Canadian securities regulators seek comment on climate-related disclosure requirements

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Oct 18, 2021

On October 18, 2021, the Canadian Securities Administrators (CSA) 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. Comments are requested by by January 17, 2022.

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.

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.

Review the press release on the CSA's website and requirements on the OSC's website.

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