Canada - CSA (Canadian Securities Administrators)
- Countries: Canada
- Function: Draft rules mandating climate disclosures aligned with TCFD and ISSB
Canada’s approach to sustainability disclosure is coordinated through the Canadian Securities Administrators (CSA), an umbrella organization representing provincial and territorial securities regulators across Canada’s fragmented regulatory system. The CSA plays a central role in harmonizing disclosure requirements nationally, ensuring consistency while allowing for regional jurisdictional authority.
In 2021, the CSA proposed National Instrument 51-107 – Disclosure of Climate-related Matters, aiming to introduce standardized climate-related disclosure obligations for Canadian reporting issuers. The proposed rules are explicitly aligned with the Task Force on Climate-related Financial Disclosures (TCFD), reflecting Canada’s commitment to international convergence on sustainability reporting practices.
Under the draft framework, publicly listed companies would be required to disclose:
- Governance: The board’s oversight and management’s role in assessing and managing climate-related risks and opportunities.
- Strategy: Material climate-related risks and opportunities and their actual and potential impacts on the issuer’s business, strategy, and financial planning.
- Risk management: Processes for identifying, assessing, and managing climate-related risks.
- Metrics and targets: Greenhouse gas (GHG) emissions data (Scope 1, Scope 2, and, optionally, Scope 3) and climate-related targets, if any have been set.
The CSA initially proposed mandatory Scope 1 disclosure, with Scope 2 optional and Scope 3 voluntary. However, after extensive public consultation and alignment with evolving global standards, particularly the ISSB’s IFRS S2 Climate-related Disclosures Standard, the CSA signaled adjustments toward tighter harmonization.
In October 2023, the CSA announced it would update its draft rules to better align with the ISSB standards, particularly IFRS S1 and S2, which integrate financial materiality with forward-looking sustainability risk disclosure. A finalized rule set is expected to be phased in beginning between late 2025 and 2026, with initial focus on large reporting issuers.
Key features of Canada's sustainability disclosure evolution include:
- International alignment: The CSA has emphasized that Canadian issuers should not face duplicative or conflicting requirements relative to global peers, particularly given cross-listings on US and European exchanges.
- Materiality-based disclosure: Following the financial materiality principle, disclosures will focus on information material to investor decision-making, similar to the US SEC approach rather than the EU’s double materiality standard.
- Phased implementation: Transition periods and scaled requirements are expected, recognizing the varying preparedness of small and medium-sized issuers.
The CSA has published guidance on ESG-related investment fund disclosures and marketing practices, aiming to curb greenwashing risks and ensure transparency for retail and institutional investors.