Public shareholder markets are considered a vital element in economic development, providing corporations with funding options and giving investors access to profitable opportunities. The general theme of the task force report, however, is that public markets are bogged down in regulation, reporting requirements and public scrutiny.
To avoid these and other problems, investors and issuers are turning to private markets where costs are lower and corporate owners and managers have greater control that allow them to “maximize returns” and cash-out when they want.
On ESG factors, the task force claims that “evidence suggests” that ESG criteria in corporate reports “positively correlates to investment performance.” Therefore, and without actually examining the suggestive evidence, the task force recommends “mandating disclosure of material ESG information, specifically climate change-related disclosure that is compliant with the TCFD recommendations for issuers through regulatory filing requirements of the OSC.
On diversity, the task force settled on something of a compromise between absolute mandates issued by regulators and a form of self-regulation in which corporations set their own targets, although the task force “recommends that publicly listed issuers set an aggregated target of 50 per cent for women and 30 per cent for BIPOC , persons with disabilities and LGBTQ+.
On diversity, the task force avoids the extreme position advanced by Nasdaq, the U.S. stock exchange that wants to be able to de-list corporations that do not have at least one female director, and at least one other director who is either “an underrepresented minority or LGBTQ+.”