches to the two amendments. I also provide a copy of some brief rebuttal remarks I made after the Minister of Labour spoke. At the end of this post, I reproduce the media statement our office released after the passage of the bill.
Videos of Committee Stage Debates
| 1st Amendment | Further Remarks | |
| 2nd Amendment |
Text of Speech in Support of 1st Amendment
A. Weaver: I rise to take my place to speak to the amendment that was brought forward by the member for Shuswap.
As we know, Bill 30 is a unique piece of labour legislation. It’s one of the first pieces of labour law that has received the broad support of members in this House.
Over the last 30 years, we’ve watched as labour policy in this province swings back and forth like a pendulum as government changed and as ideological fights play out. Putting an end to these pendulum swings, which create instability and division, was essential for our caucus. We further believe, as a caucus, in supporting evidence-based policy that ensures the protection of workers.
In this regard, the work of the expert review panel was essential. They made balanced and thoughtful recommendations as to how we could and should update our labour code in the province of British Columbia.
The amendment before us today, brought forward by the member for Shuswap, addresses one of the very few areas where what the government brought forward in the legislation before us differs from what the panel recommended.
Over the last few months, my colleagues, staff and I engaged with numerous stakeholders to develop a deeper understanding about the various forces at play in this issue of labour policy. What we learned through extensive consultation engagement is that construction labour law in the province of British Columbia is particularly unique. Yet my colleagues and I know that we are not the experts.
What rose from our engagement is the realization as to how essential it is to not simply pass the legislation, as is amended, and to move on from these issues, but rather to take the time to look deeper into construction labour law.
There are a number of challenges facing the construction industry that we firmly believe need to be explored further, including, of course, the question raised in the amendment before us concerning when and how raids can and should be allowed for. The panel itself acknowledged that there are construction-specific issues that relate to the changing labour code.
The B.C. Green caucus understands the profoundly unique nature of the construction industry. There are a number of examples that can be given. We know, for example, that in public sector unions or public sector sites, often people are in the same place for their job — on the construction site. We know that safety is often front and centre in deliberations on the site. We know that workers move from site to site to site. We know that is a very different type of working environment than, say, a stationary environment where you work in the same place.
We understand the special challenges that exist. We understand that there are unions like CMAW, like IUOE and others who actually are end-to-end project unions. We know, also, that present rules within the B.C. Federation of Labour do not allow unions to raid other unions in the Federation. So in the spirit of fairness and openness and transparency, this, to us, must be collectively addressed.
We understand that the construction sector needs a review. We understand that changes need to be there. But we also understand that the terms of reference of the panel precluded them from singling out this sector to actually provide a separate report and suite of recommendations for the construction sector.
In our view, we accept the numerous voices that told us that what they were seeing — whether you’re a representative from a union like CLAC or a union like IUOE or a union that wasn’t in the building trade, represented by the B.C. Fed — is that they’re looking for a fair and level playing field.
That is exactly what we’re looking for, one that’s grounded in evidence, not in ideology.
I come to this again, and I say this. IUOE, an end-to-end organizing union — let us suppose, hypothetically, that they go to a construction site and recognize that on that construction site, the workers there are being represented by an additional union, and that environment is not safe. Or, perhaps, there’s a multitude of unions. The IUOE, right now, is prohibited from raiding into those areas, if said unions there already are members of the B.C. Federation of Labour.
Now I come to the nurses’ union, when there was concern within the licenced practitional nurses with respect to them being represented by the health employers union. The concern was such that the licensed practition nurses felt that they would be better represented by the nurses’ union. A raid happened. The response, of course, was that the nurses’ union was kicked out of the B.C. Federation of Labour.
Is that fair? Is that actually what we’re aspiring to, here in the province of British Columbia? No. I think we’re aspiring to fair and transparent workplaces — that is, fair for all, not just for the chosen few and not just for those who have stood forward and actually have stronger influence, perhaps, with government than others.
That is why we are calling on the government to undertake a comprehensive, independent review of the construction sector, in addition to supporting the amendment before us now. There does not appear, in British Columbia, to have been a comprehensive review of this industry since 1998.
Now I’m not counting the kind of — what I would argue is a very one-sided — so-called review that occurred in the early 2000s, when the Liberals took over back then, because the building trades weren’t invited to the table. I’m not accounting a self-reflective review that’s also happened.
A proper fundamental review of how labour policy should be applied in the construction sector, I think, is long overdue in this province, because we know that in other provinces in the country, like Ontario, there are a hybridization of labour laws — one that treats stationary workplaces and one that treats transient workplaces or places where you’re not on the same site every day. We cannot expect the same labour policy to apply to stationary and transitory workplaces. The fact that we’re trying to squeeze a square peg into a round hole, to take bits and pieces of what the independent expert committee has recommended, is troubling to the caucus, because we appeal to experts for our advice.
We know, and we understand, and we heard from the construction sector that many of the sweeping changes that have been brought historically hurt that sector. We appreciate that. We understand that. We heard that. That is why we urge the government to commission a further sectoral review of labour laws in the construction sector. We support an independent review. We support a timely independent review, one with short time frames and one that looks at the unique realities of this sector of the economy and expands on the recommendations of the current labour relation code review panel.
In my view and in my caucus’s view, by doing this, we can ensure that we bring forward policy to this table that does create a fair, balanced, level playing field, grounded in evidence, not ideological or historical positions. I think, ultimately, that’s what most workers want. They want the opportunity for a fair and open workplace.
Until such time as this separate review can take place, we felt it was prudent to follow the advice set out by the current review panel and, therefore, support the amendment to ensure its language is reflected in this legislation. If a deeper dive identifies challenges with this, I hope that all members of this House would be open and prepared to support additional changes. Our caucus is. We’ve heard loud and clear that there are numerous questions that remain unanswered and want to ensure that a process is established that gets politicians objective analysis and recommendations to act upon.
More than anything, we believe, as a caucus, that we must end this ideological tug-of-war that has been allowed to take place in our province for far too long. It is not about union versus employer. It is not about worker versus employer. It is about doing what’s right to create a fair and balanced work environment for all workers in British Columbia. I think that that only will happen if we actually target this industry with a separate, independent, thoughtful review of the construction sector.
Further Remarks to 1st Amendment
A. Weaver: I just wanted to rise and address a couple of the comments there. I do appreciate the minister, and I think we’re very well served in British Columbia by the minister, who is very fair and open with his deliberations and so forth. I would say that, in listening to the minister’s speech there, he said a few things that were flags to me.
He talked about the fact that this was stopping workers from having a right to…. It does no such change. What we’re saying is that the expert panel recommendations were there as a suite. They were not there to pick and choose. We recognize and we’ve supported all of the recommendations. The important successorship changes — we supported that. In this particular case, what we’re saying is that we don’t think the expert panel did the work that needs to be done to carve out the construction sector and to look at that independently.
Now, the minister has suggested that he has the solution. That’s his view, and that’s fine. It’s his prerogative to have that. Our position is that we don’t have that information. We don’t have that information on which to make a decision in this area, because I suspect that the construction industry would have a lot more that might have to change if we actually went to a review.
I honestly don’t think the construction industry, in the province of British Columbia, has been served well. I don’t think they’ve been served well for many, many years. I come back to the issue that, if there are many sites, those will be represented by a multitude of other unions. But if you are a trade union — a building trade — you cannot raid into those unions. The minister says that that’s their right. It is their right, but it’s also our right as British Columbians to ensure that the playing field is level.
This is not about trying to create an us versus them — us versus CLAC or us versus Unifor or us versus the nurses. This is about recognizing that labour law must represent the diversity of views that are out there and be inclusive and respectful and grounded in evidence that will probably not get what everyone wants but builds forth to a policy that we can actually grow from, as opposed to a pendulum swinging back and forth.
That is one of our singular objectives: to ensure stability, consistency and certainty. We’re not convinced, and certainly no evidence was put for us, that with the change to the summer months, in fact, that will be maintained with an annual, as opposed to the existing recommendation within the panel.
With that, I’ll take my place.
Text of Speech against 2nd Amendment
A. Weaver: I rise to provide support to the minister with respect to his views on this amendment. We understand where the official opposition is coming from. On page 18 of the expert report — as the minister said, it is a superb report — the experts state as follows: “A successor union should be able to apply to the board to have a collective agreement reopened, and the board should have discretion to grant such relief in extraordinary circumstances, having regard to its section 2 duties. This would permit the exercise of this discretion where, for example, terms of the collective agreements are clearly inferior to the norm in the sector.”
The words there were contained in the preamble leading up to the formal recommendation. As the minister pointed out, we believe that in fact the expert panel were, in their recommendations, very thoughtful in terms of the exact usage of language. Were we to add the words “extraordinary circumstances” into the recommendation, I would suggest that this is actually going a step further, because the panel was actually quite careful in not using the words in the actual recommendation.
With that, I will take my place, noting that we will not support this amendment.
Media Release
B.C. Green Caucus Calls for Closer Look Into Construction Industry Labour Code
For immediate release
May 28, 2019
VICTORIA, B.C. –Supporting evidence-based policy that restores protections for workers and ends pendulum swings in the labour code are priorities for the B.C. Greens, and the expert panel’s recommendations should be expanded on to address the unique challenges presented by the construction industry.
“My colleagues, staff and I engaged with a number of stakeholders to develop a deeper understanding about the forces at play and have concluded- as did the panel- that construction labour law is particularly unique,” B.C. Green party leader Andrew Weaver said. “Because of these unique challenges, we believe it is essential that we do not simply pass this legislation and move on. The construction industry and its workers deserves a thorough review, which it hasn’t had since at least 1998. The B.C. Green caucus is strongly in support of a panel mandated to address the unique realities of this sector of the economy, and expands on the recommendations of the current Labour Relation Code Review Panel.
“Until such a time that a separate review, one more focused on the challenges of the constructor sector, can take place, we feel it is prudent to follow that advice set out by the current review panel, and therefore support the amendment to ensure its language is reflected in the legislation. If a deeper dive identifies challenges with this, I hope that all members of this House would be prepared to support additional changes. We have heard loud and clear that there are numerous questions that remain unanswered and want to ensure a process is established that can get politicians objective analysis and recommendations to act upon.”
The B.C. Green caucus supports other significant provisions of this legislation, which take important steps forward to better protect workers and ensure balance in workplaces. These include:
- Extending successorship provisions to protect workers in building cleaning/janitorial services, security services, bus transportation services, non-clinical health care services, and food services;
- Improved access and protection of collective bargaining;
- Removing education as an essential service.
“More than anything, BC Greens believe this legislation will go a long ways towards ending the ideological tug-of-war that has been allowed to destabilize the province’s labour code for the past 30 years.”
These amendments are necessary adjustments to existing labour law, but there is more work to do to address the other fundamental challenges facing the economy.
“Unfortunately, what continues to be missing from the conversation is a focus on how we can adapt our labour laws to support people grappling with the changing nature of work,” Weaver said. “From increases in precarious, gig-based jobs, to the increasing use of contractors instead of employees, British Columbians are dealing with huge changes to job stability and income security, and our laws aren’t keeping up.”
The B.C. Green caucus consults with government to improve fairness for workers and ensure balance in the workplace as part of the Confidence and Supply Agreement.
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Media contact
Macon McGinley, Press Secretary
B.C. Green caucus
+1 250-882-6187 |macon.mcginley@leg.bc.ca
Public Consultation on the 2020 BC Provincial Budget
The Select Standing Committee on Finance and Government Services Committee’s Budget 2020 Consultation is taking place in June, 2019.
British Columbians can share their priorities and recommendations for the next provincial budget by speaking with the Committee at a public hearing in-person or via teleconference, making a written, audio or video submission or completing an online survey.
Registration to reserve a speaking time will be available beginning Monday, May 27 on the Committee’s website.
Teleconference opportunities are available by calling 250-356-2933 or 1-877-428-8337 (toll-free in BC).
Speaking times will be 10 minutes – 5 minutes for the presentation and 5 minutes for questions from Committee Members.
The Committee will be holding public hearings in 15 communities from June 10-14 and June 17-21:
Colwood, Kimberley, Castlegar, Kelowna, Kamloops, Courtenay, Qualicum Beach, Vancouver, Prince Rupert, Kitimat, Prince George, Fort St. John, Quesnel, Abbotsford and Surrey.
In accordance with the Legislative Assembly’s commitment to accessibility, public hearings take place in accessible settings. Every effort will be made to accommodate any additional accessibility requirements, including the need for interpretive services.
The opportunity to make a written, audio and video submission, or complete the online survey will be available beginning June 3, 2019 on the Committee’s website.
