Canada’s securities regulators announced that they are pausing their work on the development on key sustainability reporting initiatives, including a new mandatory climate-related disclosure rule and amendments to diversity-related disclosure requirements.

According to the Canadian Securities Administrators (CSA), the umbrella organization of Canada’s provincial and territorial securities regulators, the move to pause the development of new sustainability reporting requirements is being made “to support Canadian markets and issuers as they adapt to the recent developments in the U.S. and globally.”

The announcement follows a series significant changes in the sustainability reporting landscape in major markets, with the EU in the midst of its “Omnibus” process to delay, reduce the scope and simplify disclosure requirements under its CSRD legislation, and the U.S. Securities Exchange Commission in the process of entirely abandoning its climate-related reporting rules.

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

“In recent months, the global economic and geopolitical landscape has rapidly and significantly changed, resulting in increased uncertainty and rising competitiveness concerns for Canadian issuers. In response, the CSA is focusing on initiatives to make Canadian markets more competitive, efficient and resilient.”

The CSA move marks a significant and rapid change in direction for the Canadian regulators. As recently as December, the Canadian Sustainability Standards Board (CSSB) published finalized ISSB-based Canadian Sustainability Disclosure Standards. Following the CSSB release, the CSA stated that it was continuing its work towards a mandatory revised climate-related disclosure rule that would consider the new standards.

In its new update, the CSA said that the “CSSB standards provide a useful voluntary disclosure framework for sustainability and climate-related disclosure,” and encouraged issuers to refer to the standards when preparing disclosures.

Commenting on the CSA move, Wendy Berman, Incoming Chair of the CSSB said:

“We recognize that regulatory approaches may evolve in response to market conditions, but the demand for credible, comparable sustainability information continues to grow – both globally and at home.”

Sustainability-focused groups criticized the CSA announcement, expressing concerns that a lack of mandatory reporting requirements would increase risks for investors and companies.

Julie Segal, Senior Manager of Climate Finance at Environmental Defence Canada said:

“The CSA is being regressive. Postponing requirements for businesses to get prepared for climate change and align with positive climate action will only leave businesses less prepared, investors less informed, and Canada’s economy less competitive. Protecting Canada means requiring full climate risk disclosures and credible transition plans.”

The CSA said that it will “monitor domestic and international regulatory developments with respect to climate-related and diversity-related disclosures,” and that it expects to revisit the projects to pursue requirements for issuers “in future years.”