The Canadian Sustainability Standards Board (CSSB) announced today the release of new proposed standards for companies to report sustainability and climate-related information, based on the recently released sustainability disclosure standards by the IFRS Foundation’s International Sustainability Standards Board (ISSB).

The release of the new standards may form a significant step towards the introduction of mandatory climate-related reporting requirements for Canadian companies. In 2021, Prime Minister Justin Trudeau directed 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. 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 goal to develop 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.

The IFRS released the inaugural general sustainability (IFRS S1) and climate (IFRS S2) reporting standards in June 2023, and 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.

The CSSB was formed in 2022 to work with the ISSB, and to support the uptake of ISSB standards in Canada.

The new proposed Canadian standards include CSDS 1 and CSDS 2, which align with IFRS S1 and S2, respectively, while introducing several “Canadian-specific modifications.” Key changes from the IFRS standards include pushing off the effective date by a year, with the standards becoming effective for reporting periods beginning on or after January 1, 2025, as well as extending the reliefs for certain aspects of the new requirements, with disclosure of Scope 3, or value chain, emissions, and of disclosures beyond climate-related risks and opportunities required 2 years after the implementation of the requirements, compared to the 1-year relief included in the IFRS standards.

The CSSB launched a consultation alongside the new proposed standards, with key focus areas for feedback including the alignment of the timing of sustainability reporting with financial reporting, requirements – such as scenario analysis – for climate resilience reporting, and the extended relief proposals.

CSSB Chair Charles-Antoine St-Jean said:

“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.”

Following the release of the proposed standards, Canadian securities regulator the Canadian Securities Administrators (CSA) said that it would consider the final CSSB standards, with potential capital markets-focused modifications, for incorporation into a CSA rule, to become mandatory under Canadian securities legislation.

Stan Magidson, CSA Chair and Chair and CEO of the Alberta Securities Commission, said:

“We are pleased to see publication of the CSSB’s consultation on its first set of standards. We’re interested in the feedback the CSSB receives generally and specific to certain questions, as it may 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.”