The public consultation takes place every year and the Committee considers the priorities expressed by the public and develops recommendations for the next provincial budget. Your input and the Committee’s recommendations are included in a report to the Legislative Assembly that is publicly released on or before November 15. This year, the Committee intends to release its report by late July/early August.
For full details on how you can participate, visit the website
To receive updates on the consultation, email FinanceCommittee@leg.bc.ca to be added to the email distribution list.
The deadline for all input is Friday, June 28 at 5:00 p.m.
Committee stage for Bill M209: Business Corporations Amendment Act, 2019
On Tuesday and Wednesday of this week we debated Bill M209: Business Corporations Amendment Act, 2019 at committee stage. As noted earlier, this is my Private Members’ bill that proposes amendments to the Business Corporations Act and will create a new Part 2.3 in the Act that enables companies to become benefit companies.
Below I reproduce the text and video of the entire debate at committee stage. The bill passed Committee Stage and third reading and now awaits Royal Assent. I also append at the end the media release my office issued upon passing of the bill.
Videos of Committee Stage Debates
| May 14 | May 15 |
Text of Committee Stage debate (May 14)
BILL M209 — BUSINESS CORPORATIONS AMENDMENT ACT (No. 2), 2019
The House in Committee of the Whole (Section A) on Bill M209; R. Glumac in the chair.
The committee met at 4:17 p.m.
On section 1.
A. Weaver: It gives me great pleasure to rise at committee stage for this bill. As the members are aware, this is a rather novel process and procedure here, so I hope members will bear with me, as it might take slightly longer than usual.
The Minister of Finance is here with her staff. Unfortunately — or fortunately — I’m not able to communicate with her staff. I may have to ask questions of the minister of a technical nature with respect to the broader Business Corporations Act, in which case, she would respond to the question via information from her staff through consultation with them.
My staff, Sarah Miller and Stephanie Siddon, are back there in the public gallery, and I may have to walk over to them to chat with them in the public gallery because they’re not able to be present behind us.
This is interesting. We’re sort of breaking new ground here, so I thank everyone for their indulgence as we move forward.
M. Lee: Well, with those words of introduction by the member, I’d just like to ask if we could we could just have a general understanding in terms of this particular bill and the way that it was drafted. What model was used for the purpose of this bill?
A. Weaver: Could I start by asking for a clarification as to what the member means by the term “model?”
M. Lee: Well, for example, the other word that could be used is “precedent.”
A. Weaver: Right now in Canada, there are no other provinces that have a benefit company legislation. So in essence, there is no precedent in the Canadian context on which this legislation is based.
M. Lee: Were there any other precedents used from any other jurisdiction?
A. Weaver: The process involved in the drafting of this bill was extensive, over the period of about two years. We started…. Initially the issue was brought to us by members in the business community who were concerned that there was no avenue for which they could incorporate to recognize the direction they wished their company to go.
In British Columbia, the member will be aware that we have the C3 networks brought to us by small business — that in fact this does not work for some of them because of the asset lock associated with C3s. So we essentially drafted this through extensive consultation with independent lawyers, with third-party advocates, with the business community. We held stakeholder engagement meetings in Vancouver several times, and we worked through the legislative drafters.
In the legislation, there was our legislative drafter assigned to us who put the draft together. We had many iterations of that. We worked through the Ministry of Finance to get feedback from the Ministry of Finance as well. They, too, had comments that we tried to incorporate. That led to the bill that is before us today.
The member will recall that I first introduced the bill last spring and left it on the order paper for a six-month period. It died on the order paper at the end of the fall session. The goal of doing that was to gather feedback from broader stakeholders to ensure that we were reflecting that feedback in this particular bill.
M. Lee: Thank you for that response. In terms of the level of consultation, can the member please just provide some further detail around the types of groups and the level of response and feedback that was received?
A. Weaver: Over the past year, we consulted with a number of stakeholders, as I mentioned, including business leaders, owners of C3s. It was very important to us that the C3 community was supportive of this direction we’re proposing. We met with stakeholders in that community, both C3 businesses as well as some key advocates who were involved in advocating for the C3 business model here in British Columbia, as well as lawyers.
We also consulted on the legislation in the fall of 2018 with lawyers from the Canadian Bar Association, in particular, to ensure that it fit well within the Canadian law context. We met with several academics at various times, and we had round tables with business owners several times, twice actually, and a few dozen people came in that regard.
M. Lee: Well, I think it’s important, of course, in this process. We have also heard, as a B.C. Liberal caucus, from members of the community who have specific considerations, which we’ll be talking about during the course of the review of this bill, section by section.
Just with that in mind, from the time that this original bill was tabled in the spring session, what changes and what considerations have been made to the original form of the bill versus this current one?
A. Weaver: The bill refines the previous version of the bill introduced last spring to better fit into the current statutes. We took the last draft, the one that the member referred to, into consultation. We sent it to the Canadian Bar Association to get feedback from them. It removed the requirement….
The key change was that we removed the requirement for benefit companies to change their name, as the feedback we got from stakeholders was that this would be viewed as cumbersome and a significant barrier to adoption. There were a few subtler changes that were made with respect to the role, the duties of acting directors. A slight change there and also another small change with respect to section 157, under section 7 of our act here.
M. Lee: In terms of the considerations about this bill, it has been said, of course, that the B corp. original framework comes in the U.S. context. So what differences are in this current bill that are different from the B corp. model?
A. Weaver: This bill does not refer to B corp. in any way, at any time. The B corp. is a third-party verifier of benefit companies in the U.S. context. So there is no reference of B corp. in this legislation.
M. Lee: We will certainly talk about the necessity of having a third-party standard-setting body when we get to section 5 of the bill. But in terms of the actual framework in the U.S. context, what differences are there between this legislation from similar legislation in the United States?
A. Weaver: I developed, in consultation with ministry staff, stakeholders legislation in the context of Canadian law and British Columbian law. We did not focus on U.S. law, so I am not able to answer the question to the member’s satisfaction because I did not base this on anything to do with U.S. law.
M. Lee: So again…. Well, let me reserve the question, then, in terms of standard-setting bodies to that particular section.
In terms of any other considerations around how benefit corporations would work in Canada, were there any tax considerations that were driving part of the drafting of this bill?
A. Weaver: Tax considerations were not front and centre — or actually considered — in the drafting of the bill. Our concern in drafting the bill was providing a mechanism and a process to allow those companies which wish to incorporate as benefit companies a process to do that. It would ensure that directors would be able to, and under the benefit company legislation, they must act beyond just the fiduciary responsibility and the benefit company legislation provides an avenue to do that.
To the member’s question. I suspect what he’s…. Correct me if I’m wrong, but what I suspect he’s trying to get at here is: why do we need this legislation in Canada versus the United States?
We know that it’s generally recognized that Canadian corporate law does not have a strict shareholder primacy that they have in the U.S. We recognize that. So directors of companies in Canada already have more discretion to pursue a broader mandate beyond maximizing shareholder profits. We recognize that.
We also recognize that directors of ordinary companies are held to the standard of acting honestly and in good faith with a view to the best interest of the company. It’s likely that this standard is sufficient right now to allow directors to consider other stakeholders beyond shareholders. We understand that.
However, we’ve heard from many businesses operating in this space which choose to pursue a triple bottom line, that approach to business. This legislation before us would help them feel secure in pursuing their mission.
For example, the legislation would provide a simple standardized framework for companies to adhere to that is legally and commercially recognized. It would provide clarity for directors and shareholders about the nature and mandate of the company and its goals. It would provide reassurance to individuals wishing to be directors of benefit companies that they are free to pursue the triple bottom line, and it would provide certainty for impact investors of the nature and mandate of the company.
Finally, it would enable companies to attract capital while being true to their mission as they grow. That’s an important distinction from the C3s, which, in British Columbia, were brought forward as a model, but it is a model that is also associated with an asset lock, which has precluded many impact investors from actually investing in the said C3 companies.
The legislation would also encourage more companies to pursue socially responsible and environmentally sustainable approaches to business, creating beneficial outcomes for society as a whole and leveraging the power of business to help us tackle significant social and environmental change.
I hope that’s addressing where the member is going.
M. Lee: It’s more than addressing where I was going, but I’m happy to have that conversation at this point. We had some of this discussion, of course, at second reading.
Certainly we continue to hear, in the community, questions about the need for this particular legislation. To ask the question this way, in the description that the Leader of the Third Party has talked about in terms of the need for this particular bill, when he looks at that list of items, what are the particular items that aren’t already provided for under the Business Corporations Act, in terms of corporations that are able to function, with these good purposes in mind, that isn’t already provided under the current act?
A. Weaver: There’s a rather extensive answer to this question, because I think it’s an important question. I’ll start by noting that it’s important for us to recognize that Canadian law is distinct from U.S. law. The member has referred to B corp., which is a U.S. third-party verifier.
We don’t have the shareholder primacy concerns here in Canada that they have in the U.S. However, case law in Canada has made it quite clear that directors of Canadian companies may consider other shareholders in their decision-making.
This bill before us goes much further in that difference. It recognizes the difference. It holds directors of benefit companies to an even higher standard. Rather than saying “directors may,” directors of benefit companies must consider their impact on environment and on people affected by the company’s conduct, and they must balance this duty with their traditional duty to the best interests of the company. That is a very important difference between existing law and what benefit companies are doing.
This would represent a novel and significant development in our law. In light of this significant addition to the duties of the directors, we wanted to ensure that the directors are willing to take this extra step and aren’t opening themselves up to substantially more liability by trying to do good. That’s why we chose to provide these protections in the legislation.
The legislation moves beyond existing legislation. It reduces risk for those directors and companies that wish to move down into triple-bottom-line approach.
We further consulted extensively with the B.C. branch of the Canadian Bar Association, and the lawyers who reviewed the legislation as part of this consultation did not actually raise the concerns that the member is suggesting. In fact, practising lawyers who work with clients in this space…. These are the ones in the field who are working with clients who have asked about this. They argue that the protections for the directors included in this legislation are critical. They have been recommending to their clients that they not actually go beyond the kind of fiduciary responsibility because of the additional risk that is being taken up. We sought to find a middle ground here between accountability and protection from directors that is reflected in this legislation.
The member may refer to the rather well-known BCE case. I will suggest that that case is the one that made it quite clear in case law in Canada that, in fact, directors may go and consider issues beyond the fiduciary responsibility. However, the federal government recently, in their budget measures implementation acts, actually codified this BCE as legislation in the federal statute.
In our view, as I said, this is an important addition that is not covered under existing case law in the context of the broader bill.
M. Lee: I think we’re in general agreement there are good purposes to have companies act in a responsible and sustainable manner with the aims of elements of what is described in public benefit. Certainly, I can appreciate the reduction of director liability that is spelled out in this bill. And again, we will get to that section of the bill, but I think it’s important, at the outset, to understand the overall framing of the bill and the reason for it.
This is the reason why, when I look at our corporate act, the Business Corporations Act, and the case law that surrounds that act and other similar legislation in this country, it obviously does not preclude companies from reporting on their environmental management, their impact on communities and their local community activities, for example, in places in which they operate.
Certainly, when you look at any annual report or any public disclosure required for any publicly traded company, you have that level of the disclosure and measure around the aims of that corporation.
What I’m hearing from the member, of course, is that the difference under this bill is that those particular aims are being spelled out specifically, and as a result, we need to lower director responsibility in terms of how they might be held accountable for meeting that public benefit.
I guess it does invite the conversation around what is the member’s view on what is good corporate citizen behavior in this country. And though we have an expectation under our corporate statutes today that companies that are incorporated under the Business Corporations Act — corporations that don’t get incorporated under this new act if it passes…. What is the expected standard of those companies to act in the same way that we might see for a benefit company?
A. Weaver: Thank you. I appreciate the question.
First off, to clarify, this legislation does not affect the fiduciary responsibility of a director at all. It’s no difference between a benefit company and any other company.
However, in the case of the benefit component of the benefit company, the liability is reduced from a pecuniary one to one that is simply injunctive relief. So what we’re saying is that in the case of the benefit, the reduced liability is in the injunctive relief.
To the member’s case about: “We expect good corporate citizens in British Columbia….” Well, we might expect that, but the only way to test that is to go to court if you don’t like a decision, and that would preclude the average person from actually taking that step. We have some examples where companies have wanted to actually stand up and do more.
The recent example of Loblaws, for example. Shareholders rejected a proposal by Loblaws that wanted to talk about considering moving forward with the living wage. So shareholders very recently reject this proposal. So now Loblaws, if they were to introduce that, could open themselves up to a challenge, because the shareholders rejected the proposal on living wage.
Had Loblaws incorporated as a benefit company, and in their benefits they had specifically stated articles that were there to ensure that their employers were treated in a particular fashion, then the protections would be there for their directors to actually introduce the living wage in their workforce without the fear of actually having a legal challenge to them that would lead to financial penalties.
