On April 23, the Canadian Securities Administrators (CSA) announced a pause in their efforts to develop mandatory climate-related disclosure rules and amendments to existing diversity-related disclosure requirements. The CSA indicated that the move is intended to give Canadian markets and issuers time to adjust to recent developments in the U.S. and globally, which have increased market uncertainty and elevated competitiveness concerns.
Climate-related disclosure
The pause on a mandatory climate-related disclosure rule comes after the U.S. Securities and Exchange Commission determined to end its defense of litigation challenging its climate-based disclosure rules last month, as well as developments in the E.U. relating to its "omnibus" package that is intended to simplify (and reduce) the reporting obligations under certain E.U. regulations, including the Climate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive. The CSA indicated that it is shifting its focus towards initiatives that will enhance the competitiveness, efficiency and resilience of Canadian capital markets in light of these evolving circumstances, such as recent blanket orders relating to prospectus disclosures and exemptions.
Despite the pause, prior CSA guidance relating to reporting of climate-related risks continues to apply and Canadian securities legislation continues to require issuers to disclose material risks, including material climate-related risks. The CSA noted that the Canadian Sustainability Standards Board (CSSB) issued its final sustainability standards in December 2024. The CSSB standards are broadly aligned with those of the International Sustainability Standards Board, and the CSA encouraged issuers to reference these standards when preparing their own disclosures.
Diversity disclosure requirements
The pause on the amendments to existing diversity disclosure requirements also follows international developments in recent months, including a successful challenge in December 2024 to the jurisdictional authority of the SEC and NASDAQ to require disclosure related to board and executive officer diversity for NASDAQ-listed issuers. The existing Canadian requirements remain in force, meaning that non-venture issuers must still report on matters such as the representation of women on their boards and in executive officer positions and with respect to the adoption (or not) of targets and other related matters.
bIt now appears that additional detailed rule-making in these areas is on hold for the foreseeable future. While the CSA indicated that it will continue to monitor both domestic and international developments in climate and diversity disclosure requirements, it indicated that it planned to revisit these projects in the "coming years". In the meantime, the CSA also indicated that it will continue to monitor disclosure practices and provide additional information and guidance, as appropriate.
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