In a move that underscores Canada's commitment to environmental sustainability and corporate transparency, the Canadian Sustainability Standards Board (CSSB) has unveiled its proposal for new sustainability reporting standards, a significant stride towards harmonizing Canadian corporate reporting with global best practices. This initiative, drawing from the International Financial Reporting Standards (IFRS) Foundation's International Sustainability Standards Board (ISSB) guidelines, marks a pivotal moment in Canada's journey towards integrating climate-related reporting into the core of corporate governance.
The dialogue around mandatory climate-related disclosures has gained momentum in Canada over the past few years. Prime Minister Justin Trudeau, in 2021, laid the groundwork for this shift, urging cabinet ministers to align with the Task Force on Climate-related Financial Disclosures (TCFD) framework. This commitment was further solidified in 2022 when it was announced that federally regulated financial institutions would be required to adhere to TCFD-aligned disclosures starting in 2024. The TCFD's transition of duties to the ISSB last year paved the way for a more unified global approach to sustainability reporting.
The ISSB itself emerged from the 2021 COP26 climate conference, tasked with developing standards that would offer a clear, consistent template for sustainability disclosures worldwide. Their efforts culminated in the release of the first set of sustainability (IFRS S1) and climate (IFRS S2) reporting standards in mid-2023. In July, IOSCO, the leading international policy forum and standards setter for securities regulators called on regulators to incorporate the standards into their sustainability reporting regulatory frameworks.
Building on this foundation, the CSSB's proposed Canadian standards, namely CSDS 1 and CSDS 2, mirror the ISSB's IFRS S1 and S2 but with tailored modifications for the Canadian context. Notably, these changes include a deferred implementation date, now set for January 1, 2025, and an extended timeline for the disclosure of Scope 3 emissions and other climate-related risks, providing Canadian companies with additional preparation time.
Alongside the announcement of these standards, the CSSB has initiated a consultation phase, seeking input on several critical areas. These include the integration of sustainability reporting with financial reporting timelines, the incorporation of climate resilience scenario analysis, and feedback on the proposed extended compliance timelines.
Charles-Antoine St-Jean, Chair of the CSSB, emphasized the broader vision behind these standards, stating:
“With the release of the first proposed Canadian Sustainability Disclosure Standards, we’re 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 to drive meaningful action towards a more sustainable future for all.”
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