The Independent Review Committee on Standard Setting in Canada recommended that an effectiveness review be conducted with the assistance of an independent third party to help streamline and harmonize oversight activities and processes. In response to the results, the Effectiveness Review Joint Taskforce and the current oversight councils approved that a single council be created to oversee standard setting for accounting, audit and assurance, and sustainability.  

This decision consolidates the activities of three oversight bodies – the Auditing and Assurance Standards Oversight Council (AASOC), Accounting Standards Oversight Council (AcSOC), and the Canadian Sustainability Standards Board (CSSB) Implementation Committee – streamlining the processes and activities for accounting, audit, assurance, and sustainability standard setting.

The Oversight Council is effective from April 1, 2024, and will focus its initial work on establishing its operations and governance processes. It will begin its formal oversight work on July 1, 2024. The current oversight bodies will conclude their operations on June 30, 2024.

Access the press release on the FRASCanada website.

For Canadian securities legislation to mandate compliance, the CSSB standards need to be integrated into a CSA rule. Following the completion of the CSSB consultation and standardization, the CSA intends to solicit feedback on a revised rule outlining climate-related disclosure obligations. The proposed CSA rule will align with final CSSB standards, possibly with tailored adjustments for Canadian markets, focusing primarily on provisions relevant to climate disclosures.

The CSA continues to monitor and assess international developments in this area, including the United States Securities and Exchange Commission (SEC)’s climate-related disclosures rule approved on March 6, 2024.

Access the press release on the CSA’s website.

The package comprises three consultation papers:

• Proposed Criteria for Modification Framework
• Proposed CSDS 1 General Requirements for Disclosure of Sustainability-related Financial Information
• Proposed CSDS 2 Climate-related Disclosures

The proposed Criteria for Modification Framework presents the basis on which the CSSB could introduce changes to the ISSB standards. These criteria ensure that Canadian standards align with international standards while addressing Canadian public interest.

The proposed CSDS 1 and CSDS 2 are based on IFRS S1 and IFRS S2 with the following modifications: 

• The proposed effective dates for CSDS 1 and CSDS 2 have been extended by one year compared to that of IFRS S1 and IFRS S2 (i.e. the proposed standards would become voluntarily effective for annual reporting periods beginning on or after 1 January 2025);
• The proposed transition relief for disclosures beyond climate-related risks and opportunities has been extended from one year to two years;
• The proposed requirements to disclose comparative information have been changed to align with the proposed modification for the transition relief; and
• The proposed transition relief for disclosure of Scope 3 GHG emissions has been extended from one year to two years.

Please click to access the following on the Financial Reporting and Assurance Standards (FRAS) Canada website:

• Press release
• Proposed Criteria for Modification Framework
• Proposed CSDS 1
• Proposed CSDS 2
• In Brief — A plain and simple overview of the recently issued Exposure Drafts

Note: On 10 April 2024, the CSSB offers a webinar on the proposed new standards. Please click for more information here.

The report focuses on IFRS Accounting Standards and does not consider sustainability reporting standards such as the European Sustainability Reporting Standards (ESRSs) or standards issued by the International Sustainability Standards Board (ISSB).

According to the report, minor amendments in the following areas would have positive implications for financial stability:

• The application of the materiality principle in IAS 1 may need to be enhanced, as even if the transaction involved is immaterial in quantitative terms, user expectations or peer practice may justify information on it

• The addition of climate factors to the list of indicators of impairment of non-financial assets in IAS 36
• How provisions and contingent liabilities should be recognized according to IAS 37, given climate-related risks
• Additional disclosure requirements, examples and guidance on how climate-related risks should be incorporated into estimating expected credit losses and the fair value of financial instruments.

In addition, the ESRB recommends that the IASB prioritize the work on pollutant pricing mechanisms. This project is currently on the IASB's reserve list.

Access the report on the ESRB’s website.

The vote follows a political agreement between the Council of the EU and the EU Parliament in February 2024.

EU companies will still have to report as planned in line with general sustainability reporting standards adopted by the European Commission in July 2023. Later adoption of sector-specific standards for EU companies affects the extent of reporting, as the sector-specific part about companies’ particular impact on people and the planet in their area of activity will not be required before 2026.

