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The Government of Canada announced the first expansion of its requirements for climate-related financial disclosures to include private companies, with new plans to introduce mandatory climate-related reporting for large, federally incorporated companies.
Alongside the new climate-related disclosure requirements, the government also introduced plans for a new sustainable investment taxonomy to help categorize green and transition economic activities.
Canada’s process to move towards mandatory climate-related disclosures began in 2021, with a directive from Prime Minister Justin Trudeau to cabinet ministers to move towards a system of reporting based on the Task Force on Climate-related Financial Disclosures (TCFD), and in 2022, the government announced that financial regulator OSFI will require federally regulated financial institutions to publish climate disclosures aligned with the TCFD framework beginning in 2024. In its November 2023 Fall Economic Statement, the government announced a further commitment to expand mandatory climate disclosures. Last year, the TCFD announced that its responsibilities were being transferred to the IFRS Foundation’s International Sustainability Standards Board (ISSB).
Under its new plan, the government said that it will bring forward amendments to the Canada Business Corporations Act that will require the new climate-related financial disclosures, and that it will launch a regulatory process to determine the substance of the disclosure requirements, as well as the size of companies to be covered by the new requirements.
The government’s statement noted that small- and medium-sized businesses will not be subject to the new requirements, although it is considering ways to encourage those businesses to voluntarily provide climate-related disclosures.
While the government has yet to determine the substance of the new disclosures, the Canadian Sustainability Standards Board (CSSB) earlier this year released new proposed standards for companies to report sustainability and climate-related information, based on the ISSB sustainability disclosure standards.
Chrystia Freeland, Deputy Prime Minister and Minister of Finance, said:
“Today’s release of a path for Made-in-Canada sustainable investment guidelines and climate disclosures from large companies will accelerate the flow of private capital into Canada, in turn growing our economy, creating good jobs, and advancing our progress to net-zero emissions by 2050.”