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ESG: The Use of Non-Financial Metrics by the Investment Industry is a Lawsuit Waiting to Happen

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From the Fraser Institute

By Bryce Tingle

Relying on deeply flawed ESG (environment, social and governance) ratings is incompatible with investment fiduciaries’ legal obligations

ESG ratings discourage companies from growing

The ESG ratings industry is an expensive distraction for public companies. It provides, in the form of low scores, a cudgel for activists, outsiders, and shareholders to use against companies who refuse to invest in improving their scores, although these investments are a waste of resources because the scores measure nothing useful. This makes Canada’s public markets much less appealing for companies considering listing their shares. In turn, for a private company that seeking an exit to investors, this makes selling the company to a larger competitor more attractive. As
many of these buyers are foreign (especially in advanced industries like technology and pharma) innovative Canadian businesses do not scale up in this country (Tingle and Pandes, 2021: 10). The choice of innovative businesses to sell themselves, rather than go public, is very bad for Canada.

ESG ratings obscure the contributions companies make to society

The ESG ratings agencies perpetuate a harmful lie about the ways in which companies contribute to the growth and success of Canadian society. Companies create the wealth we enjoy (and use for various public purposes), they employ us, and they provide us with the goods and services
we need. Companies should be celebrated for these contributions to our society and not asked to solve social problems unrelated to their competitive activities in various markets. Their failure to deliver on these social expectations will generate greater levels of distrust in Canadian institutions.

ESG ratings are a false alternative to legislation

In practice ESG has come to be seen as a valid alternative to government regulation for solving certain kinds of social and environmental problems. As we have seen, it is incapable of doing so and is not even really intended to do so. The public is taking investment managers’ marketing copy and applying it to really serious problems.

Again, the inevitable failure of ESG to solve these problems will breed cynicism, but it also distracts us from the kinds of regulation that will
actually accomplish the social and environmental goals we have for our society.

If a fund claims to invest based on ESG considerations, the fund managers should have to show their own work and demonstrate it is rationally related to the ESG outcomes promised to beneficiaries. Merely following deeply flawed ESG ratings is, as we have seen, not acceptable. We do not tolerate fraud elsewhere in our capital markets; there is no reason to tolerate it in the claims investment funds make in order to raise money from retail investors.

A Lawsuit Waiting to Happen: The Use of Non-Financial Metrics by the Investment Industry

  • Environmental, Social and Governance (ESG) scores are sold to investment fund managers to assist them in making investment decisions. The scores are generated by a large industry of third-party firms and embedded in ratings, rankings, and indices.
  • The various elements in ESG scores stand in contrast to the traditional financial metrics relied upon by previous generations of investors.
  • Can investment fund professionals, who manage the wealth of other people, legally rely on ESG data in making their investment decisions? Over 88% of fund managers overseeing US$3.16 trillion of investment funds purport to use these ESG scores, a problem if the scores are inaccurate.
  • A decade of careful investigation in dozens of empirical studies has found:
    • ESG funds market themselves as advancing environmental and social objectives, but the ESG ratings those funds depend on are explicitly not about protecting the earth and society from the impact of corporate behaviour, but protecting the corporation from society.
    • Turning the welter of complex criteria into the simplistic ratings sold to investment funds requires judgement calls about what is material for a company or industry, and how to weigh various factors in coming up with a final score.
    • ESG ratings of the same company vary widely from one rating agency to another, demonstrating low validity and suggesting the ratings are not measuring anything real.
    • ESG ratings fail to predict future environmental and social performance, such as the exposure of a company to government fines, labour actions, or pollution violations.
    • ESG ratings of companies do not predict future operating performance or the trajectory of stock prices.
    • ESG ratings do not correlate with reduced investment risk.
    • Corporate disclosure of ESG-favoured information seems, ironically, to be connected to less ethical and more self-interested managerial behaviour.

Click here to read the report (20 pages)

Bryce Tingle

N. Murray Edwards Chair in Business Law, University of Calgary

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Business

Canadians are fed up with grocers maple‑washing their food

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This article supplied by Troy Media.

Troy Media By Sylvain Charlebois

Patriotic packaging on foreign food isn’t clever marketing—it’s maple‑washing, and it’s eroding trust

Canadian grocery retailers are misleading shoppers about where their food really comes from. Behind the patriotic packaging lies a growing  problem: “maple‑washing”—using Canadian symbols to suggest products are homegrown when they’re not. It’s eroding consumer trust and must end.

That’s why more Canadians are paying closer attention to what labels actually mean. Awareness around origin labelling has grown as people learn the difference between “Product of Canada,” “Made in Canada,” and “Prepared in Canada.” The Food and Drugs Act requires labels to be truthful and not misleading. A “Product of Canada” must contain at least 98 per cent Canadian ingredients and processing. “Made in Canada” applies when the last substantial transformation happened here, while “Prepared in Canada” covers processing, packaging or handling in Canada regardless of ingredient source.

The differences may seem technical, but they matter. A frozen lasagna labelled “Prepared in Canada,” for example, could be made with imported pasta, sauce and meat—packaged here but not truly Canadian. These rules give consumers the clarity they need to make informed choices.