They could have injunctive relief sense — they could be told not do that — but with the benefit provisions there, it protects companies from doing what they want to do. The Loblaw example is a great counter-example to what happens when we don’t give an avenue for companies to actually do the good they want to do, because shareholders don’t want them to do that.
So while in theory, in the theoretical world, the notion that companies right now may do good if they wish — and the BCE ruling underpins that, and now federally, the federal government is moving through to enshrine that in their Budget Implementation Act — it’s still in optional fashion.
We believe — and the fact that many companies came to us with this as an example of their frustration — that it was critical to actually provide this opportunity to allow companies to move towards this kind of new approach. It is innovative. It’s novel. It’s been incorporated in a number of states in the U.S., as the member alluded to, as well as Italy and a few other jurisdictions. And as we move forward, I think you’ll see that the uptake is quite exciting.
M. Lee: I think it’s important to understand the distinction and the aims of this bill. It’s also important to keep in mind the unintended consequences that might occur with some of the provisions of this bill, which we’ll get to. But I think it’s important to say that I would have thought that, as members of the Legislative Assembly, we have every expectation that companies will meet many of the objectives of this bill, and they’re able to do that.
Certainly, in terms of shareholder proposals under the Business Corporations Act, there are requirements for when a shareholder puts forward a proposal to a general meeting of shareholders for a company. That’s something that, for good governance purposes, it’s necessary to set out in that set of protocols. But here, just to ensure that…. When we start playing with and adjusting the responsibilities of the directors, and also how public benefit will be defined — which is in the public interest of this province, presumably — these are the areas of the bill that we’ll be exploring.
But I just wanted to at least have on the record that discussion to understand the general thinking behind this bill. So thank you for that.
Sections 1 to 3 inclusive approved.
On section 4.
M. Lee: If I could invite the member to just walk through with us the requirements of where a benefit report will be maintained as per the provisions of the Business Corporations Act, subsection 42(1)(q.2).
A. Weaver: Section 46 of the act is modified to add after No. 4, which states: “Any person may, without charge, inspect all of the records that a company is required to keep under section 42, other than the records referred to in section 42 (1) (l) to (o) and (r) (iii), if the company is a public company, a community contribution company, a financial institution or a pre-existing reporting company.” That’s subsection 46(4).
We’re suggesting to add 46(4.1), which adds, as well, that: “Any person may, without charge, inspect the copy of the benefit report that a benefit company is required to keep under section 42(1)(q.2).” The location of keeping the records is no different from any other company.
Section 4 approved.
On section 5.
M. Lee: I first wanted to ask the question about the public benefit definition. It’s been commented upon to us that this actually is a weaker definition than what’s appearing under equivalent charity legislation, whether it’s societies or others. Could the member comment on comparing this definition versus other similar definitions for charitable organizations?
A. Weaver: I’m going to ask the minister, after I’ve responded, whether she has any additional insight. When we move beyond the immediate bill, it’s a little more difficult, without the depth of expertise, to know how some things relate in other areas.
I will say that what we did is we focused quite extensively on the Business Corporations Act, section 51.91, which is part 2.2, Community Contribution Companies. In that, there’s a definition called community purpose. In there, it’s defined as this: “Community purpose means a purpose beneficial to (a) society at large, or (b) a segment of society that is broader than the group of persons who are related to the contribution company, and includes, without limitation, a purpose of health, social, environmental, cultural, educational or other services, but does not include a prescribed purpose.”
We modelled our definition of benefits based on the definition of community purpose as per the community contribution companies, the legislation of which was brought forward by the previous government.
To continue, if I go to the…. I must get to my bill here. With respect to the public benefit, here what we tried to do was we tried to be inclusive to ensure that we weren’t prescriptive of exactly what that benefit would be, inclusive to allow a class of persons, as outlined here, as well as the environment. So it’s broader, but it’s modelled after the C3 legislation.
I’ll take my place and perhaps the minister may supplement that.
Hon. C. James: I think the definition is there. It’s a broader definition. That’s basically the difference. It’s more expansive, a broader definition than the member was describing. So I wouldn’t describe it in the way the member described it. I would describe it as a more expansive, broader definition.
M. Lee: I guess the linkage on this would be, looking forward, something we’d consider under the same section. So I guess we can speak to it, if we can jump back and forth, because section 5 of the bill obviously has numerous subsections, which I certainly would like to go over.
Just where public benefits is utilized, under subsection 51.993(a)(ii), for example, it says that the: “director or officer of a benefit company… must (a) act honestly and in good faith with a view to (ii) promoting the public benefits specified in the company’s articles.”
Was there a consideration around the use of the word “promoting,” as opposed to some other word that actually might reflect action?
A. Weaver: With respect to the word “promote,” we did not seek alternate words for the word “promote” there. However, the key aspect of 51.993(1), in our view, is…. And the action is in (b), where it states specifically that the director or officer of a benefit company must “balance the duty under section 142 (1) (a), with the duty under paragraph (a) of this subsection.” The balancing aspect is the action that we believe is needed.
M. Lee: I think we’ll be on section 5 for some time, given the nature of the provisions that are all under section 5. Maybe we could just speak to the balancing aspect there. In terms of the way this was drafted, it appears that one reading of this provision may be that when you look at the actual section in the Business Corporations Act, under subsection 142(1)(a), that sets out the requirements of how a director must act “honestly and in good faith with a view to the best interests of the company.” And as the member spoke to, “best interests of the company” has been really thoroughly canvassed and defined under case law as to what that means, in terms of a more expansive definition interpretation.
Sub (b), “exercise the care, diligence and skill that a reasonably prudent individual would exercise in comparable circumstances, (c) act in accordance with the Act and regulations, and (d) subject to paragraphs (a) to (c), act in accordance with the memorandum and articles of the company” — which, of course, in the articles, can state a specific set of purposes for which that company is incorporated. That exists today I note.
In terms of the sub (b) portion of 51.993(1)(b), as the member just mentioned, there is language that says “balance the duty.” So could I ask the member for how this provision with that lead-in language is intended to be interpreted? And does it qualify the existing standard of director responsibility under subsection 142(1) of the Business Corporations Act?
A. Weaver: Thank you to the member for the question. Section 142 of the act, as the member noted, says that “(1) a director or officer of a company, when exercising the powers and performing the functions of a director or officer of the company, as the case may be, must (a) act honestly and in good faith with a view to the best interests of the company.” Stop there. Nothing in the bill changes (b), (c) or (d) in section 142.
However, what we’ve done here is say in Bill M209, 51.993(1)(b), that one must balance what’s in the best interests of the company — that’s 142.1(a)— with the thing immediately above it. That is that the directors are expected to “act honestly and in good faith with a view to (i) conducting the business in a responsible and sustainable manner, and (ii) promoting the public benefits specified in the company’s articles.”
This is the subtle difference. We are adding that section, which suggests that we’re now saying that those two must be balanced with 142.1, which is the duty to “act honestly and in good faith with a view” to the best interest of the company. So we’re extending this beyond just the company, without touching the (b), (c), (d), which are the “exercise the care, diligence and skill, etc., act in accordance with the act, ect., and subject to paragraphs (a) to (c) etc.”
M. Lee: I just suggest with the drafting that’s here that the word “balance” may suggest that there’s a greater priority where there may be some conflict with how a director is to meet their duties, whether it’s duties to act in the best interests of the corporation or duties to promote the public benefits as set out in the company’s articles, which would be an example of how we would fit those two provisions together.
Let me ask, first of all, whether the member, in terms of the consultation, has received comment on this particular provision? Because we certainly have received letters recently, in the last few days, about concerns around this particular provision, for example.
A. Weaver: I think I would have received the same emails, because I believe the member and I were copied on the same emails. There were three people who contacted us who had very similar concerns. We had many others who contacted us who did not share those concerns.
In this case, I think what we’re trying to do here is…. We recognize the word “balance” is one that needs to be coupled with some more protection for directors, which is why we’ve added just the injunctive as opposed to monetary relief.
In the bill, down in section 5 of 51.993, you’ll see there it says: “Despite any rule of law to the contrary, a court may not order monetary damages in relation to any breach of subsection (1).” The reason why we’ve done that is because, in the attempt to balance the best interests of the company with promoting the public benefits and conducting the business in a responsible manner, we recognize that we want to protect directors who are trying to do that. So injunctive relief is available to shareholders, but not monetary relief with respect to the benefit component of it.
We have received extensive feedback from a variety of people. This issue was raised by a couple. We disagreed with that, as did others.
M. Lee: I appreciate the view of the member in terms of the feedback he’s received of concerns.
I don’t know that it’s necessarily a numbers situation in terms of greater quantity in favour versus against, so to speak, for concerns. I do recognize the concerns that have been shared with the member and myself and others, other colleagues in our B.C. Liberal caucus here.
But I think the other way of coming at balance is actually to read this against 51.993(3), which does speak specifically to this specific example I gave, because in each case, it refers to section 142(1)(a) of the act. That specifically, explicitly says the “director or officer of a benefit company does not contravene the duty under section 142 (1) (a) of this Act due only to the director…acting in accordance with subsection (1) of this section.”
I guess the way this is drafted, it does turn back on itself in the sense that you’re not found to be in breach of that section of the act, which is to “act honestly and in good faith with a view to the best interests of the company,” as long as you’re balancing the purposes of promoting the public benefit specified in the company’s articles with that particular duty.
It would suggest that in a situation where a director may be found not to have acted in the best interests of the company, that director would not be in breach of what is a section of the corporations act which applies to every other director for the companies that we spoke about earlier in this province, as long as that director was attempting to balance the other public benefits that are specified in the company’s articles.
In my view, what that would suggest is that there is, effectively, a lowering of standards, let’s say, because that director no longer has to meet what is set out in the act in section 142(1)(a). Is there a concern that the way this bill has been drafted and composed, we’re effectively enabling directors of benefit companies to meet a lower standard?
Hon. C. James: The Finance Ministry, as we’ve said, has gone through the bill and has taken a look at the clauses. Just to touch on this piece, certainly our interpretation is that you still have the duty to act in the best interests of the company. None of this changes that. That requirement is still there, and adding duties doesn’t actually take away from that clause, doesn’t take away from the requirement still to meet the best interests of the company.
It adds the balance, I think, as the member has described. As he suggested, it talks about the balance, but it in fact, in our interpretation from the Finance Ministry, does not take away the requirement and the duty to still act in the best interests of the company. That still remains in the legislation, and that would be our interpretation.
A. Weaver: Just to clarify, that is our interpretation as well, and I thank the minister for providing that.
M. Lee: I did mention earlier that I will have a series of questions relating to section 5. They’re quite encompassing in terms of the main nature of this bill. I appreciate the response from the Minister of Finance as well as the member.
I would like to just come back, then, to section 51.993(3) of this bill, under section 5. Just on a plain reading of the words that are there in (3), it does say that the director does not contravene the duty under section 142(1)(a) of the act. So in what circumstances would a director acting in accordance with subsection (1) of this section be seen not to have contravened that particular section? What does that director need to do?
A. Weaver: I’m going to ask the Minister of Finance to provide some further clarification, but to address this first, I’d like to draw the member’s attention to 51.993(3). The key words there are “due only.” It says here: “A director or officer of a benefit company does not contravene the duty under section 142 (1) (a) of this Act due only to the director or officer acting in accordance with subsection (1) of this section.”
To give a specific example, let’s suppose, hypothetically, I’m Loblaws and I decide that I would like…. Because I’m a benefit company and in my articles, I have an article that I believe it’s important to pay living wages, and I believe it’s important to treat employees in a certain way — some articles in that regard. The fact that I’m doing that and that is a benefit as defined in 51.993(1)(a), that by itself does not undermine my ability to act in good faith, with the view of the best interests of the company.
That is essentially saying that if a director, due only to trying to apply the benefit as articulated in 51.993(1)(a)…. Due only to that, that in and of itself does not undermine the director’s ability to act honestly and in good faith with the view to the best interests of the company. I think it’s quite clear, and the keywords are “due only.” Perhaps the minister could expand on that.
Hon. C. James: I think the keyword, as the member has said, is “only” in this section, from our read. It spells out that a shareholder wouldn’t be able to sue a director focusing on the additional duties that have been put in so the sustainable manner, etc., would mean they contravened their requirement to act in the best interests of the company.
I think the “only” identifies that. It doesn’t actually take away from the ability to act in the best interests of the company, and it ensures, as I said, that that claim can’t be utilized. In fact both duties, as we talked about in the previous discussion, are required and are required to be balanced, as it says in that section.
