Canadian securities regulators seek comment on climate-related disclosure requirements

Calgary and Toronto – The Canadian Securities Administrators (CSA) today published for comment proposed climate-related disclosure requirements. The proposed requirements address the need for more consistent and comparable information to help inform investment decisions. They also demonstrate the CSA’s commitment in favour of the growing international movement toward mandatory climate-related disclosure standards.

The requirements contemplate disclosure largely consistent with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. They will improve the comparability of the information issuers disclose and help investors make more informed investment decisions by enhancing climate-related disclosure. The requirements are also intended to address costs associated with reporting across multiple disclosure frameworks, improve access to global markets and facilitate an equal playing field for issuers.

“We recognize some issuers already share certain climate-related information,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “Our proposed requirements will bring those disclosures into a harmonized framework benefitting investors and issuers alike and aligning Canadian capital markets with the global movement towards consistent and comparable standards.”

The proposed requirements contemplate disclosure by issuers related to the four core elements of the TCFD recommendations:

• Governance – an issuer’s board’s oversight of and management’s role in assessing and managing climate-related risks and opportunities.
• Strategy – the short-, medium- and long-term climate-related risks and opportunities the issuer has identified and the impact on its business, strategy and financial planning, where such information is material. As a modification from the TCFD recommendations, the proposed disclosure would not include the requirement to disclose “scenario analysis”, which is an issuer’s description of the resilience of its strategy within different climate-related scenarios, including a 2°C or lower scenario.
• Risk management – how an issuer identifies, assesses and manages climate-related risks and how these processes are integrated into its overall risk management.
• Metrics and targets – the metrics and targets used by an issuer to assess and manage climate-related risks and opportunities where the information is material.

Issuers would be required to disclose their Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions and the related risks, or their reasons for not doing so. The CSA is also consulting on an alternative approach that would require issuers to disclose Scope 1 GHG emissions. Under this alternative, disclosure of Scope 2 and Scope 3 GHG emissions would not be mandatory.   

“With global momentum building on sustainability-related disclosures in both the public and private sectors, these proposals reflect our vision and expectations for reporting issuers as we move towards a global baseline for such disclosures,” said Morisset.

The disclosure requirements would be phased in, as outlined in the notice, to give companies sufficient time to plan for implementation.

The proposed disclosure requirements draw on extensive engagement with stakeholders, follow environmental and climate-related reporting guidance issued by the CSA in 2010 and build on CSA Staff Notice 51-358 Reporting of Climate Change-related Risks published in August 2019. 

More details about the consultation, including a list of specific questions for stakeholders, can be found in CSA Notice and Request for Comment Proposed National Instrument 51-107 Disclosure of Climate-related Matters on the websites of CSA members.

Comments should be submitted in writing by January 17, 2022.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

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