On January 22, 2021, the Capital Markets Modernization Taskforce (Taskforce) released its final report (Report). The Taskforce was established by the Ontario Provincial Government to help transform the regulatory landscape for the capital markets sector, and advise the Minister of Finance on how to improve the innovation and competitiveness of the Province’s capital markets and best help build Ontario’s economy.

The Report includes 74 policy recommendations designed to amend securities laws in the following areas:

  • improving regulatory structure to enhance governance
  • improving competitiveness through regulatory measures
  • ensuring a level playing field between large and small market players
  • improving the proxy system, corporate governance and the process of mergers and acquisitions
  • fostering innovation
  • modernizing enforcement and enhancing investor protection

Because of the far reaching nature of the numerous recommendations, BAX will do a series of articles over the next few weeks on recommendations of interest to small and midcap issuers and the registrants that service them. 

Recommendation #32 –  ESG Information

The Taskforce has recommend enhanced disclosure of material environmental, social and governance (ESG) information, including forward-looking information, for public issuers. According to the Taskforce, there is increased investor interest in issuers reporting on ESG-related information and, while many issuers provide ESG disclosure, both issuers and investors have expressed concerns about the lack of a standardized framework for this disclosure.

According to the Report, the framework that has global support and meets investor needs for concise, standardized metrics on material climate change-related issues is the Taskforce on Climate-Related Financial Disclosures (TCFD) recommendations. The Taskforce recommends mandating disclosure of material ESG information, specifically climate change-related disclosure that is compliant with the TCFD recommendations for issuers through regulatory filing requirements of the OSC. The requirements would apply to all reporting issuers (non-investment fund) and include mandatory disclosure recommended by the TCFD related to governance, strategy and risk management (subject to materiality) on a “comply-or-explain” basis.

There would be a transition phase for all issuers to comply with the new disclosure requirements, beginning when the new requirements are implemented. The length of each issuer’s transition phase would depend on the issuer’s market cap at the time the requirements are implemented, with each issuer grouped into one of three market cap tiers that correspond to a certain transition phase.

For a full copy of the Report:

For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.

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.