Climate-related disclosure requirements in Canada continue to evolve. 2025 is likely to be the year when generally applicable mandatory climate-related disclosure requirements in Canada crystalize.

Following the release by the International Sustainability Standards Board (ISSB) of its voluntary sustainability (IFRS S1) and climate-related (IFRS S2) disclosure standards in June 2023, the Canadian Sustainability Standards Board (CSSB) was formed and throughout 2024 consulted on the appropriate Canadian version of those standards.

On December 18, 2024, the CSSB released its finalized sustainability standards: CSDS 1 (general requirements for disclosure of sustainability-related financial information) and CSDS 2 (climate-related disclosures). These standards (the CSSB Standards) represent Canada’s inaugural generally applicable sustainability disclosure standards, but are voluntary.

The CSSB Standards are substantively identical to the ISSB’s standards except for a few transitional matters:

1. The effective date of the CSSB Standards is for reporting periods beginning on or after January 1, 2025.
2. In each of the first three annual reporting periods in which an entity applies CSDS 2 (climate-related disclosures), it is not required to disclose Scope 3 emissions.
3. In each of the first three annual reporting periods in which an entity applies CSDS 2 (climate-related disclosures), it is not required to use quantitative climate-related scenario analysis to assess its climate resilience. It is contemplated that “simpler” qualitative scenario analysis would still be provided over the transitional period.
4. For Canadian public companies, sustainability reporting should be made at the same time as the entity’s second quarter interim financial reporting in the first year of reporting, and in the second and third years of reporting within six months of the end of the annual reporting periods. Note that thereafter, reporting is to be made with the regular annual financial reporting.

Following the release of the CSSB Standards, the Canadian Securities Administrators (CSA) announced that:

1. It continues to work towards a revised climate-related disclosure rule that will consider the CSSB Standards and may include modifications considered appropriate for the Canadian capital markets. On October 18, 2021, the CSA published its original climate disclosure rule proposal - proposed National Instrument 51-107 Disclosure of Climate-related Matters (NI 51-107) and its proposed Companion Policy 51-107CP (the CSA 2021 Proposal).
2. As it develops a revised mandatory climate-related disclosure rule, it would consider the feedback received by the CSSB during its consultation on the CSSB Standards.
3. It would continue to work towards a balanced approach that supports the assessment of material climate-related risks, responds to requests for consistent, comparable and decision-useful climate-related disclosures and contributes to efficient capital markets, including considering the needs and capabilities of issuers of different sizes.
4. It will continue to monitor international developments related to climate-related disclosure. Given the interconnectedness of [the Canada and US] markets, the CSA will be carefully considering developments in the United States.

The CSA is expected to issue a new mandatory climate-related disclosure proposal for comment in 2025 that would be broadly applicable to public companies in Canada. What it will say is unclear, but our previous insights — The red glare: Watching the impact in Canada of ESG changes in the United States – Climate disclosure and DEI and Climate-related disclosure scenario: Canadian Sustainability Standards Board Standards released; now back to the Canadian Securities Administrators’ 2021 Climate-related disclosure proposal? — discuss the prospect of the CSA rule being impacted by the fate of the U.S. Securities and Exchange Commission’s 2024 climate-related disclosure rule, and provide an overview of the CSA’s original 2021 proposal.

In October 2024, the federal government announced an intention to amend the Canada Business Corporations Act to require public-company-like climate-related disclosure by large private companies governed by that statute. The requirements and size requirements for companies are unclear.

Federally regulated domestic systemically important banks and internationally active insurance groups headquartered in Canada are legally required to make ISSB-based climate-related disclosure pursuant to Guideline B-15 issued by the Office of the Superintendent of Financial Institutions.

For recommendations on preparing for the coming mandatory climate-related disclosure rules, please see The CSA and ISSB climate-related disclosure proposals: Significant implications for directors, boards and public company governance, one year on.

For more information on this topic, please contact the author, Bill Gilliland.

This article is part of the Dentons' Canadian Regulatory Trends to Watch in 2025 series. To read other articles in this series, click here.

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