Armed with this clarity, many Canadians have become more selective about what they buy. That vigilance has emerged alongside a surge in consumer nationalism, spurred partly by geopolitical tensions and anti‑American sentiment. Even with U.S. giants like Walmart, Costco and Amazon dominating Canadian retail, many shoppers are deliberately avoiding American food products. The impact has been significant: NielsenIQ reports an 8.5 per cent drop in sales of American food products in Canada over just a few months. In an industry where sales usually shift by fractions of a per cent, such a drop is extraordinary. It shows how quickly Canadians are voting with their wallets.

That kind of shift, rare outside of crises, caught many grocers off guard. The sudden change left supply chains long dependent on U.S. products under pressure, and store‑level labelling grew inconsistent. Early missteps—like maple leaves displayed beside imported goods—were excused as logistical oversights. But six months later, those excuses no longer hold. Persisting with misleading displays and false origin claims has crossed the line into misrepresentation. Instances of oranges or almonds labelled as Canadian, with prices quietly adjusted after complaints, show the problem is systemic, not accidental.

Regulators have stepped in. The Canadian Food Inspection Agency (CFIA) received 97 complaints about origin claims between November 2024 and mid‑July 2025. It investigated 91 cases and confirmed 29 violations. That level of scrutiny signals a growing intolerance for deceptive marketing.

The message to retailers is clear: this is not business as usual. Canadians have shown remarkable solidarity in supporting homegrown products during a time of economic strain and food insecurity. The least retailers can do is honour that trust by maintaining strict standards in labelling and merchandising. This is not about nationalism. It is about honesty. In today’s market, misleading customers is not only unethical but bad economics.

Consumers who suspect false origin claims should report them to the CFIA or to a retailer’s customer service. The CFIA generally investigates within 30 days. But the burden should not rest on shoppers to police grocery aisles. The responsibility lies with retailers to meet the moment with the same accountability they now expect from suppliers, regulators and consumers.

After months of consumer vigilance, it is up to grocers to end maple‑washing once and for all.

Dr. Sylvain Charlebois is a Canadian professor and researcher in food distribution and policy. He is senior director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast. He is frequently cited in the media for his insights on food prices, agricultural trends, and the global food supply chain.

Troy Media empowers Canadian community news outlets by providing independent, insightful analysis and commentary. Our mission is to support local media in helping Canadians stay informed and engaged by delivering reliable content that strengthens community connections and deepens understanding across the country.

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Artificial Intelligence

Anti-DEI advocate Robby Starbuck reaches settlement with Meta over AI defamation

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Quick Hit:

Conservative activist Robby Starbuck has settled his lawsuit against Meta over claims its AI chatbot defamed him, falsely linking him to Jan. 6 and other discredited narratives. As part of the deal, he’ll advise Meta on reducing political bias and misinformation in its AI models.

Key Details:

  • Starbuck sued Meta in April after its AI chatbot allegedly labeled him a “White nationalist” who was arrested on Jan. 6 and suggested he should lose custody of his children.
  • As part of the settlement, Starbuck will work with Meta’s Product Policy team to improve AI fairness and accuracy, especially on political and ideological topics.
  • The deal follows Meta’s January decision under President Donald Trump’s administration to scrap its DEI policies, part of broader efforts to address concerns about anti-conservative bias.

Diving Deeper:

The dispute began in August 2024 when an X user surfaced several examples of Meta’s AI chatbot spreading damaging misinformation about Robby Starbuck. Among the claims: that he participated in the Jan. 6 Capitol riot, was connected to QAnon, and opposed vaccines. Starbuck’s own investigation uncovered more falsehoods, leading him to pursue legal action after attempts to resolve the matter privately with Meta failed.

Filed in Delaware Superior Court, the lawsuit alleged defamation and reputational harm, noting the AI went so far as to recommend he lose custody of his children on grounds that he was a “danger” to them. Starbuck — known for his activism against DEI initiatives — framed the case as a broader warning about the dangers of political bias embedded in artificial intelligence systems.

Under the settlement, Starbuck will now have a formal role advising Meta’s Product Policy team, a move both sides say will strengthen the accuracy of Meta AI and help curb ideological slants. “I’m extraordinarily pleased with how Meta and I resolved this issue,” Starbuck told Fox News Digital. “Resolving this is going to result in big wins that I believe will set an example for ethical AI across the industry.”

Meta has faced similar bias accusations as other AI developers. Google’s Gemini, for example, was criticized for portraying Memorial Day as controversial and producing racially inaccurate historical images. OpenAI’s ChatGPT was previously caught refusing to praise Donald Trump while readily praising Kamala Harris or Joe Biden — an imbalance the company later pledged to address.

Since President Trump’s return to the White House, Meta has taken steps to address perceived anti-conservative leanings. In January, it ended DEI programs and elevated Joel Kaplan, a former Republican political strategist, as chief global affairs officer. Kaplan argued the move would ensure the company recruits “the most talented people” without ideological filters.

Starbuck said he intends to use his new position to protect Americans of all political affiliations from AI bias but emphasized that ensuring fairness for conservatives will remain his top priority. “I think a tech leader like Meta working with me is a critically important step to producing a product that’s fair to everyone,” he said. “What we do to improve AI training could become an industry standard.”

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