Our Publications
Ukraine Crisis – Implications f...

Ukraine Crisis – Implications for Corporate Strategy and Disclosure

The Russian invasion of Ukraine is disrupting global security and the world economy. As the invasion continues, sanctions are mounting, and the disruption is spreading. This is a different global reality than existed two months ago.

The crisis in Ukraine is unfolding as the threats posed by climate change continue to grow. Only last month the International Panel on Climate Change[1] reported evidence of observed impacts, project risks, levels and trends in vulnerability, and adaption limits that “…demonstrate that the worldwide climate resilient development action is more urgent than previously assessed…”.

All of this is occurring as the world is still struggling to emerge from the havoc wreaked by the global pandemic.

The disruption to the global economy will prompt many organizations to revisit their strategic plans and risk management. With new pressures on commodity prices and supply chains, organizations may need to recalibrate the assumptions underlying those plans. If the organization is pulling business operations or investments out of Russia (or has a business partner who is doing so), it may need to reassess its allocation of assets and other resources. New market opportunities may be emerging for some organizations, requiring a realignment of strategic priorities.

Global disruption resulting from Russia’s invasion of Ukraine may also have an impact on an organization’s climate risk strategy. In Europe, there is a commitment to reduce dependency on Russian gas quickly and drastically by reverting to coal, creating challenges for the climate change goals of the companies that must do so. There are also implications for companies’ stakeholders, including investors and customers, who link their own climate change goals to the businesses in which they invest or with which they do business.

Organizations around the world will need to understand how these challenges will impact their ability to meet their climate change objectives.

Finally, organizations should consider whether their disclosure appropriately reflects the changed risk environment. To date, very few public companies in Canada have made disclosure about the risks presented by the Russian invasion of Ukraine. We have reviewed the AIFs filed by TSX listed issuers between February 1 and March 10, 2022. Fewer than 15% of those issuers discussed the Russian invasion of Ukraine as a risk factor. The vast majority were filed by issuers in the resource sector.

Organizations in all sectors should be considering how the Russian invasion, resulting sanctions and the economic fallout will affect their business and their disclosure.

  1. The United Nations established the International Panel on Climate Change (“IPCC”) in 1988 to “provide the world with a clear scientific view on the state of knowledge in climate change and its potential environmental and socio-economic impacts.