The Parliament vote does not affect the reporting timelines as agreed under the Corporate Sustainability Reporting Directive (CSRD). As a next step, the legal text needs to be formally approved by the Council of the European Union before becoming effective.

Access the press release on the European Parliament’s website.

The GHG Protocol secretariat solicited stakeholder feedback between November 2022 and March 2023 on the use of the Corporate Value Chain (Scope 3) Accounting and Reporting Standard (the “Scope 3 Standard” or “Standard”) and the Technical Guidance for Calculating Scope 3 Emissions (the “Scope 3 Technical Guidance” or “Technical Guidance”) to understand user needs, identify topics which may warrant updates or guidance, and solicit recommendations for specific updates or new guidance.

Approximately 350 individuals and/or organizations provided responses to the scope 3 survey. In addition to the scope 3 survey, respondents were given the opportunity to submit proposals.

The inclusion of feedback in the summaries does not indicate that a recommendation will be implemented or reflected in updates to either the Scope 3 Standard or Scope 3 Technical Guidance. Instead, the GHG Protocol secretariat and governance bodies are prioritizing which topics to address in the update process, including the scope of work for updates and additional guidance and resources.

According to the draft summary report, any updates will aim to align with best practice approaches to ensure that the GHG Protocol standards for corporate accounting and reporting are effective in providing a rigorous and credible accounting foundation for businesses to measure, plan, and track progress toward science-based and net-zero targets in line with the global 1.5°C goal. Any future updates will seek harmonization and interoperability with accounting rules under development through major disclosure initiatives.

Access the Summary of Scope 3 Proposals and the Detailed Summary of Scope 3 Stakeholder Survey Responses on GHG Protocol’s website.

Covering double materiality, due diligence, and the Corporate Sustainability Reporting Directive (CSRD), each publication emphasizes the pertinence of the topic and the significant role played by the globally adopted GRI Standards in helping address them: 

• Double materiality: The interconnectedness of a company's impacts on society and the environment with its financial performance. GRI reporting prepares companies for double materiality, given that impacts are the basis for determining associated financial risks and opportunities.  
• Due diligence: How a business prevents, mitigates and accounts for its impacts. Due diligence is integrated into the GRI Standards, with reporting requirements aligned with authoritative intergovernmental instruments. 
• CSRD: The benefits for policymakers in harmonizing their sustainability disclosure regulations with the EU. The GRI Standards are closely aligned with the new European Sustainability Reporting Standards (ESRS), with collaboration continuing to ensure they remain so in the future. 

Access the press release on the GRI’s website.

The revised GRI biodiversity standard delivers:

• full transparency throughout the supply chain; 
• location-specific reporting on impacts; 
• new disclosures on the direct drivers of biodiversity loss; and 
• requirements for reporting impacts on society.

It builds on the most important global biodiversity developments, such as the UN Kunming-Montreal Global Biodiversity Framework (GBF), the Science Based Target Network (SBTN) and the Taskforce on Nature-related Financial Disclosures (TNFD).

The GRI cooperated and liaised with the European Financial Reporting Advisory Group (EFRAG), which developed European Sustainability Reporting Standard (ESRS) 4 Biodiversity and ecosystems, and other key organizations in the biodiversity field to support global alignment of the revised standard.

Access the press release on GRI’s website.

The IFRS Foundation issued a special joint podcast episode where IASB Vice-Chair Linda Mezon-Hutter and ISSB Vice-Chair Sue Lloyd shared insights into the discussion.

Key topics included feedback on integration in reporting projects and enhancing connectivity between the two boards. The podcast also discussed the IASB’s management commentary project and the role of the Integrated Reporting Framework.

Access the press release on IFRS Foundation’s website.

This study, an annual benchmark that now includes 2022 data, also found the use of varying sustainability standards and frameworks, continues to make it difficult for investors, lenders, and other stakeholders to find consistent and comparable sustainability information.

Key findings revealed a surge in companies reporting sustainability information, with 98% doing so in 2022 compared to 91% in 2019. However, standalone sustainability reports have declined, indicating a shift towards integrated reporting. While there is an increase in companies seeking assurance on sustainability disclosures, the scope remains limited. Additionally, accounting firms dominate assurance engagements, reflecting growing recognition of their reliability in ensuring sustainability disclosure consistency.

Access the report on IFAC’s website.