Climate and Diversity: CSA Stays Neutral on a Moving Train

On April 23, 2025, the Canadian Securities Administrators (CSA) announced that it is pausing its efforts to develop new and enhanced climate and diversity-related disclosure rules for public companies in Canada. This decision follows a wave of recent developments in the environmental, social and governance (ESG) landscape, most notably the public retreat in the United States by a wide range of lawmakers, business leaders, proxy advisory firms and institutional investors from numerous diversity, equity and inclusion (DEI) and sustainability policies and initiatives, as well as the U.S. Securities and Exchange Commission’s (SEC) decision to end its defense of its rules that would have required public companies to disclose climate-related risks and greenhouse gas emissions.

In this bulletin, we provide a brief overview of the climate and diversity-related disclosure requirements previously under consideration in Canada, discuss the CSA’s recent announcement and outline our expectations with respect to the future of ESG-related disclosure in Canada.

Background 

The Development of an Enhanced Climate- and Diversity-Related Disclosure Regime in Canada 

Diversity-Related Disclosure Requirements

In Canada, “non-venture issuers” (i.e., those listed on a senior stock exchange like the Toronto Stock Exchange) are subject to certain diversity-related disclosure obligations set out in Form 58-101F1 – Corporate Governance Disclosure (58-101F1). All public companies (i.e., “venture issuers” and “non-venture issuers”) formed under the Canada Business Corporations Act (CBCA) are also subject to additional diversity-related disclosure requirements. Both instruments generally adopt a “comply or explain” approach to diversity disclosure in which companies are required to disclose certain details on their diversity policies or, if they do not have such policies, explain why not. However, while 58-101F1 is limited to requiring disclosure in relation to the representation of women on boards and in executive officer positions, the CBCA requirements extend more broadly to also require such disclosure in respect of Aboriginal peoples, persons with disabilities and members of visible minorities.

In April 2023, the CSA issued a notice and request for comment on two alternative proposals to update the diversity-related disclosure regime under 58-101F1 (the Proposed Diversity-Related Disclosure Amendments). As discussed in greater detail in our Blakes Bulletin: CSA Discloses Diversity of Potential Changes to Diversity Disclosures, the primary difference between the two proposals was their level of prescriptiveness in regards to the disclosure of aspects of diversity beyond the representation of women. While one proposal would have required mandatory reporting on the representation of five designated groups (women, Indigenous peoples, racialized persons, persons with disabilities and LGBTQ2SI+ persons), the other would have allowed companies to select, in addition to women, such additional categories of diversity themselves.

Climate-Related Disclosure Requirements

With the exception of certain requirements applicable to some industries, companies are not subject to specific climate-related disclosure obligations in Canada. In October 2021, the CSA proposed to change this by publishing for comment National Instrument 51-107 – Disclosure of Climate-related Matters (the Proposed Climate-Related Disclosure Rules), which would have introduced specific disclosure requirements regarding climate-related matters for most public companies in Canada. The Proposed Climate-Related Disclosure Rules largely adopted the disclosure standards prescribed by the Task Force on Climate-Related Financial Disclosures (the TCFD Framework), with certain notable modifications, including a “comply or explain” approach to greenhouse gas emissions disclosure, as well as a lack of requirement to provide scenario analysis. For further details regarding the Proposed Climate-Related Disclosure Rules, see our Blakes Bulletin: CSA Seeks Comments on Climate-Related Disclosure Rules.

Subsequent Developments 

Following their publication, both the Proposed Diversity-Related Disclosure Amendments and the Proposed Climate-Related Disclosure Rules underwent public comment periods during which they received many comments expressing a range of divergent viewpoints on the two instruments. Subsequently, the CSA issued a number of statements, building momentum, indicating that it was continuing to advance the Proposed Climate-Related Disclosure Rules in light of the rapidly evolving sustainability-related disclosure landscape. Most recently, in December 2024, following the publication by the Canadian Sustainability Standards Board of its inaugural sustainability disclosure standards (the CSSB Standards), the CSA reaffirmed its intention to publish a revised version of the Proposed Climate-Related Disclosure Rules for public comment (as detailed in our Blakes Bulletin: Canadian Sustainability Standards Board Publishes Inaugural Sustainability Disclosure Standards). Similarly, in its 2023-2024 Year in Review Report, published in July 2024, the CSA advised that it was continuing to work towards publishing a final version of the Proposed Diversity-Related Disclosure Amendments (see our Blakes Bulletin: No Summer Break for the CSA: Selected Securities Law Developments for more information).

More recently, however, there has been a significant, countervailing policy shift among a number of influential groups, particularly in the U.S., throwing a range of ESG-related programs and policies into reverse. In particular, since taking office in January 2025, U.S. President Trump has issued a series of executive orders aimed at eliminating DEI programs across the U.S. federal government and impacting the private sector. Subsequently, several high-profile companies have been the subject of legal actions and investigations regarding their DEI initiatives. In addition, many companies have publicly revoked or curtailed their DEI-related practices — or adjusted how they disclose them externally. Institutional Shareholder Services, a leading proxy-advisory firm, also announced that it was indefinitely suspending the consideration of racial, ethnic and gender diversity factors in making voting recommendations with respect to director elections at U.S.-based issuers. In addition, in March 2025, in the wake of significant opposition from groups of interested stakeholders, the SEC ended its defence of its rules that would have required public companies to disclose climate-related risks and greenhouse gas emissions.

Against this backdrop, coupled with recent tariff announcements and the resulting economic uncertainty for many key Canadian industries, the CSA was confronted with the decision as to whether to proceed with the Proposed Diversity-Related Disclosure Amendments and the Proposed Climate-Related Disclosure Rules. Citing the “rapidly and significantly changed” global economic and geopolitical landscape, as well as “rising competitiveness concerns for Canadian issuers,” the CSA ultimately determined to pause all work on these two initiatives. The CSA noted that while it “expects to revisit both projects in future years,” in the near term it will focus on initiatives to make Canadian markets more “competitive, efficient and resilient,” such as the recently announced blanket orders discussed in our Blakes Bulletin: CSA Blanket Orders Aim to Warm Up Canadian Capital Markets, as well as its efforts to combat misleading disclosure, potentially including greenwashing. For more information on some of the CSA’s current areas of focus, see our Blakes Bulletin: Stay Clean, Don’t Wash: CSA Comments on Artificial Intelligence and Climate Disclosures. 

Looking Ahead 

The CSA’s efforts over the last several years to update the ESG-related disclosure regime for Canadian public companies have faced delays due to differing views among CSA members on DEI and sustainability-related initiatives, as well as the need to consider the impacts of ongoing parallel international developments. Until some degree of convergence occurs in these areas, which appears unlikely in the near term, particularly given the impacts of developments south of the border, the CSA is not expected to actively pursue these two disclosure projects.

In the meantime, applicable public companies will continue to be subject to the diversity-related disclosure requirements under 58-101F1 and the CBCA, as noted above. Public companies will also continue to be subject to the obligation to disclose material risks related to their business, which, for many issuers, may include climate-related risks. It remains to be seen if public companies primarily focused on the Canadian market will continue to voluntarily comply with one or more of the various existing climate-related disclosure frameworks, such as the CSSB Standards, given the pressures still being exerted by various Canadian investors and other stakeholders.

For more information, please contact the authors or any other member of our Capital Markets group.