M. Lee: I think trying to work through examples would be helpful, and I appreciate the member raising one. I’m sure we can think of other examples.
I think, conceptually, I appreciate what the Minister of Finance is saying — that it’s intended that, effectively, both duties are to be met. It just strikes me that, the way this is being expressed, including in the response, effectively you could have a situation where a director or a set of directors are not being found to be in breach of acting in the best interests of the corporation because they’re more minded to promote the public benefits that are set out in the company’s articles.
This gets back to the earlier discussion as to why we need this bill in the first place, because really, as we look at the expanse of case law interpreting statutes like the Business Corporations Act, we see a more expansive definition of what the best interests of the corporation means. It doesn’t just mean the shareholders. It does mean stakeholders, which includes employees, community members in which a company might operate. So it does extend beyond that.
I think the considerations that this bill is trying to address by framing it this way…. There are concerns regarding how a director’s liability, effectively, will be potentially watered down in order to meet this higher standard.
Let me just go back to where we were in the definition section of part 2.3, section 5, which is around the “public benefit” definition itself. When we deal with the environment — subsection (b) of this definition — were there other elements that were considered as part of this definition?
A. Weaver: The definitions were meant to be broad and inclusive. At the front, it says “means a positive effect, including of an….” It’s very broad and inclusive, so we did not consider anything other than what was here. We haven’t precluded that it only be that which is listed specifically because we’ve allowed for some flexibility.
M. Lee: Just in terms of the definition of “responsible and sustainable manner,” sub (a) talks about taking into account the well-being of persons. What other mentions of that term, “well-being,” is used in this definition?
A. Weaver: I’m sorry. I don’t understand the question. Could the member please repeat it?
M. Lee: I’ll ask it another way. What does well-being mean in the course of this definition?
Hon. C. James: I’ll just rise to speak on this because this was an area where feedback came from the Ministry of Finance.
The term that was originally utilized was “material well-being.” The suggestion from the Ministry of Finance was not to use the word “material” in defining “material well-being” because “material” implies that there could be a level that matters and a level that doesn’t.
Certainly, from our perspective, using the term well-being referred to in the plain-language, ordinary term of well-being, which we felt covered off in this section. Using material well-being implied that there would be a measurement to show it mattered and a measurement to show it didn’t. We felt well-being was a better description.
M. Lee: I appreciate the response in terms of material, and I can understand that. But in terms of the plain-language interpretation of well-being, if I could just get, for the record, a description of what’s intended to be captured by the use of that wording in this definition.
Hon. C. James: In statutory definitions such as this piece of legislation and other pieces of legislation, we do use the plain-language definition. That is the definition that is used, so it purposefully provides the opportunity…. But we’re speaking about people here, so the plain-language definition would include “good health,” would include “comfort,” and would include “security” — so personal security, economic security, well-being of persons. “Well-being of persons” would include those three plain-language definitions of well-being.
M. Lee: I thank you for that response. Just moving to the next subsection of that definition, sub (b) refers to “a fair and proportionate share of available environmental, social and economic resources and capacities.” Could I ask the member to explain what is intended to be captured within that section?
Hon. C. James: I think the important piece is that “fair and proportionate share” doesn’t stand by itself. Again, as we talked about linking clauses, it refers to, in fact, the “responsible and sustainable manner.” It provides the context around the responsible and sustainable manner — those two pieces together.
M. Lee: I appreciate the aims and the objectives of the definition as being something to aspire to. It’s curious to me, though, in terms of how a company will determine whether it’s fair and proportionate share, because fairness and proportionate share suggest that it’s fair and proportionate to others who are not under the purview of the company’s operations. Of course, First Nations and Indigenous peoples come to mind as to how you apportion environmental resources, for example, and economic resources.
I just wonder whether this has the benefit of a clearer definition as to how companies will actually utilize this definition and whether there is other similar legislation and use of this term. Is there any other similar legislation that would be of help in terms of interpretation under any other B.C. statute?
A. Weaver: We’re not aware of any other such statutes that use such a term. The purpose of such a term, in this definition here…. The intention, of course, is to provide guidance to directors under their dual commitment, which they’re supposed to exercise, as in section 142.1 — to “act honestly and in good faith” to exercise their duty and responsibilities to pursue specific benefits and operate responsibly and sustainably.
While my staff are not aware of other legislation, I’ll pass it to the minister in case she has access to other information.
Hon. C. James: No, I’m not aware of other legislation. But I think, similarly to the discussion we just had, it’s important to take a look at statutory definitions and the plain-language view of those. Again, “fair and proportionate share” would be linked to, again, “responsible and sustainable manner.” So using resources that you need while recognizing resources for future generations — those kind of plain-language approaches.
But I think the other piece that’s important in this section and around the definitions and how you interpret the definitions is the importance of the benefit report that will be issued by the company. In fact, the benefit report provides that accountability.
If there is a different kind of interpretation used by a company, for example, that the shareholders may not agree with or the public may not agree with, they won’t be investing, then, in that company. So there’s an additional level of accountability in this piece that I think is important just to mention, which is the benefits report and the opportunity for the public, the shareholders and others to be able to see the action on these definitions and to see the interpretation used and then provide, as I said, their decision around investment and work with the company.
M. Lee: I appreciate the responses. I just…. There’s a reason why I’m focusing on this provision, of course. It feeds into the section that we were talking about earlier, which is subsection 51.993(1)(a)(i), which is the standard for benefit companies under this bill that directors must “act honestly and in good faith with a view to conducting the business in a responsible and sustainable manner.”
This definition, of course, is instructive as to how a director or board of directors will ensure that the company is meeting that standard. And I appreciate, to the minister’s point, that there will be a benefit report. We can work through what that will look like on an annual basis.
But just coming back to this definition in sub (b), I think it’s another good example of what “fair and proportionate share” means, because fairness, of course, is in the eye of the beholder at the time that the company is actually doing its operation. And in the issues around lowering our carbon footprint and other considerations around our environment, for example, what does that mean in this context?
But the actual word that I don’t know that I’ve seen, also, in legislation — perhaps I can just ask specifically about this word as well — is “endeavours.” Has that word “endeavours” been used under B.C. statutes as a test in terms of what a “responsible and sustainable manner” ought to be?
Hon. C. James: So just a quick search. We can find other acts to be able to provide to the member with a little more time. But just a quick search shows that it’s often used in insurance contracts, but it’s also used in legislation. It’s been used in the Nisga’a Final Agreement Act and Maa-nulth treaty, as well.
M. Lee: I heard the second part of the answer, but the first part was insurance contracts?
Hon. C. James: Yes, insurance contracts often use insurance contracts.
M. Lee: Certainly, I can appreciate in respect of agreements like with the Nisga’a that there would be this kind of language utilized. I would suggest, though, in the context of this bill and in context of director liability and duties, that the precision might be more accurate in terms of the test that’s being utilized.
We’ve had the discussion under subsection 51.993 about the interplay, let’s say, with subsection 142(1)(a). Here’s another example, in my view, of what “conducting the business in a responsible and sustainable manner” will mean because “endeavours” is basically like “trying.” It doesn’t actually do that.
So in the trade-off of ensuring that directors are meeting what are these higher-level, aspirational, social-good-type goals, under “public benefit” and “responsible and sustainable manner,” there is a trade-off here in terms of…. Again, we’ve had the discussion about potentially reducing the level of responsibility of directors to meet those new duties.
But let me just go to another question here relating to “third-party standard.” Third-party standard, as defined under this section 5, talks about the overall performance of a benefit company, again, in relation to its “conducting business in a responsible and sustainable manner” and the performance of benefit company in relation to the public benefits, as stated in the benefit company’s articles.
Particularly in respect of public benefit and the use of the definition “responsible and sustainable manner,” why is it the case that a third-party standard-setting body is needed here?
A. Weaver: The reason why a third-party standard-setting body is incorporated is for transparency and accountability. We’re hoping to avoid a company self-reporting on itself and to ensure that the standards are examined in a transparent and accountable manner by an independent third-party arm away from the closed connections of the company.
M. Lee: So the nature of a third-party standard-setting body is a private entity. Is that correct?
A. Weaver: A third-party standard-setting body means a person or entity that is not related to the company.
M. Lee: Just in terms of the nature of public benefit, when we’re talking about issues relating to the environment, including air, land, water, flora and fauna and animal and fish and plant habitats, it would suggest that the determination of what public benefit would be in that area would be, of course, in another use of the term “public interest.”
So would it not be the case that the standard for defining and assessing and reporting on a public benefit would be best left with a public body which is of a governmental nature? Did the member consider that as being the body which would deal with these standards?
A. Weaver: Yes, and I appreciate the question. The goal here, and what we expect and hope will happen, is that we will see a rise in a manner parallel to what happened when the previous government brought in the carbon-neutral government legislation.
What you saw emerge there were entities that were arm’s length from government that were starting to move down the path of developing offsets, and those offsets were held to high international standards.
One of them, a B.C.-based company, offsetters.ca — a very well-known company — picked up in the mid-2000s to the latter part of the 2000s as a direct consequence of the previous government’s efforts in this regard. It doesn’t preclude a public entity. It doesn’t preclude a B.C.-based entity at this particular juncture. We didn’t want to be overly prescriptive, and there’s room, through regulation-setting, down the road to expand upon this.
M. Lee: Well, I think that we have regulators, of course, of companies. So whether it’s under particular regulations of government or, of course, the securities commission for public companies…. When we’re talking about director’s duties and how they’re dealing with the investing public, for example, it would be appropriate for that to be kept within government or some regulatory body of government.
I’m curious about the member’s suggestion that, akin to under the carbon-neutral tax that was provided by the previous government, there would actually be organizations that might be struck to deal with this new benefit company. Could the member expand on how those entities would service this area?
A. Weaver: Thank you to the member for the question. Under the carbon-neutral government legislation, governments were required to be carbon neutral. They were required to offset anything above. Those offsets had to remain in British Columbia. The problem was there were not offsetting agencies in British Columbia to respond to the need, to the demand that was created by this carbon-neutral government legislation.
One of the things that emerged was such companies emerged in British Columbia to provide the service that the market was demanding. Those services provide third-party validation and accounting of carbon offsets. So offsetters.ca is one. It used to be used by Air Canada; I think it may still be used. It was an example of business responding to the needs of business created through government signal that was sent out to the market.
I see no reason here why something different wouldn’t emerge down the road in the province of British Columbia. With the province of Quebec talking about enabling benefit companies there, too, we might see some partnerships with Quebec companies and B.C. companies, and we might see other provinces build on this.
As we move forward, we might see nationwide companies emerge. Again, we were open to allowing…. By framing it the way we did, we weren’t prescriptive that it must be a particular third-party validator. We also know that the regulations will be set in place in the following months, and we feel quite comfortable with the way it’s worded here.
M. Lee: Well, we’ve covered, at the outset of this committee stage, how novel benefit companies will be in Canada. I think I’m hearing from the member that he anticipates that there may well be organizations struck or established to deal with this new type of entity in this province.
That, I would say, is quite concerning in the sense that I’m not sure why this government would look at shifting the regulatory oversight of corporations and the investing public to these entities, which are not necessarily related to government and don’t have the sort of rigour and experience under the various regulatory bodies that are provided oversight.
Perhaps I could ask the Minister of Finance for her comment, as well, on whether there’s been any risk assessment, from a regulatory perspective, to have this standard setting being done by a third party as opposed to some government entity, which, in my view, would be more appropriate.
Hon. C. James: I appreciate the member’s question, but in fact, this act in no way is shifting regulatory authority. The Business Corporations Act is, in fact, a facilitative act. The entire act is facilitative. It provides an opportunity for companies to form. It gives companies the ability to form. There are other acts all across government that govern everything from market conduct to consumer protection to environmental protections, etc.
I think that’s the key here — that this is a facilitative act. The requirements around regulation are in other acts to protect consumers, to ensure that market conduct is followed. So this provides the facilitative approach.
Then, certainly, the check and balance that’s in here is the third-party reporting and the requirement around public reporting. So the public can then make their determination based on the public reporting that occurs and based on a third-party assessment about whether this is a company they want to invest in or not. That determination is there. So again, this follows along with a facilitative approach that the Business Corporations Act takes.
M. Lee: I appreciate, given the nature of this bill, that there’s a lot to think through here, and I appreciate the work that’s gone into this, as described by the member at the outset. I think as we walk through the bill, though, and hearing the Minister of Finance’s response, it raises a couple of additional questions.
Because of the nature of the standard-setting body, that body is responsible for determining the…. It includes the process used to develop a third-party standard, which is the criteria against which the benefit company’s performance is being measured and the relative weight of those criteria. You would think that that is an important role.
