On April 5, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 51-354 Report on Climate change-related Disclosure Project (The Staff Notice). The Staff Notice summarizes the results of the CSA’s review of the disclosure by reporting issuers of the risks and financial impacts associated with climate change and outlines its plans for future work.

The focus on climate change-related issues in Canada and around the world has grown rapidly in recent years. Various stakeholders are seeking improved disclosure of the material risks, opportunities, financial impacts and governance processes related to climate change and in response to a changing regulatory environment as illustrated by federal government’s pan-Canadian framework on clean growth and climate change and by its commitment under the Paris Agreement to reduce greenhouse gas (GHG) emissions, including by 30% below 2005 levels by 2030.

As a result, on March 21, 2017, the CSA announced a project to review the disclosure of risks and financial impacts to issuers associated with climate change, and the governance processes related to them (the Project). The Project was focused on climate change-related risks and opportunities that impact an issuer and its business, as opposed to the impact an issuer has or may have on climate change.

The objectives of the Project were:

  • to assess whether current securities legislation in Canada and guidance are sufficient for issuers to determine what climate change-related disclosures they should provide;
  • to better understand what climate change-related information investors need in order to make informed voting and investment decisions, and;
  • to see whether or not issuers are providing appropriate disclosures in this regard.

In the process of carrying out the project, CSA staff identified a number of key themes arising out of the Project, which include:

  • a better understanding of Canadian issuers’ current disclosure practices in relation to climate change-related information; and,
  • an insight into users’ and issuers’ perspectives on the materiality of climate change-related risks and opportunities and the associated financial impacts.

During the course of the Project, CSA staff held a number of consultations with stakeholders.  Staff sought to understand their disclosure needs, whether those needs were being met by issuers, and their suggestions for improvement. Staff consulted with issuers with respect to their interactions with users of climate change-related information, as well as the challenges involved in identifying climate change-related risks and opportunities, quantifying impacts, and preparing meaningful disclosure of material information.

The CSA has identified a series of next steps stemming from the Project. They include:

  • developing guidance and educational initiatives which are useful to issuers across a wide range of industries with respect to the business risks and opportunities and potential financial impacts of climate change;
  • considering new disclosure requirements regarding corporate governance in relation to business risks, including climate change-related risks, and risk oversight and management; and,
  • monitoring the quality of issuers’ disclosure and the evolution of best disclosure practices in this area, to assess whether further work needs to be done to ensure that Canadian issuers’ disclosure continues to develop and improve;
  • determining whether investors require additional types of climate change-related disclosure to make investment and voting decisions; and,
  • monitoring developments in reporting frameworks, evolving disclosure practices and investors need for additional types of climate change-related disclosure to make investment and voting decisions, including whether disclosure requirements in relation to GHG emissions are warranted in the future.

CSA Staff Notice 51-353 Update on CSA Staff Notice 51-354 Report on Climate change-related Disclosure Project is available for download from the websites of participating jurisdictions.

For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.

This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.