Canada: CSA Review Of Climate Change-Related Disclosure

Last Updated: May 16 2018
Article by Davia Wang and Ronald Schwass


On April 5, 2018, the Canadian Securities Administrators ("CSA") published CSA Staff Notice 51-354 – Report on Climate Change-Related Disclosure Project ("SN 51-354"). SN 51-354 provides a summary of the findings from a CSA project launched in 2017 (the "Project"), which consisted of the CSA's review of the current disclosure framework with respect to climate change-related information, research on the disclosure regime in other jurisdictions and a report on consultations conducted by the CSA with a wide range of stakeholders, including issuers, professional advisors and investors. In SN 51-354, the CSA also provide their perspective on certain key issues in climate change reporting.  As a result of their work, the CSA view climate change-related risks not as industry specific but rather as a category of risks and opportunities affecting issuers across a wide range of industries.

The objectives of the Project were:

  1. To assess whether current regulatory guidance was sufficient;
  2. To better understand what information investors require in order to make informed decisions; and
  3. To review current disclosures being made by public issuers.

Overview of Disclosure Requirements

Under securities laws in Canada, issuers must disclose any information that is considered material, which may include climate change-related information. For instance, issuers are required to disclose material risks in their annual information form and management's discussion & analysis. The CSA highlighted a few types of risks that may be related to climate change and their potential impacts on issuers' business and financial performance. For example, climate change events such as extreme weather could lead to physical risks, which could include damages to issuers' assets and interruptions to their normal course of business or may have financial impacts such as asset write-offs and reduced revenue. In addition, an unstable regulatory environment with respect to climate change legislation could lead to regulatory risks, which may result in extra compliance requirements and increased costs for issuers. Furthermore, violations to regulatory requirements could also result in reputational risks. Finally, changing market demand for energy efficient products could give rise to business model risk and affect issuers' bottom line through lower profit and higher capital expenditure.

In addition to the disclosure of risks, the CSA are of the view that issuers are also required to disclose their risk management process and oversight with respect to climate change and environmental issues. This includes disclosure of issuers' environmental policies and the steps taken to implement them. The CSA note that this could include policies on climate change-related issues and the impact of such policies on issuers' operations. In addition, issuers' boards are responsible for adopting a strategic plan that evaluates the risks faced by the business and for the identification of the principal risks faced by the issuers and for the implementation of a risk management process. Lastly, when reviewing the issuers' continuous disclosure documents, the board, the audit committee and the issuer's Chief Executive Officer and Chief Financial Officer should consider climate change-related matters.

Work Completed

In connection with the Project, the CSA conducted research on the disclosure regime of climate change-related information in the United States, the United Kingdom and Australia. They also reviewed several voluntary frameworks for sustainability reports or climate change-related information, including the Final Recommendations of the Task Force on Climate-related Financial Disclosure (the "TCFD Recommendations"),  the International Integrated Reporting Framework published by the International Integrated Reporting Council (the "IR Framework"), the Global Standards for Sustainability Reporting published by the Global Reporting Initiative (the "GRI Framework") and the Climate Risk Technical Bulletin (the "SABA Framework") published by the Sustainability Accounting Standards Board ("SASB").

To gain a sense of the current disclosure practices of climate change-related information in Canada, the CSA reviewed the continuous disclosure ("CD") and voluntary disclosure made by 78 issuers from the S&P/TSX Composite Index. These issuers came from various industries and had a wide range of market capitalization (the "Disclosure Review").

The CSA also conducted anonymous surveys (the "Survey") to get feedback from issuers with respect to their current climate change-related disclosure practices, including their governance and risk management processes, the cost and challenges associated with such disclosure and the demand for such disclosure from their investors. All TSX-listed issuers were invited to complete the Survey and the CSA received responses from 97 issuers, representing 13 industries and with market capitalizations ranging from $25 million to over $1 billion.

In addition, the CSA held 50 consultations (the "Consultations") with a variety of stakeholders, including investors, issuers, advisors and academics. Specifically, the CSA sought users' views on their need for climate change-related information, the sufficiency of the disclosure made by issuers and the adequacy of the current disclosure regime. The CSA also canvassed issuers' perspectives on their current disclosure practices and governance and risk management processes with respect to climate change-related information, as well as the challenges they face in providing such disclosure and in complying with regulatory requirements. Other stakeholders, such as legal advisors and academics, provided their views on the collection and presentation of climate change-related disclosure as well as insights into the current trends in this area.

Key Themes

The outcome of the Disclosure Review indicates that 56% of the issuers provided specific climate change-related disclosure in their CD and 85% did so in their voluntary disclosures, with issuers in the oil and gas industry being mostly likely to make such disclosure. The quantity and quality of disclosure increases with the issuer's market capitalization. The most prevalent risk type related to climate change is regulatory risk, followed by physical risk and market risk. 

A majority of issuers referenced a third-party framework in their voluntary disclosure, with the GRI Framework being the most common one used. The most common type of disclosure made in voluntary disclosure was emissions-related metrics. However, very few disclosed their GHG emissions in their CD.