So the first point I would raise is that it feeds back into the ability of directors and officers to utilize 51.993, in terms of duties of directors and officers to, effectively, be a caveat on their performance on meeting the standards and duties set out in subsection 142(1)(a) of the Business Corporations Act. So as much as there are other regulatory bodies under other acts and statutes of the province that will deal with investor protection, for example, this body does play a very important role in setting the standard, and that is being delegated now under this bill to a third party — literally, because that’s the definition — which does not have that regulatory authority or experience or connectivity, let’s say, with a securities regulator.
I use that by way of an example because this seems to be an outsourcing of responsibility in terms of setting out standards to a third party which may not be related at all to government. Again to the Minister of Finance, does she not have concern about this delegation of authority out to a third-party body which may not be at all under the jurisdiction of government?
Hon. C. James: I think the first piece to start with is again to come back to the fact that this is a facilitative act. So if you were a company — not a benefit company, but a company, a corporation under this act — and you were looking at forming, government is not involved. Government now is not involved. It’s not that there’s any less involvement by government with the benefit company. In fact, government is not involved. This is an enabling act. It provides an opportunity for companies to form. Government is not involved.
That doesn’t take away the requirement for directors to meet the best interests of the company, as we were talking about. That’s there regardless. But there isn’t a third-party standard. There isn’t government who steps in and gets involved.
In fact, moving to look at the amendments that are coming forward and the benefit company, there will be a standard. There will be a third-party standard. The company will take that standard. They’ll apply it to themselves. Then the shareholders will make that judgment, just as they do with regular companies when regular companies report out each year. Shareholders will make a decision about whether the directors have met the best interests of the shareholders, and they’ll make a determination. That would be similar with the benefit company.
The additional piece that you have in this act is the third-party standard, an outside view taking a look at whether these standards have been applied. Again, the shareholders will make a decision. So from that perspective, there is no involvement of government in either of those processes. So it’s not that it’s taking away anything. In fact, I would suggest that it adds an additional standard that is here for the benefit companies.
I think the other piece is in the reporting out that happens, the benefit report. That includes why the selection of the third party was chosen. That has to be included as well. So there’s additional accountability, again, around why the company was chosen to be able to set the standard by the benefit company. That provides another level of accountability that’s there.
M. Lee: Well, I continue to see a concern regarding how, as described, there is an interposition of a standard-setting body with referral under this bill, which is between, arguably, the Business Corporations Act as a legislative framework and, let’s say, a securities regulator who — for investor fraud or concerns from an investor about fraud, misrepresentation or any other claim to court — might take the directors to court regarding some allegation of improper activity not meeting the best interests of the corporation, and there being some out, in this manner.
But in any event, the standard setting is in between. This is further than what’s in the act currently, as the minister just demonstrated or, certainly, outlined. I understand that. But there is an additional standard here that is being interposed, as I mentioned.
If we go by way of analogy, just to share some of my thinking on this…. If we look at securities regulatory law, for example, the securities commission certainly puts out policies and guidelines and standards, which companies need to meet.
For example, a 43-101 technical report on a mining project is a standard with geoscientists and other technical support, a standard that public companies need to comply with. So that’s an example where there is some involvement, but that’s still under the purview of securities law and a public regulator. This standard, though, is not being reviewed by a regulatory body or providing any oversight in terms of the standards themselves.
So let me ask that question that way, just so that I confirm my understanding. Is there any oversight to these third-party, standard-setting bodies by any regulatory body of government?
Hon. C. James: I think the piece that’s important to note — and I mentioned it earlier, but I think it’s important to note again — is that standards are different than the regulatory acts. The regulatory acts that are in place right now for corporations, whether you’re a benefit corporation or a business corporation, still have to be followed. None of that changes with the amendments that are in here. You will still have to report to B.C. Securities Commission. You will still have to make sure that you’re following market conduct. The requirements legally in other acts around consumer protection, around securities — all of those still have to be followed. None of that changes with any of the amendments that are in here.
The standards, again, are set by a third party. The government will not be involved in that process. That’s private sector, as the private sector does with companies making determinations with shareholders about whether they meet the requirements. That will be a determination for shareholders to make, just as it is now with existing companies.
M. Lee: Just so I can appreciate that analogy, can the minister provide an example of what she was just referring to at the end of her comments regarding a private body setting similar standards for private companies?
Hon. C. James: Two examples just off the top of my head. We can provide more to the member, if he’s interested. LEED standard and fair trade would be two examples where, again, there’s a determination from the outside, from the private sector, around what those standards look like. Many companies will call themselves fair trade or will make a determination based on those private standards that are set.
M. Lee: I come back to the example, with that in mind, of this act, and the public benefit definition does contain elements relating to the environment. So is it not the case, though, that when we’re talking about enabling benefit companies to operate for the public benefit in a responsible, sustainable manner, and we’re talking about concepts around using a fair and proportionate share of available environmental, social and economic resources and capacities…?
Really, the appropriate body that should be determining that is a public body that knows what the public interest is defined as so that we don’t, effectively, put this out to standards being set for public benefit which will make it difficult, I think, for a court to deal with in terms of the interpretation of those standards, when it should be government that’s setting those standards.
The Chair: Member, was there a question there?
M. Lee: Well, I’m just biting for another comment about whether there are concerns regarding how a court will interpret the standard when it’s set by a private body.
A. Weaver: While the minister is looking, I would draw to the attention of the member…. We have section 16 in here that also gives government power through order-in-council, regulation-making power to actually address the issue of standard as well, were there to be wrinkles moving forward.
And I’ll let the minister continue with a more detailed response.
Hon. C. James: Again I’ll go back to the facilitative approach versus the existing acts that are in place. Government’s job is to ensure, as I talked about, consumer protection, market conduct, strong regulatory structures in place for how people act and do business in our province. Those pieces are in place. That’s government’s role: to ensure that we look at consumer protection, that we look at environmental regulations, that we look at market conduct, that we ensure strong regulatory structure in our province so that people are acting in a way that is fair and responsible to the public.
What we’re talking about here are individuals’ investments in private sector companies, and shareholders will determine, based on their investments or not, whether a company is meeting the goals that they want as part of their investment. We’re ensuring that they’re doing it in a way that is responsible, that follows regulatory structures — whether we’re talking about the B.C. Securities Commission or otherwise — that those pieces are in place. But it is shareholders who then will determine, as they do now in other examples, whether the company is meeting their goals.
We set the accountability, as you can see in this act, around ensuring that the public has that information — that they have to report publicly, that that requirement is there so public has the information to be able to make those judgment calls.
M. Lee: I appreciate the response, and I appreciate the member’s point, as well, about section 16.
I think we have time for one more question at this point. I think we covered a lot of ground here. Just let me come at it this way. In terms of the benefit report under section 51.994, under section 5 here, is there any review contemplated of the benefit reports as they may be filed by government?
A. Weaver: May I ask the member to please repeat the question. I was conferring with the minister, and I missed that.
M. Lee: No worries.
Specifically, the question is to section 51.994, in relation to benefit reports. Is there any government oversight in terms of the review of these benefit reports as they may be filed?
A. Weaver: There’s no requirement for government to be involved. This is about directors reporting out to shareholders their ability and progress towards the third-party standards.
At this juncture, hon. Chair, I move that the committee rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 6:12 p.m.
Text of Committee Stage debate (May 15)
The House in Committee of the Whole (Section A) on Bill M209; R. Leonard in the chair.
The committee met at 2:47 p.m.
On section 5 (continued).
M. Lee: I just wanted to come back, before proceeding with further questions and comments about section 5, to touch on a point that we addressed at the beginning of this committee process on this bill, which was the level of consultation and the letters received by the member for Oak Bay–Gordon Head in response to this proposed legislation.
Just for the purpose of the record, I wanted to confirm with the member that he did receive the correspondence — which from my understanding, when I’m looking through the correspondence — is expressing various concerns regarding this legislation, much of which we are covering in committee here.
Just for the record, it’s from Dr. Carol Leeow, who is an assistant professor with the School of Law at UBC; Joel Bakan, who is also a professor there and well known for his views on the corporate structure; Ryan Black, who is a lawyer with McMillan — I guess he’s co-chair of the information and technology group there; Steve McKeon, who’s a leading lawyer at Blake’s and a former classmate of mine at UVic law school; Camden Hutchinson, who is an assistant professor at the Peter Allard School of Law at UBC as well. I believe those are the ones that I…. And of course, Janice Sarah, who is a preeminent, distinguished professor at the law school at UBC as well.
Could I just confirm with the member that he did receive that correspondence and has had an opportunity to review their concerns and address them?
A. Weaver: If the member would bear with me, I have an email chain here. I can search the emails. It’ll take some time. If we could go slowly through the names, I could search each one.
Carol Liao — she sent us a number of letters. Obviously, most of the correspondence we received was either from Carol or cc’d to Carol or was in a chain that Carol was in. I would suggest that the main person we had feedback from in the academic community was Carol Liao. And others only in the last…. You know, this bill had been on the order paper since May of last year in various forms. Only in the last week or so did we get a couple of others that had Carol Liao, again, on the cc chain. So, really, the only person in the academic community throughout this process who we have had continual letters from has been Carol Liao at UBC until the last week or so. But I will check each of those names — if we could go through them slowly.
M. Lee: Well, I appreciate the member doing that to confirm. Let me read them back. And you’re quite right. At least, in a few cases, I can see Carol Liao being copied in on the correspondence. Besides Professor Liao, it’s Joel Bakan, who’s at UBC Law School. Looks like correspondence on April 11.
Should I give you the names and then you can search, or do you want me to…?
A. Weaver: Yeah.
M. Lee: Why don’t we do that?
So Ryan Black with McMillan law — correspondence, email here dated April 12. Steve McKoen, with Blake’s, also dated April 11. He’s also an adjunct professor at UBC. It looks like all the correspondence to the member is all dated around April 11 or April 12. Camden Hutchison, assistant professor at UBC, also dated April 11. And again, apart from some correspondence, as well, to the Minister of Finance from Carol Liao as well. Janis Sarra, April 7. Sorry. That may be a…. You may have confirmed, though, that she…. I know that Professor Sarra had sent separate letters to many members of our caucus separately and independently. I certainly received one on May 12, so I am assuming that you also saw her correspondence on May 12 as well.
A. Weaver: I can confirm I received a letter from Ryan Black and Steve McKoen.
If we could just spell the name of Hutchison and Bakan again, that would help me, because I’m having difficulty finding them.
M. Lee: Let me just…. Maybe the reason is that when I looked at it in more detail, I went to the Minister of Finance in both cases.
A. Weaver: Ah. That’s why I couldn’t find it.
M. Lee: There you go.
Maybe I can ask the same question, though, but you don’t have your laptop there, necessarily. And that’s Joel Bakan and Camden Hutchison on April 11. I’m sure the minister received a lot of correspondence, but perhaps you could confirm that.
Hon. C. James: Yes, I can confirm we received that correspondence.
A. Weaver: And I can confirm I received the correspondence from Janis Sarra on May 12, 2019.
M. Lee: I think the point being, with the level of consultation and the length of time that this bill has been worked on…. The quality, I would say, of the comment received by these individuals — leading experts, let’s say, in the corporate law field in good governance…. Certainly I’m aware of many of them. Whether their comments have been taken into account in terms of this bill would be the question.
A. Weaver: Yes, we read all the letters. We reflected upon the comments. Many of the comments, if not most of the comments, fell into the hypothetical. They were suggesting the hypothetical.
I would remind the member that the court system does not make the law. It interprets and enforces the law. It is the duty of legislators to create the law. It was in the spirit of…. The academics were suggesting what I would believe is hypothetical and theoretical interpretations of how a court, without any evidence other than their opinion, may wish to…. We have before us a bill that is informing law. It is not one that is informing how a hypothetical interpretation may or may not rise in the future, so we did take into account their suggestions.
There were others who disagreed with that, and as somebody who has spent a good deal of time in the academic sector, I very much appreciate the input from academics. I recognize that they took it upon themselves to raise this issue.
I would suggest to the member that it really was a single individual, Carol Liao, who was the person who wrote a paper in an international journal. When I met with her over lunch, extensively, it seems that Ms. Liao is not very enamoured with B corp. model in the U.S.
We are not referencing B corp. We are not making a U.S. model, and her expertise in the published literature is with respect to the U.S. implementation of B. corp.
I would suggest to the member that we have indeed looked at this academic advice. We recognize that many of their concerns were hypothetical. We also recognize, with the additions that I mentioned yesterday in the case of Loblaws…. Also, with the adoption into the Budget Implementation Act, federally, the federal government is bringing the BCE requirements into that, and this particular legislation has no effect on the existing duties of directors.
M. Lee: Well, I don’t think we have the time, unfortunately, at this committee level, to have the back and forth that the member’s comments might invite me to respond to.
But let me just say that I think that what these individuals have taken the time to do — as the member does respect in terms of their effort — is provide commentary to this government and to the member about the implications of this bill and the areas that we’ve been talking at length about in the committee yesterday, which we will continue to do with a few other considerations at this session.
Certainly, when I look at the letters, of course, I recognize their concerns in the sense that they are applying basic corporate law, corporate governance principles, which is partly based on the case law, partly based on the statutes, partly based on our understanding of how good governance is to occur in our country. So the changes that are set out in this legislation will alter that in respect of benefit companies.
Again, we’ve talked about why that might be the case in terms of the purpose of benefit companies, which we clearly support. But it’s just a matter of the way the standards are set, as we talked about and we’ll talk about a little more in a moment and also the directors’ duties themselves.
Certainly, I’m aware of the studies that Carol Liao has partly based her review on for that article that the member spoke to. I was actually one of the people who was interviewed for that study when I was still practising corporate governance law. That was really based on 25 leading practitioners in the country dealing with corporate governance, and those were some of the elements that she drew from.
It’s not just a purely academic exercise. I would say that Professor Liao certainly has reached out to members in the profession to understand from corporate lawyers what they do in terms of advising companies around some of the leading case law to deal with a director’s duties. And same thing with Steve McEwan as well, because he is a practising lawyer in a major corporate law firm, so he has that perspective.
Let me just go on to ask a question then. If I may, Madam Chair, there is a related section later in this bill that I’d like to ask about now, in the context of section 5, because section 5 is quite all-encompassing. So if I may, I’d just like to ask that question relating to section 16.
The Chair: All right.
[The bells were rung.]
The Chair: Well, actually, no. We’re going to recess.
The committee recessed from 3:01 p.m. to 3:12 p.m.
M. Lee: Just for the purpose of continuing to look at section 5, I’d like to just ask…. Under section 16, it does refer to “third-party standards.”
As the member yesterday commented to me near the end of the session, there noted, in the section, it does provide for Lieutenant-Governor-in-Council to prescribe “for the purposes of the definition of ‘third-party standard’…matters that the standard must define and address, and (ii) the methods of assessment the standard must require.” I would just like to ask the member the interaction between this regulation-making power and what’s intended here versus how third-party standards would be set.
A. Weaver: I appreciate the member asking on section 16, and I recognize that the bill is largely contained in section 5. But it’s so tightly linked, it’s, in my view, utterly sensible to raise these questions now, even though it pertains to a later section.
The intent of section 16 was a safety net. In particular, as the third-party standards emerge, we were hoping that government would retain the ability to deal with any issues that may arise. There might be some issues that arise where the government retains flexibility to step in if government believes that it needs to do that.
Before I pass to the minister to provide more on-the-ground practice of how that would work, I’d just like to address for the member from before an issue that was raised that I think is important to put on the record.
That was that in 2014 the Canadian Bar Association recommended that parliament — that’s at the national level — codify the BCE decision that directors may consider other stakeholders. As I mentioned yesterday, that’s currently in progress, and it’s in the Budget Measures Act, and they are responding to that.
Also, in 2014, the Canadian Bar Association recommended that there be allowance for a corporation of benefit companies. That was a recommendation to the federal government by the 2014 Canadian Bar Association.
In addition, we put the article by Ms. Liao and others, information to the B.C. branch of the Canadian Bar Association, to ask them if they could give us information as to whether or not they agreed with the concerns that were raised.
When they reviewed our legislation — the B.C. branch of the Canadian Bar Association — in the fall of 2018, no flags were raised with respect to the particular issues that were identified by the member prior to the bells being rung.
Hon. C. James: Just to confirm from the Finance Ministry’s perspective, the section in section 16 really speaks to enabling government to require the standard to address various areas. Again, there is no intent from government to do that. That is not the direction, but I think safety valve, as the member has described, is a good description. I would say that if there were standards that were being misused, it would provide an opportunity for government to come in and, as the section reads, to be clear about the matters that the standard must define and address and the methods of assessment that the standard must require — so, again, another piece that’s there in case there was some abuse or some misuse of standards that were in place.
M. Lee: I think this interaction is important to consider. Is it intended that the government would prescribe “the matters that the standard must define and address, and (ii) the methods of assessment the standard must require” prior to the standards being set by another organization?
A. Weaver: As the minister pointed out, that is not the intention of this. The intent of this is for the government to have a safety-net approach to actually step in if they believe that, in fact, stepping in needs to occur.
M. Lee: If I’m hearing it this way, the step in, then, would occur after the standards were established by a third-party group. A benefit corporation is incorporated to meet that standard and is reporting against that standard. Then, when does government actually step in if there are concerns?
A. Weaver: I’m going to ask the minister to address this, because it’s asking about intervention by government, and as the minister is the relevant body, she will address the question.
Hon. C. James: The standards would need to be in place. There would be no rationale or no opportunity for government to step in and prescribe, as it identifies matters that the standards must define, unless there was abuse or misuse of the standards.
That could come forward from the shareholders., that could come forward from citizens to raise those concerns. Obviously, government would look at that. But this is, again, meant to be enabling. So the standards would already be in place. They would already be utilized. A public report would be out on how the company was doing on those standards, which would provide, obviously, all of the information that would be necessary for someone to feel that the standards weren’t being met and to raise their concerns with government.
M. Lee: I think that with the discussion we had yesterday and the clarifications today in this session, I would still like to propose an amendment to the bill, recognizing that this has been very much an involved discussion. The concerns that I raised yesterday support the reason why I’m raising the amendment. That would, in the first case, to section 5, put the benefit standard back in the hands of government so that it wouldn’t be in the hands of a third party.
Perhaps I could first table that amendment here, and others can review that. There is a companion amendment that would be necessary to the same regulation we just spoke about in section 16, if this amendment would pass. So perhaps I will just circulate the two amendments together.
The Chair: Member, are you moving the amendment at this time?
M. Lee: Yes, I am.
The Chair: Do you want to speak to the amendment?
On the amendment.
[SECTION 5 is amended
(1) by deleting the text shown as struck out and adding the underlined text as shown:
“third-partybenefit standard” means athe prescribed standard for defining, reporting and assessing
(a) the overall performance of a benefit company in relation to its conducting business in a responsible and sustainable manner, and
(b) the performance of the benefit company in relation to the public benefits specified in that benefit company’s articles,
which standard is developed by a third-party standard-setting body and in accordance with the regulations, if any;
“third-party standard-setting body”, in relation to a benefit company, means a person or entity that is not related, in accordance with subsection(2), to the benefit company and that makes public the following information:
(a) the name of each member of the third-party standard-setting body’s governing body;
(b) the selection process for membership in that governing body;
(c) the name of each person who,
(i) if the third-party standard-setting body is a corporation, controls the standard-setting body within the meaning of section2(3) of this Act, or
(ii) if the third-party standard-setting body is not a corporation, controls the operations of the standard-setting body;
(d) a description of the sources of the third-party standard-setting body’s funding in sufficient detail to disclose any relationship that could reasonably be considered to compromise the standard-setting body’s independence from the benefit company;
(e) a description of the process used to develop a third-party standard, including the criteria against which the benefit company’s performance is to be measured and the relative weight of those criteria.
(2) For the purposes of the definition of “third-party standard-setting body”, a third-party standard-setting body is related to a benefit company,
(a) in the case of a standard-setting body that is a corporation, if it is an affiliate of the benefit company, and
(b) whether or not the standard-setting body is a corporation, if
(i) a director, officer or shareholder, or an associate of a director, officer or shareholder, of the benefit company or of an affiliate of the benefit company is a member of the governing body of, or controls the operation of, or otherwise controls, the third-party standard-setting body, or
(ii) a person who beneficially owns shares of the benefit company, or an associate of such a person, is a member of the governing body of, or controls the operation of, or otherwise controls, the third-party standard-setting body. ; and
(2) by substituting “benefit standard” wherever “third-party standard” may appear.]
M. Lee: The proposed amendment, copies of which I’ve just handed over, would redefine the benefit standard that’s defined under section 5 and would make it a prescribed standard for defining and reporting and assessing the same aspects that are required for a benefit company, namely the overall performance in conducting its business in a responsible and sustainable manner, and the performance of the benefit company in relation to the public benefits specified in that benefit company’s articles. That is no change from the actual standard components that are set out in section 5.
What is deleted, though, is the rest of that particular related provision, which would have put it over to a third-party standard-setting body, as opposed to what I’m proposing under this amendment — having that standard, the co-called benefit standard that’s required under subsection 51.991(1), be determined by regulation.
This goes to the points that I was raising yesterday in terms of the interaction between benefit standards and the ability of directors to comply with the duties, that they’re meeting that standard and they have the opportunity, through various provisions of this act that we reviewed yesterday to, arguably, vary from what level of director duties they currently have under corporate law in British Columbia.
It’s out of that consideration and the concerns that I raised yesterday that, really, the standards that benefit corporations ought to be meeting in respect to public benefit and a responsible and sustainable manner in terms of the way they conduct their business, which are the aims of this act for benefit companies — that that be prescribed by government. That’s the purpose for this amendment.
The Chair: Speaking to the amendment, the member for Oak Bay–Gordon Head.
A. Weaver: I will not be supporting this amendment. More importantly, in my opinion, this amendment — and I’ll take a ruling from the Chair — is out of order.
The reason why I believe that is that the intent of the entire bill is dramatically changed. This is about creating — and there would be a substantive cost to government in creating — an agency that would be required to set the standards. That was never the intent of the bill. The intent of the bill is exclusively to focus on third-party standards and to have industry, the market, involved as well.
I must say I find it rather interesting that the free enterprise party is trying to cut down free enterprise or the ability of innovation in our broader society to actually be the standard-setters that government will oversee through its regulatory-making power but will not insert or demand upon such benefit companies as it stands.
Hon. C. James: Speaking to the amendment, I’ll speak against the amendment. I understand why the member is bringing it forward, but the purpose of the act is enabling. That is the purpose of this act for corporations. It’s to be enabling.
To look at a prescribed standard from government would take away, in fact, the ability to enact those standards in a way that would meet the diversity of private companies. There’s a whole range of companies out there. There’s a great diversity of companies. To have a very prescribed standard would take away the ability for a private company to meet those standards and/or to carry out the benefits in a way that, again, meets the needs of the company and the diversity of the company.
There wouldn’t be one definition of the standard met in the same way by all kinds of companies. All kinds of companies will want a variety of ways to be able to meet that standard, to be able to apply the standard. That’s the purpose of a benefit company. It gives them the ability to make that determination and to meet those standards and then to be accountable for them.
I think that’s the other very important piece here. The accountability has to be there. The report has to come out. They have to have the third-party validation, and the shareholders then have the ability to make their decisions based on the information that comes forward. I think that’s a very critical piece in looking at making these amendments to the act.
M. Lee: Well, I think we’re speaking both to the amendment and the suggestion that it’s out of order. I can speak to both at the same time. It’s just to say that in my view, the whole purpose of the amendment is because it is dealing with the way that we’re enabling new corporations to become benefit corporations, to seek and fulfil the purposes that are set out for a benefit corporation in this bill, which is public benefit in a responsible and sustainable manner.
In doing that, my suggestion and the purpose for the amendment is that those standards ought to be, when we’re talking about public interest around the environment…. Again, that’s including air, land, water, flora and fauna, animal, fish, and plant habitats. That’s not something that you would necessarily put out to an organization that isn’t directly accountable to the people of British Columbia through government regulation.
So certainly, our B.C. Liberal caucus is very supportive of companies that prosper for the benefit of shareholders and the communities that they operate in, but they need to do it responsibly. The concern regarding having standards set by a variety of organizations, with the opportunity for government to step in only after the fact that these standards have been set and benefit corporations have been incorporated, as we’ve just heard from the Minister of Finance…. That’s the concern.
Government ought to have and ensure the consistency of these standards across the board for all benefit corporations. That’s the purpose of this amendment, and that’s the reason why, in my view, this amendment is in order.
The Chair: I think we will take a recess for five minutes.
The committee recessed from 3:29 p.m. to 3:37 p.m.
The Chair: The amendment is in order. Are there any other speakers to the amendment?
Hon. C. James: To the member: again, speaking against the amendment, I think the important piece to note in the amendment — the amendment speaks to accountability and speaks to regulations and government being involved. I think it’s important to note — we had this as part of the discussion yesterday — that regulations already exist in other acts, so a company is still required to follow all of the environmental laws that are in place in British Columbia. A company is still expected to follow all the requirements around a financial institution and protection of consumers. All of those exist in other acts. This section is not meant to replace or to add those kinds of regulations, because they already exist in other acts.
