Summary

The 21st-Century Business Act proposes important changes to the Canada Business Corporations Act, aiming to shift the focus of corporations from solely pursuing profits to also considering their impact on society and the environment. Corporations will be required to minimize harmful impacts and report on their societal and environmental performance at annual meetings, creating a dual responsibility to both shareholders and broader stakeholders.

What it means for you

Groups that may be impacted by this act include:

• Corporate shareholders who may see shifts in business focus affecting profitability.
• Small businesses that may struggle with new reporting obligations and increased operational costs.
• Consumers who could benefit from more responsible corporate practices and environmentally-friendly products.
• Employees who may experience changes in corporate culture and priorities.

Expenses

The financial implications of the act could lead to increased spending for corporations, including:

• Higher administrative costs to comply with new reporting requirements, possibly diverting funds from other vital areas like innovation.
• Potential legal expenses arising from ambiguity in what constitutes harm and compliance issues leading to litigation.
• Small businesses may incur costs for adapting practices, which could strain their resources and limit growth.

Proponents view

Supporters believe this act is essential for modern business practices, arguing that:

• It holds corporations accountable not just to shareholders but also to employees, communities, and the environment.
• It promotes sustainable practices that can lead to long-term profitability through enhanced corporate reputation and consumer trust.
• The shift towards socially responsible governance could spark innovation that benefits the planet and society, potentially leading to cost savings.

Opponents view

Critics argue against the act on the grounds that:

• The focus on societal and environmental goals could undermine the core mission of businesses to generate profit, especially for smaller firms with fewer resources.
• New requirements may create operational burdens that distract from essential business activities and reduce competitiveness.
• The lack of clear definitions regarding "harm" and corporate responsibility may lead to increased litigation and uncertainties, complicating governance and decision-making processes.