The Canadian Sustainability Standards Board (CSSB) today announced the release of new proposed standards for companies to report sustainability and climate-related information, building on the sustainability disclosure standards recently released by the International Sustainability Standards Board (ISSB). ) from the IFRS Foundation.
The publication of the new standards could be a significant step towards introducing mandatory climate-related reporting requirements for Canadian companies. In 2021, Prime Minister Justin Trudeau directed ministers to adopt a reporting system based on the Task Force on Climate-related Financial Disclosures (TCFD), and in 2022 the government announced that financial regulator OSFI will require financial institutions Federally regulated companies will publish climate disclosures aligned with the TCFD framework starting in 2024. Last year, the TCFD announced that its responsibilities were being transferred to the IFRS ISSB.
The ISSB was launched in November 2021 at the COP26 climate conference, with the aim of developing IFRS Sustainability Disclosure Standards, driven by demand from investors, companies, governments and regulators to provide a global baseline of disclosure requirements, enabling a consistent understanding of the effect of sustainability risks and opportunities on companies' prospects.
IFRS released the first general sustainability (IFRS S1) and climate (IFRS S2) reporting standards in June 2023, and in July IOSCO, the leading international policy forum and standard-setter for securities regulators, called to regulators to incorporate standards into their sustainability. regulatory reporting frameworks.
The CSSB was formed in 2022 to work with the ISSB and to support the adoption of ISSB standards in Canada.
The proposed new Canadian standards include CSDS 1 and CSDS 2, which align with IFRS S1 and S2, respectively, while introducing several “Canada-specific modifications”. Key changes to the IFRS standards include pushing back the effective date by one year, with the standards coming into effect for reporting periods beginning on or after January 1, 2025, as well as extending exemptions for certain aspects of the new requirements, with disclosure of Scope 3, or value chain, emissions and disclosures beyond climate-related risks and opportunities required 2 years after implementing the requirements, compared to the 1 year relief included in IFRS standards.
The CSSB launched a consultation alongside the proposed new standards, with key focus areas for feedback including aligning the timing of sustainability reporting with financial reporting, requirements – such as scenario analysis – for climate resilience reporting and proposals for expanded aid.
CSSB President Charles-Antoine St-Jean said:
“With the release of Canada’s first proposed Sustainability Disclosure Standards, we are taking a significant step towards ensuring that sustainability is not just a buzzword, but a fundamental aspect of our economic fabric. Our goal is to empower organizations to not only communicate their sustainability performance effectively, but also to drive meaningful action towards a more sustainable future for all.”
Following the release of the proposed standards, the Canadian securities regulator, the Canadian Securities Administrators (CSA), said it would consider the final CSSB standards, with possible capital markets-focused modifications, for incorporation into a CSA rule, to become mandatory under Canadian securities legislation. .
Stan Magidson, president of the CSA and president and CEO of the Alberta Securities Commission, said:
“We are pleased to see the publication of the CSSB consultation on its first set of standards. We are interested in the feedback the CSSB receives generally and specifically on certain issues as it can help inform revisions to our proposed climate-related disclosure rule. We strongly encourage interested and affected parties to share their views on the proposed CSSB standards.”