This is related simply to the benefit piece of a benefit company, and I just think that it’s important to make sure that we put on the record that this isn’t related to all of the regulatory requirements that are already in place for companies, that they are required to follow. This does nothing in that regard.
A. Weaver: I thank the minister for that. To add to that, I’d also like to point out that government does not want to suppress the innovation that’s out there in the broader market. The whole purpose of enabling a third-party standard is to tap into innovation that’s out there in the for-profit sector who are busy developing such standards. And for government to suggest it would know how each individual company should function is probably an overreach of government. A government sets rules and regulations, as the minister said. All companies still are required to follow all the other regulations — environmental law, social laws, etc.
This is saying, with respect to the benefit, we’re encouraging a bottom-up, innovative approach to defining what benefits are and providing third-party standards without the overreaching arm of government interfering in the market which is out there.
Again, I come back to the point that I find it rather challenging that a Liberal Party, which suggests it is quite supportive of innovation and free market, would try to suppress innovation in the market and actually suppress the free market to have more big government control on what is or is not a public benefit.
Amendment negatived on the following division:
|
YEAS — 8 |
||
|
Wat |
Thornthwaite |
Ross |
|
Oakes |
Rustad |
Milobar |
|
Tegart |
Gibson |
|
|
NAYS — 9 |
||
|
Kahlon |
Brar |
Beare |
|
Kang |
Ma |
James |
|
Ralston |
Fleming |
Weaver |
M. Lee: I just wanted to appreciate the consideration of that amendment. Perhaps while we’re looking at section 5, the other area that, in the absence of that amendment passing…. The main element, of course, of section 5 continues to be the director’s duty section under section 51.993.
In respect of that amendment to that section, I’d like to also move another amendment, which would effectively treat directors of benefit corporations like any other director of any other corporation and not reduce the standard for which directors of benefit corporations would be held accountable. For the purpose of the intent of the bill, the motion that I move which would amend section 51.993 would effectively strike out every section other than subsection (1). I can submit that amendment to you, as well.
[SECTION 5 by deleting the text shown as struck out:
Directors and officers
51.993 (1) A director or officer of a benefit company, when exercising the powers and performing the functions of a director or officer of the company, must
(a) act honestly and in good faith with a view to
(i) conducting the business in a responsible and sustainable manner, and
(ii) promoting the public benefits specified in the company’s articles, and
(b) balance the duty under section142(1)(a) with the duty under paragraph(a) of this subsection.
(2) Despite subsection(1),
(a) the directors and officers of a benefit company have no duty under subsection (1) to
(i) a person whose well-being may be affected by the company’s conduct, or
(ii) a person who has an interest in a public benefit specified in the company’s articles, and
(b) no legal proceeding may be brought by a person referred to in paragraph(a)(i) or (ii) against a director or officer of a benefit company in relation to the duties under subsection(1).
(3) A director or officer of a benefit company does not contravene the duty under section142(1)(a) of this Act due only to the director or officer acting in accordance with subsection (1) of this section.
(4) Despite subsection(2), a legal proceeding under this Act or any other enactment may be commenced in relation to the duties under subsection(1) only by shareholders of the benefit company and only if,
(a) in the case of a public company, the proceeding is commenced by shareholders holding, in the aggregate, at least the lesser of
(i) 2% of the issued shares of the company, and
(ii) issued shares of the company with a fair market value of at least $2000000, and
(b) in any other case, the proceeding is commenced by shareholders holding, in the aggregate, at least 2% of the issued shares of the company.
(5) Despite any rule of law to the contrary, a court may not order monetary damages in relation to any breach of subsection(1).]
On the amendment.
M. Lee: As I was mentioning, this amendment would delete the other subsections of 51.993 under section 5 of the bill such that only the first provision would remain. It basically sets out the director’s duties in respect of conducting the business in a responsible and sustainable manner” and “promoting the public benefits specified in the company’s articles….”
We had some discussion yesterday about the balancing that’s required between the duty required to act in the best interests of the corporation and other duties under section 142(1)(a) of the Business Corporations Act. That still is a concern, but I think to achieve the right balance for the purpose of this bill, rather than strike out that subsection, as well, I think that it is beneficial to include on the whole recognition of that particular duty, as it speaks to conducting the business in a responsible and sustainable manner and promoting the public benefits.
The reason why the deletions of what follows is that…. The main question to consider is: why is it that directors of benefit companies should be held to a lesser standard, in effect, than directors of any other corporation? So I appreciate that there are greater aspirations for these companies, but these aspirations really speak to language that’s already in the bill, where we’re talking about…. In the first case, we spoke to the use of the word “endeavour.”
For example, under a responsible and sustainable manner, it says “endeavours to use a fair and proportionate share of available environmental, social and economic resources and capacities.” Endeavour is something that is less than best efforts, reasonable efforts or must. It’s not mandatory. It is endeavour. I think that that’s a pretty low standard in terms of the aim and objective, for example, in that area.
And secondly, as we did comment yesterday, for example, in committee stage, when we talk about promoting the public benefits, that’s the standard again that the director or officer of the benefit company is to be held to — again, promoting public benefits as opposed to actually affecting those benefits. These are fairly high-level aspirational type objectives for benefit companies.
In view of that, I still do not see the need to have directors being held to a lower standard in terms of their liability, as well as restricting lawsuits or any claims from any stakeholders. Here I would note that in subsection (4), it restricts any legal proceeding to only be by a shareholders as opposed to any stakeholder. So that means, in effect, under this enabling legislation, the only lawsuits that can be coming forward against directors and officers of benefit companies can only come from shareholders, and only if, in a case of a private company, they hold an aggregate of at least 2 percent of the issued shares of that company.
Obviously, in a public company case, it’s the same 2 percent threshold, and a fair market value of $2 million. That’s, again, only putting these directors and officers in a position where they’re potentially the subject of a lawsuit or a claim for not meeting these higher level goals for reasons of limitations on shareholder remedies, which is not the case for companies under the Business Corporations Act when they’re not a benefit company.
To ensure that, in the area of good governance and for shareholder protection and protection of stakeholders as they look at benefit companies and others who might invest in benefit companies, it’s important that we maintain the same standards that would be there for any other company under the Business Corporations Act. And that’s the reason why I put forward this amendment.
A. Weaver: Thank you to the member for putting this amendment forward. We recognize this issue is one that has created some questions.
We went back and forth on this. We extensively consulted on this, including with the B.C. branch of the Canadian Bar Association. The lawyers who reviewed the legislation there did not raise concerns about this, but in fact, the practising lawyers who work with clients — these are on-the-ground lawyers, who we also argued — felt that this kind of a protection for taking on extra duties are extremely important. In fact, they believe that the middle ground that we found here in terms of accountability is precisely the protection that they needed to encourage companies to go that way.
The member’s slightly incorrect here. There is nothing in this legislation that affects section 142(1)(a) of the act, which states: “A director or officer of a company, when exercising the powers and performing the functions of a director or officer of the company, as the case may be, must act honestly and in good faith with a view to the best interests of the company.” The issue of a fiduciary responsibility is still there. All the rules with respect to that still apply. It is only to the benefit section of a benefit company that the responsibilities have changed slightly. That is that monetary damages cannot be sought but only injunctive relief. It was with that in purpose. We did not want to discourage people from moving beyond exploring different benefits for the public company while retaining all of the protection shareholders have for fiduciary responsibility. But in the case of the benefit component, it is only that aspect of the director’s duties that the aspects of this subsection apply.
So I don’t know that the concerns of the member are justified in light of the fact that the fiduciary responsibility is still there as per section 142(1). However, the benefit component has slightly different…. We’re saying that that is the novel aspect of this bill. It’s enabling companies to go further and to be protected in doing so.
Hon. C. James: I’ll be speaking against the amendment that’s come forward. I appreciate that the member feels that it’s necessary. This is part of our discussion we had yesterday about what this actual section refers to. I’ll come back to our discussion we had yesterday, where we talked about the “and” being the important part of this section.
These sections refer to the benefits section, so in fact, what this section does is add to the duties of directors, not take away. It talks about balance. It talks about the importance, yes, of the best interests of the company and the fiduciary responsibility, and balancing that with the other pieces. So it’s not an either-or. It’s not that one takes away from another. One doesn’t have more weight. And, in fact, it talks about the duties of directors in both of those areas. So from that perspective, I don’t feel that the amendment is necessary.
R. Sultan: I cannot resist interjecting, as an old corporate director, and making the observation that as I understand this particular feature that my colleague has referred to, we are further insulating directors in certain aspects of these benefit corporations. And since I think it would be quite easy to point out in a court of law that most corporations in fact exist to provide benefits…. You know, they deliver bread. They put a roof on your house. They run transit systems. That’s the main purpose of benefits. They’re not a corporation…. They’re not going to be in business very long unless they’re benefiting somebody.
On a broad definition of benefit, I guess it would strike me, as a non-lawyer, that you’re giving them immunity, an added degree of immunity. And if my interpretation is correct, I would forecast a great rush to convert to public benefit corporations amongst boards who always have the grey cloud of possible litigation hanging over their heads. It is a bit of a nightmare for directors, and they take out insurance for accusations raised against them for these very reasons.
So I’m wondering if the distinguished members sponsoring this legislation have thought through possible unintended consequences whereby “Wow, we get more immunity. Let’s sign up, and if we have to prove benefits, well, that’s the easiest part of the whole assignment.”
A. Weaver: I would argue, as the minister pointed out, in fact, in a benefit company you have an added level of duties and responsibilities to which you’re accountable. You’re accountable to all those fiduciary responsibilities. Companies are now.
What we’re doing is we’re saying that if you are going to pursue a benefit with your company — a benefit through a third-party standard, etc. — directors, in doing so, will not be at risk from a monetary penalty because it will just be injunctive relief. The reason why this is important…. I come back to the Loblaws example because I think it’s a very illustrative example. What happened is Loblaws wanted to have a proposal to put forward to pay a living wage to their employees. That would be a benefit. That would be a social benefit. You might imagine that in articles of a benefit company that they actually put living wages as a social benefit. Well, the shareholders of Loblaws rejected, very recently, the proposal to have a living wage. So Loblaws could not go forward, then, and start paying a living wage to their employees, because their shareholder resolution here has told them they can’t.
Now, if Loblaws were a benefit company and they had in their articles that treating employees with a living wage is one of their benefit articles, then they would be protected in doing so because it is part of the articles of their company.
In fact, the member for West Vancouver–Capilano…. His concerns, I would say, are not substantive, because of the fact that we’re actually providing an additional layer of accountability here, but that is with respect to the benefit component and only the benefit component of a benefit company.
R. Sultan: If I may respond very, very briefly to the member’s arguments, which I must say are convincing if one accepts the member’s definitions of benefit, which I would say are more than a little bit tinged by the member’s own particular value system and his experience and his impression of how the world goes around. But this has very little correlation, I would forecast, with how the law, in fact, would be interpreted in reality, in the courts, in the future. So I would suggest caution, and with that, I’ll sit down.
M. Lee: I just wanted to further the discussion that my colleague from West Vancouver–Capilano has raised.
We canvassed this at length yesterday in committee as well. I don’t believe that my view is incorrect or slightly incorrect. I think we have a difference in view as to how this section will work. That actually concerns me in the sense that the lack of clarity around the application of this section is a concern.
If we look at, in my view, the qualification that is set out in sub (1) of this amendment, which I am prepared to let stand, even though I have concerns about the word “balance” under sub (b). Arguably, already, that, as I mentioned yesterday, already cuts away at how the duties will be adhered to by directors of benefit corporations, which is what the member just spoke to — that they’re able to balance that against the duties in section 142(1)(a).
So that balancing, in effect, has a concern that’s raised by sub (3), because sub (3) says, “A director…does not contravene the duty under section 142 (1) (a)” of the Business Corporations Act “due only to the director…acting in accordance with subsection (1) of this section” — which is the section I just went through.
If a director is found to have achieved the right balance, then they’re no longer to be found in contravention of section 142(1)(a). So that immediately does qualify the application of 142(1)(a) to that director, if that person demonstrates that he or she has balanced their duty under that section against the new duties that are there, in this section, for a benefit corporation.
That, of course, we did canvass at length yesterday. That’s one of the reasons for this amendment.
Just to speak to the other provisions…. I spoke to the shareholder one already. The fact that there’s no order of monetary damages in relation to a breach of subsection (1). Again, because of the interplay with section 142(1)(a), because of that linkage, that actually means that as long as they’re somehow balancing their duties in subsection (1), then they get an out, in effect, under sub (3) and sub (5). They have a limitation on which shareholders can potentially bring forward a claim under sub (4).
