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CSA Seeks Comments on Climate-Related Disclosure Rules

October 28, 2021

The Canadian Securities Administrators (the CSA) recently issued a notice and request for comment on proposed National Instrument 51-107 – Disclosure of Climate-related Matters (the Proposed Instrument) and its companion policy (the Proposed Policy), which would introduce specific disclosure requirements regarding climate-related matters for most public companies in Canada. As discussed in this bulletin, the CSA has largely adopted the disclosure standards prescribed by the Task Force on Climate-related Financial Disclosures (the TCFD Framework), with certain notable modifications outlined below. Such an approach demonstrates the CSA’s commitment towards mandatory climate-related disclosure standards. The approach is also described as reflecting the CSA's efforts to balance the concerns of investors regarding the need for consistent, comparable and decision-useful disclosure, with those of issuers with respect to the burden of compliance.


In recent years, investors and other stakeholders, both domestically and internationally, have become increasingly attentive to the climate-related risks to which many issuers are exposed. Such stakeholder interest provided the impetus for the emergence of a range of voluntary climate-related disclosure frameworks, including the Financial Stability Board's TCFD Framework and the frameworks developed by the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). Many issuers have responded to the concerns of stakeholders by incorporating disclosure regarding the material risks from, opportunities created by, and potential impacts of, climate change into their disclosure materials, most commonly in a stand-alone sustainability report, or similar document, published on the issuer’s website.

The absence of a unified disclosure standard has resulted in issuers adopting a range of divergent approaches to such disclosure. While certain issuers have implemented the TCFD Framework, others have adhered to the frameworks developed by the GRI or the SASB. This level of fragmentation resulted in calls from investors, particularly institutional investors, to improve the consistency, transparency and comparability of climate-related disclosure. Of particular note was the appeal, in November of 2020, from the heads of Canada's eight largest pension funds, for issuers to both enhance and standardize their approaches to environmental and social governance.

The Proposed Instrument seeks to address stakeholder concerns by introducing a single standard, based principally on the TCFD Framework, against which the climate-related disclosure of public companies will be measured. The selection of the TCFD Framework as the model upon which the Proposed Instrument is premised reflects the CSA's view that the TCFD Framework is emerging as the global standard for climate-related disclosure. In particular, jurisdictions such as the United Kingdom, the European Union, Australia, New Zealand and Switzerland have implemented, or are taking steps towards implementing, disclosure standards that are modeled on, or are comparable to, the TCFD Framework. In the United States, the Securities and Exchange Commission (the SEC) has also recently expressed interest in implementing rules concerning climate-related disclosure. Implementing specific climate-related disclosure requirements based on the TCFD Framework can also be viewed as consistent with the support the CSA has expressed for establishing the International Sustainability Standards Board (the ISSB) and the Canadian offer to host the ISSB headquarters in Canada.



Similar to the existing corporate governance disclosure regime provided for in National Instrument 58-101 – Disclosure of Corporate Governance Practices and National Instrument 52-110 – Audit Committees, the Proposed Instrument would apply to all public companies, other than those that are: investment funds, issuers of asset-backed securities, designated foreign issuers, SEC foreign issuers and certain exchangeable security issuers,  and certain credit support issuers and public companies that are subsidiaries of other public companies.

Disclosure Requirements

Consistent with the TCFD Framework, the Proposed Instrument is organized around four core elements of climate-related disclosure: (i) Governance; (ii) Strategy; (iii) Risk Management; and (iv) Metrics and Targets. Addressing each of the four elements will require issuers to be mindful of the need to provide clear, meaningful and issuer-specific disclosure, as the CSA has expressed concerns about the use of "boilerplate, vague or incomplete" disclosure in regards to current market practices.

Public companies who are subject to the Proposed Instrument would be required to disclose the following information:


  1. a description of the board of directors' oversight of climate-related risks and opportunities; and
  2. a description of management's role in assessing and managing climate-related risks and opportunities.


  1. to the extent that such information is material to an issuer, the climate-related risks and opportunities that the issuer has identified over the short, medium and long-term; and
  2. to the extent that such information is material to an issuer, the impact of climate-related risks and opportunities on the issuer's business, strategy and financial planning.

Risk Management

  1. a description of the issuer's process for identifying and assessing climate-related risks;
  2. a description of the issuer's process for managing climate-related risks; and
  3. a description of how processes for identifying, assessing and managing climate-related risks are integrated into the issuer's overall approach to risk management.

Metrics and Targets

  1. to the extent that such information is material to an issuer, the metrics used by the issuer to assess climate-related risks and opportunities in line with its strategy and risk management process; and
  2. to the extent that such information is material to an issuer, a description of the targets used by the issuer to manage climate-related risks and opportunities and the issuer's performance against these targets.

In addition, the current draft of the Proposed Instrument would require issuers to disclose Scope 1 greenhouse gas (GHG) emissions (all direct GHG emissions by an issuer), Scope 2 GHG emissions (all indirect GHG emissions arising from an issuer's consumption of purchased electricity, heat or steam) and Scope 3 GHG emissions (all other indirect GHG emissions of an issuer, other than those described in Scope 2) and the related risks, or provide an explanation as to the issuer's reasons for not disclosing such information. If an issuer elects not to include any GHG emissions disclosure, the issuer would be permitted to provide its reasons for not doing so in respect of GHG emissions as a whole, as opposed to a separate explanation for each scope.

The CSA has noted that they are also considering an alternative approach to the Metrics and Targets section of the Proposed Instrument, which would make the disclosure of Scope 1 GHG emissions mandatory, while taking a comply or explain approach to disclosure concerning Scope 2 and Scope 3 GHG emissions.

Public companies will also be required to disclose the reporting standard they use to calculate and disclose their GHG emissions, which must be the GHG Protocol developed by the World Resources Institute and World Business Council for Sustainable Development, or a reporting standard that is comparable to the GHG Protocol.


The Proposed Instrument contemplates a phased-in approach for all issuers, with a one-year transition phase proposed for non-venture issuers and a three-year transition phase proposed for venture issuers. For example, if the Proposed Instrument comes into force on December 31, 2022, which is the earliest date on which the CSA expects the Proposed Instrument to come into force, an issuer with a December 31 year-end would be required to comply with the Proposed Instrument in its annual filings due in 2024, if it is a non-venture issuer, and 2026, if it is a venture issuer.

Applicable Continuous Disclosure Documents

Public companies who send a management information circular to security holders in connection with soliciting proxies for the election of members of their boards of directors would be required to include the Proposed Instrument’s disclosure with respect to Governance in such circular. Issuers who file an annual information form (AIF) would be required to include the Proposed Instrument’s disclosure with respect to Strategy, Risk Management and Metrics and Targets in that document (as well as Governance disclosure if no applicable management information circular is being sent to security holders), while public companies (including venture issuers) who do not file an AIF would be required to include the requisite disclosure in their management's discussion and analysis.

Notable Features and Implications of the Proposed Instrument

  1. Lack of Requirement to Provide Scenario Analysis: The TCFD Framework recommends that participants include in their disclosure materials an evaluation of the resiliency of their strategic plans to a range of climate-related scenarios, including a 2°C scenario. The CSA has elected not to incorporate this aspect of the TCFD Framework into the Proposed Instrument. In doing so, the CSA has taken note of concerns from both an investor perspective, as the number of assumptions required in connection with such disclosure brings the consistency and comparability of such information into question, and an issuer perspective, particularly in regards to the costs associated with preparing such information.
  2. Materiality Qualifier for Certain Requirements: By introducing a materiality qualifier into the disclosure requirements concerning Strategy and Metrics and Targets, the CSA has limited the application of these sections of the Proposed Instrument to those issuers for whom such information is material (i.e., a reasonable investor’s decision whether to buy, sell or hold securities in a company would likely be influenced or changed if the information in question was omitted or misstated). However, as the sections regarding Governance and Risk Management are not subject to such a qualifier, all public companies who are subject to the Proposed Instrument will be required to comply with those requirements.
  3. Comply or Explain Approach to GHG Emissions: In contrast to the TCFD Framework, which recommends that participants disclose Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions, the Proposed Instrument has taken a comply or explain approach with respect to such disclosure. Although the CSA is considering mandating the disclosure of Scope 1 GHG emissions, this would still represent a greater level of flexibility than that recommended by the TCFD Framework.
  4. Implications for Foreign Private Issuers: As noted above, SEC foreign issuers are exempted from the requirements of the Proposed Instrument. However, Canadian public companies who qualify as foreign private issuers (FPIs) under applicable U.S. laws would be required to comply with the Proposed Instrument. As such, in the event that the SEC implements climate-related mandatory reporting, unless either the SEC or the CSA includes a carve-out for FPIs, it follows that FPIs would be subject to two, potentially distinct, climate-related disclosure regimes.
  5. Potential Expansion of Secondary Market Liability: The CSA has observed an overall increase in the number of public companies who are providing climate-related information in their voluntary disclosure documents, such as ESG reports. By mandating that aspects of this information be included in an issuer's core continuous disclosure documents, the CSA is effectively expanding the scope of secondary market liability. In addition, public companies seeking to complete short form prospectus offerings should take particular note of this implication, as such continuous disclosure documents, and the climate-related information they contain, would be incorporated into their offering documents by reference.
  6. Use of Forward-Looking Information: Compliance with the Proposed Instrument will necessarily involve the use of forward-looking information. In order to ensure that they are able to avail themselves of the safe harbour provisions under applicable securities laws, public companies should ensure that any forward-looking information disclosed has a reasonable basis and that the forward-looking information cautionary statement in their continuous disclosure documents is revised accordingly.
  7. Timing Considerations for Public Companies Subject to Existing GHG Reporting Requirements: Certain public companies are already required to disclose GHG emissions under existing federal and provincial legislation, including the federal Greenhouse Gas Reporting Program. This may create timing challenges for issuers who are subject to both regimes, as the relevant reporting deadlines are staggered.  In particular, public companies with a December 31 year end are generally required to file their annual disclosure documents (in which climate-related disclosure would need to be included under the Proposed Instrument) within the first quarter of the following financial year.  Conversely, the federal Greenhouse Gas Reporting Program currently contemplates a June 1 reporting deadline, which is generally consistent with the requirements prescribed by the analogous provincial regimes.


By introducing a uniform standard based on the TCFD Framework, the CSA is seeking to introduce consistency and comparability to the Canadian climate-related disclosure landscape in a manner that is responsive to the concerns of the business community, investors and other stakeholders. Given that aspects of the Proposed Instrument would apply regardless of whether climate-related risks are material to an issuer's business, the Proposed Instrument should be of interest to all applicable public companies, regardless of the industry in which they operate.

The Proposed Instrument is open for comment until January 17, 2022.

For further information, please contact:

Jeff Bakker                   403-260-9682
Michael Barrett          403-260-9621
Pascal de Guise          514-982-4119
Dufferin Harper         403-260-9710
Olga Kary                    403-260-9644
Kathleen Keilty           604-631-3318
Matthew Merkley       416-863-3328

or any member of our Capital Markets or Environmental groups.