Effective corporate governance stewards the interests of our employees, share owners, and Indigenous and community partners over the near-, medium- and long-term, providing review and oversight of corporate strategies and executive decisions. We regularly evaluate our governance practices to ensure they are aligned with international standards for assessing sustainability and climate-related issues. As such, our Board of Directors and management team fully endorse our net-zero commitment and 2030 ESG targets announced in January 2022.
Key elements of our corporate governance system include the oversight and diligence provided by the Board of Directors, the Lead Director, the Audit & Risk Committee and our Corporate Governance, Nomination, Compensation and Succession Committee (GOCOM). While the overall board provides oversight on strategy, sustainability, risk management, DEI, succession planning and corporate governance, each of the board committees has specific responsibilities.
The GOCOM Committee oversees our corporate governance practices, including succession planning and evaluates senior executive officers' compensation and performance. The Audit & Risk Committee has the greatest oversight over our sustainability practices and disclosures. It oversees accounting and financial reporting, as well as risk management and control practices. The committee review risks and opportunities that could materially impact our ability to achieve our strategic and operational objectives and is responsible for ensuring that management addresses risks by implementing appropriate mitigation measures.
We have an established enterprise risk-management process that allows us to identify and evaluate risks by both severity of impact and probability of occurrence. This evaluation includes climate-related risks involving transitional (policy/regulatory, market, technology and reputational) and physical factors. In addition, we evaluate climate-related opportunities, such as resource efficiency, cleaner energy sources, innovative products and services, access to markets, and climate change resilience and adaptation.
The senior executive of each operating division reports on operating results and risks to a designated audit director, who in turn reports to the Audit & Risk Committee. In addition, each division prepares Stewardship Reports, which are presented to the Audit & Risk Committee on a biannual basis, and include topics such as safety, environment and Code of Ethics compliance. Our How We Do Business document is the code that sets out the behaviours and standards of conduct we expect of ourselves and each other. It provides an overview of the policies and practices that must be followed by anyone who works for or represents ATCO.
An important aspect of governance is internal checks and balances. In 2021, an internal investigation showed that failures in our procedures and disclosure processes resulted in contraventions of the Inter-Affiliate Code of Conduct, a set of rules ATCO’s regulated companies follow to ensure fair business practices and proper disclosure. ATCO deeply regrets the situation and is actively correcting and improving its contracting and disclosure practices to ensure this type of issue never happens again. Additional information about this situation was provided in ATCO’s news release that was filed on November 30, 2021.
At ATCO, the sustainability team reports through the Senior Vice President of Finance, Treasury, Risk & Sustainability to the Chief Financial Officers of ATCO Ltd. and Canadian Utilities Limited. Several senior members of leadership also oversee and contribute their expertise due to the cross-functional nature of many sustainability initiatives. Sustainability is managed collaboratively across numerous groups, including Human Resources, Government Relations, Indigenous Relations, Health and Safety, Environment, Marketing and Communications, Corporate Governance and Secretarial, Business Development, Internal Audit and Risk Management, among others. These groups monitor best practices, develop and implement policies and standards, and support our various divisions.
In 2021, an enterprise-wide Sustainability/ESG Council was established with senior subject matter experts from each of the groups mentioned above, among others, with the goal to increase collaboration and coordination on sustainability initiatives and ESG reporting. The objectives of this Council are to agree on shared priorities across the enterprise, drive forward targeted initiatives for improvement and monitor progress.
The daily management of sustainability commitments and programs is guided by divisional leadership through topic-specific policies, training, monitoring and other management considerations. Our executive leadership team is kept informed through quarterly internal dashboards that report key performance indicators, including data regarding environmental, safety and Indigenous relations metrics, which are being expanded to provide progress updates on our recently announced 2030 ESG targets.
For more detailed information on our corporate governance and management approach, please refer to the Governance section of the Management Proxy Circular for ATCO Ltd.