Again, sub (2) says: “…no legal proceeding may be brought…against a director…in relation to the duties under subsection (1).” Actually, it goes further to say that a director has “no duty under subsection (1) to (i) a person whose well-being may be affected by the company’s conduct, or (ii) a person who has an interest in a public benefit specified in the company’s articles.” This effectively strips a number of duties and responsibilities of these directors of benefit corporations.
They act in favour of the environment, and yet if there’s a person whose well-being may be affected by the company’s conduct, whether it’s concerns over drinking water or other aspects that might impact the environment in which we all live, this section actually says there’s no duty to that person.
This is just another example of why these provisions that are set out in 51.993 effectively insulate, the word that my colleague from West Vancouver–Capilano has used, and that’s a concern. That’s, again, the purpose for this amendment, and that’s the reason why we’re tabling it in this manner.
Hon. C. James: I appreciate the outline. I think there’s no question we have a disagreement on the interpretation. I don’t want to leave the record talking about the fact that there’s a lack of clarity. In fact, we certainly have reviewed it from a finance perspective. We feel that the act, as I’ve talked about, refers to added duties, not taking away from duties, and that the balance and the word “and” are critical in this piece. Certainly from our perspective, we feel that the interpretation that we outlined is clear in this section, but it’s clear we have a disagreement on this issue.
The Chair: Seeing no further comments, calling the question on the amendment.
The Chair: We are voting on an amendment to section 5 of Bill M209, put forward by the member for Vancouver-Langara.
Amendment negatived on the following division:
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YEAS — 8 |
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|
Coleman |
Wat |
Thornthwaite |
|
Yap |
Ross |
Oakes |
|
Milobar |
Gibson |
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NAYS — 9 |
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Kahlon |
Brar |
Beare |
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Kang |
Ma |
James |
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Ralston |
Fleming |
Weaver |
S. Gibson: I think, with respect, we should wait until my colleagues arrive here. I think it would be inappropriate to really do it this way. I can’t speak for them, but I have a hunch they would prefer to be here. I think that it’s a bit disrespectful to take advantage of a situation like this. I say that with respect.
Hon. M. Farnworth: I don’t have a problem if we take a five-minute recess. But I’ll also remind the member to remember this. Because I can remind him of a previous time when the roles were reversed, and the same courtesy was not extended. So we will take a recess.
Interjection.
The Chair: Members. Members.
S. Gibson: I was not a perpetrator of that.
Interjection.
S. Gibson: No, but I don’t want it to be taken personally. I’ll accept that five-minute recess. I’ll be back.
A. Weaver: I see no reason why this committee cannot proceed. There was no notice given to any of us that a recess was going to be taken. They walked out of the room, and here we are. Well, we now have a person back.
The fact is this has happened to me and my colleagues in the B.C. Green Party multiple times, where the B.C. Liberals had an agreement with us that we would speak at a certain time and be present at a certain time and they negated that agreement. There was no such courtesy ever exhibited or shown to us.
I find it very rich now. While I respect what the member for Abbotsford-Mission said, I find it very rich to see the pleadings coming from the member in light of the behaviour of said official opposition over the last two years.
I see we now have the member back. But frankly, for the record, I think the courtesy being extended right now is one that has not been shown, and it exhibits the difference between this side of the House and that side of the House, which is actually trying…. [Applause.]
Well, thank you for that. So I’ll sit down, because I see that the member is now back, and we will likely be able to continue.
Interjection.
The Chair: Excuse me, Member. Seeing that I am not calling a recess, we will continue with section 5 now.
M. Lee: Without understanding what I just walked into, with apologies to this chamber in terms of this committee side, when we’re running three houses — and I know the House Leader will acknowledge this — it’s very difficult, of course, on the members to be able to deal with different bills at the same time. That is the reason why I was delayed in getting back here.
There was a recess called in the main chamber to deal with another piece of legislation which your colleague had called. So I’m able to come back here. My apologies for not being back here right after the vote was called, if that’s the issue. I’m not sure what the exact issue is, but you have my apologies. I will continue on with the bill, because we’re on a tight time frame, of course, for other reasons.
The Chair: Let’s limit our comments now to section 5.
M. Lee: Okay. I appreciate that, Madam Chair.
Just in terms of the benefit report, yesterday, during committee side, we did talk about the review and the nature of the benefit report. If I could ask, what is the standard of representation in terms of concerns around misrepresentation or fraud relating to this benefit report? Who is going to be reviewing the nature of the disclosure in the report itself?
A. Weaver: To answer the questions, a couple of things. First, the member did comment on the fact that there are three Houses. I will say that that’s not an excuse. I will remind the member that, in fact, with three Houses, there are three B.C. Green caucus members. I am the critic for the labour bills that are being debated in the other House right now. We had to make alternate arrangements. At any given time…. Like yesterday, I was supposed to be in three Houses at once. So for the member not to be here at the appropriate time is inappropriate. While he may have apologized, I do not think it’s appropriate for the member to walk out and for us to continue. With that said….
The Chair: Member, just to remind you that we don’t speak about members’ absences.
A. Weaver: I was speaking directly, not about the member’s absence but about the member’s comments that he made himself, not ones that I was making.
With respect to the standards, the standards are to be publicly available. Sorry, the benefit report is to be publicly available, as are the standards. They are to be accessed free of charge. They are to be posted on a website if a company has such a website.
Section 14 of the bill, you’ll see here, sets out the following offences: failure to comply with approval and signing requirements for a benefit report, failure to publish or post a benefit report or publishing or posting a non-compliant benefit report. Those are set out in section 14, while section 15 provides for the penalties associated with not doing that which is in section 14.
M. Lee: What is the standard review for the benefit report?
A. Weaver: I thought I just answered the question. The benefit report is made publicly available. It is made available to anybody who wants to access it, free of charge. It is posted on a website if a company has such a website. The offences outlined in section 14 are those sections that outline what they are, and section 15 outlines the penalties. The member’s question was answered the first time, I believe, that I rose.
M. Lee: Is there a standard of misrepresentation in the report itself?
A. Weaver: I haven’t seen any said reports published publicly on either the website of a company or by accessing free of charge, so I’m not sure what he’s referring to. Perhaps he could expand upon that.
M. Lee: Is there any sign-off or liability or responsibility for the report itself by the officers and directors who sign the report?
A. Weaver: In section 51.994, the section entitled “Benefit report,” the member will note that subsection (4) of that specifically states: “The directors of a benefit company must ensure that, before a benefit report is published, the report is (a) approved by the directors, and (b) signed by one or more directors to confirm that the approval required under paragraph (a) was obtained.”
Then No. 5 says: “Promptly after a benefit report is published, the directors of the benefit company must post the report on the company’s publicly accessible website, if the company has one.”
Section 16 of the report enables government, if government believes that it needs to step in…. It grants government regulatory power — and I say here —under section 16 (b), “prescribing, for the purposes of section 51.994, (i) information that must be included in a benefit report, and (ii) the manner in which the benefit report must disclose the required information.”
As I outlined earlier, section 14 outlines the potential offences. Section 15 outlines the penalties associated with those offences.
The Chair: Hearing no further questions….
Sections 5 to 17 inclusive approved.
Title approved.
A. Weaver: I move that the committee report the bill complete without amendment.
Motion approved.
The committee rose at 4:26 p.m.
Media Release
B.C. Greens Make History, Pass First Ever Private Member’s Bill From Opposition Party
Legislation creates new legal option for businesses pursuing environmental, social goals
For immediate release
May 15, 2019
VICTORIA, B.C. – The B.C. Green caucus made history today with the unanimous passing of the first ever Private Member’s Bill from an opposition party. The Greens also positioned the province as a leader nationally by bringing in the first legislation in the country to formally provide a legal framework for businesses committed to pursuing social and environmental goals to incorporate as benefit companies under the Business Corporations Act.
“B.C. Greens are showing a path forward, both by being the first province to pass legislation supporting companies committed to pursuing a triple bottom line, and by demonstrating the strengths of a minority government, where no one party controls what gets passed in the House,” B.C. Green Party leader Andrew Weaver said. “This is what democracy should look like.”
It wasn’t just a lack of votes that held previous opposition parties from passing legislation. This minority government is the first opportunity opposition parties have been given access to official drafting services. These resources empower opposition parties to draft their own Private Member’s Bills, paving the way for all 86 members to be able to pass legislation into law.
“Yesterday, our amendment to the Residential Tenancy Act saw broad tripartisan support from NDP and Liberals at its second reading before the House. The B.C. Green caucus is proud to be offering a vision for how British Columbia’s government and economy can evolve to meet the challenges of today with a collaborative and innovative approach, completely rethinking the underlying status quo for a bold new path forward,” Weaver said.
“Indeed, we have been inspired by B.C.’s incredibly innovative companies that want to play a bigger role in addressing the challenges and opportunities we face – climate change, rapid changes in the nature of work, the gig economy, rapid technological advances, and growing income inequality,” said Weaver. “This legislation is part of positioning our province to be a leader on the cutting edge of global economic trends. We are seeing shifts in consumer patterns and behaviour, particularly among younger demographics sensitive to their social and environmental impact. By becoming the first jurisdiction in Canada to create benefit companies, B.C. can best create space and opportunities for its businesses that want to lead the way.”
Government recognizes the impact B.C. businesses make in their communities, and has been supportive of the concept of benefit companies.
“B.C. businesses are already leaders in sustainable and socially responsible practices, and giving them the option to create a new corporate structure as benefit companies allows them to build their values right into their legal framework,” says Carole James, Minister of Finance. “I want to thank our partners in the Green Party Caucus for bringing this idea forward. By working closely with our minority governing partners, we are helping people and business build a cleaner, better future.”
Quotes
Catherine Warren, CEO, Vancouver Economic Commission-
“As Vancouverites and British Columbians, we are proud to be a hub for bold, mission-driven companies, so it comes as no surprise to us that B.C. could pass the first benefit company legislation in the country. Jobseekers, international businesses, and investors with common values come here to build on common ground. The Vancouver Economic Commission is focused on inclusive, resilient economic development and prosperity for all. We recognize that we can always do more – to help local companies lead for people, planet, and prosperity – and VEC’s sees this legislation as one way to ensure that social and environmental values advance tomorrow’s economy.”
Chris Arkell, co-founder of Sea to Sky Removal-
“As a company focused on waste management in the construction industry, we wanted to hold ourselves to the highest available standard of public accountability. Unlike traditional corporations, companies like ours are committed to considering the impact of their decisions not only on their shareholders, but also on their stakeholders – workers, suppliers, community, consumers, and the environment. This legislation strengthens our ability to maintain our core values even as future directors, management or ownership changes may happen.”
Michelle Reid, sustainability czar, Mills Office Productivity-
“As a family owned business since 1949, we are pleased to see the government moving forward in recognizing the work businesses like ours have done and continue to do for our people, planet and communities. This legislation provides traditional businesses the opportunity to take into account all stakeholders when making company decisions. Businesses and the commitments they make to their employees, surrounding communities and the environment are vital to ensure everyone has the opportunity to flourish. We would like to thank the leadership of the B.C. Green Party for helping to secure the legacy of social and environmental stewardship that we will continue to provide in the years to come.”
Quick Facts
What does this legislation do?
- This legislation provides a simple framework for companies to adhere to that is legally and commercially recognized and creates a higher standard, by requiring that:
- Directors act with a broader purpose with respect to society and the environment, and balance this commitment against the best interests of the company.
- Companies promote a specific “public benefit”, or a positive effect.
- Directors must publish an annual report that describes the company’s activities in relation to their benefit commitments, and they must select an independent third party standard to report their work against.
- This legislation creates clear expectations about the nature and mandate of the company and provides protections for directors who choose to prioritize public benefits.
- It will provide certainty for impact investors of the nature and mandate of the company.
- It will enable companies to attract capital while being true to their mission as they grow.
- It will protect the vision of the founders of benefit companies by embedding the environmental and social benefits into the company’s mandate.
How do benefit companies differ from Community Contribution Companies (C3s)?
- Government introduced C3 legislation in 2012 as a hybrid option between for-profit businesses and non-profit enterprises.
- C3s and benefit companies are complementary ways for government to support a spectrum of socially and environmentally responsible business.
- C3s are subject to restrictions related to their allocation of profits and their transfer of assets, while benefit companies would have no such restrictions.
How can a company become a benefit company?
- A company can become a benefit company by altering its notice of articles to include the required benefit statement through a special resolution, which would require two-thirds approval to pass.
- A company would need to include in its articles a commitment to operate in an environmentally sustainable and socially responsible manner, and to promote one or more specific public benefits.
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Media contact
Macon McGinley, Press Secretary
+1 250-882-6187 |macon.mcginley@leg.bc.ca
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