Based on issuers' responses to the Survey, the main reasons cited by them for the non-disclosure of climate change-related information were (i) their conclusions that such information was not material, (ii) that a common framework for measurement was lacking, and (iii) a perceived lack of interest from stakeholders. However, responses received by the CSA through the Consultations and the Survey indicate a divergence between the users and issuers on their views as to the materiality of climate change-related risks and opportunities. In general, users consider climate change-related risks to be a conventional business issue that warrants more disclosure and discussion in issuers' CD. Issuers thematically appear to only disclose information they consider material and omit information that is remote or difficult to measure or quantify.

The CSA also note two main deficiencies in the disclosure of climate change-related information. First, among those that disclosed climate change-related information, only 7% provided specific disclosure regarding the financial impact of such risk. Second, few issuers disclosed details concerning their governance and risk management practice with respect to climate change.

Users' Perspective

The Consultations reveal that users were generally dissatisfied with the current state of climate change-related disclosure both in terms of the quantity and the quality of the information provided. In particular, users suggested a lack of disclosure of the issuers' risk management process and governance practices, which made it difficult for them to conduct their analysis on the impact of such risks and in making investment decisions. Although some users suggested that a "comply or explain" approach may be adopted for climate change-related disclosure, the CSA note that this approach is generally not consistent with the general disclosure approach in Canada, which allows issuers to omit negative answers in their disclosure. There was no consensus among the users on whether there should be new prescriptive disclosure requirements on climate change-related disclosure. Many considered it sufficient to supplement the current disclosure regime with additional guidance from the regulators.

Issuers' Perspective

Issuers' responses from the Consultations suggest that users demand more climate change-related information from larger issuers in carbon-intensive industries. Furthermore, issuers indicated a strong preference for the current disclosure regime and noted that additional disclosure obligations would discourage companies from becoming reporting issuers in Canada and damage the competitiveness of Canadian issuers in global markets. Several issuers also expressed their concern that placing an emphasis on climate change-related disclosure would detract from other environmental risk disclosure.

In addition, issuers indicated that they faced significant challenges in providing climate change risk disclosure. First, they argue that such disclosure is costly and may not justify the benefits obtained. Second, issuers noted the unsettled regulatory regime in this area posed significant challenges in compliance. Third, several issuers indicated it was difficult to comply with the disclosure requirements of forward-looking information ("FLI"), which requires FLI be based on reasonable assumptions and limited to a certain time period. Last, issuers acknowledged their lack of expertise in climate change-related issues, which has contributed to the difficulty in making decisions related to the existence and scope of such disclosures.


As part of the Project, the CSA reviewed the climate change-related disclosure requirements in the United States, the United Kingdom, and Australia. They found that the disclosure regime in the United States is similar to that of Canada, in that both do not have prescribed disclosure on climate change-related information. This is in contrast to the regimes in the United Kingdom and Australia, where public companies are required to make specific disclosure in this area.

The CSA also reviewed a number of frameworks for voluntary corporate sustainability reporting. Some of these frameworks, such as the IR Framework and the GRI Framework, are more comprehensive in nature and cover a range of sustainability topics. Others, such as the SASB Framework and the TCFD Recommendations, focus more narrowly on the risks and financial impacts to an issue associated with climate change. In particular, the CSA compared the TCFD Recommendations to the current disclosure requirements in Canada and noted that the TCFD Recommendations contain more specific disclosure requirements on the governance and risk management of climate change-related risks. In addition, the TCFD Recommendations provide more specific guidance on climate change-related issues for both financial and non-financial businesses. The TCFD Recommendations also encourage organizations to adopt scenario analysis, such as a "2 °C scenario", in assessing the readiness and resilience of their business strategies with respect to climate change-related risks.

Potential Future Trends

The CSA note that there are some indications that other frameworks, such as the SASB Framework, may converge with the TCFD Recommendations in the future. The convergence of various disclosure frameworks brings benefits such as enhanced transparency and comparability across different issuers. It would also bring certainty to the disclosure regime and address the demand for climate change-related information from users. However, using a single framework also has its drawbacks. First, users differ in the amount and type of information they need and a single framework approach may not adequately serve their diverse needs. Second, a single framework may take away from issuers the flexibility to provide additional information to their investors voluntarily. Finally, a single framework approach may not yield the intended comparability among issuers and may lead to "boilerplate" disclosure that is of little use to investors.

Future Work by the CSA

The CSA indicate that in the near term, they will focus on the development of guidance and educational initiatives for issuers with respect to the risks and impacts of climate change-related issues. They will also continue to monitor issuers' disclosure of climate change-related information as well as developments in reporting frameworks worldwide.

With respect to future regulatory actions, the CSA believe that new disclosure requirements may be needed with respect to issuers' governance practices and processes used in the identification, assessment, and management of climate change-related risks. Despite the current disclosure requirement in National Policy 58-201 – Corporate Governance Guidelines ("NP 58-201"), which requires an issuer's board of directors to adopt a written mandate to identify the principal risks of the issuer and to implement appropriate systems to manage these risks, little information was provided by the issuers in these areas. To rectify this issue, the CSA indicated that amendments to Form 58-101F1 and NP 58-201 may be needed and additional guidance may be provided.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions