CHAPTER 01 10 Regulatory and Judicial Developments That GCs and Boards Need to Know
In March 2022, the U.S. Securities and Exchange Commission (SEC) proposed its own rule changes to require climate-related disclosure. Although the SEC’s proposal is also based on the TCFD recommendations, it differs from the CSA’s version in several respects, which we discuss in detail in Chapter 5. As drafted, the SEC’s new rules would not apply to Canadian issuers that rely on the multijurisdictional disclosure system (MJDS), the regime that enables eligible Canadian issuers to satisfy their U.S. reporting obligations and register securities in the United States by using documents prepared primarily in accordance with Canadian requirements. However, the SEC specifically sought comment on whether this is the right approach. As discussed in our comment letter, we believe that it is.
KEY TAKEAWAYS
– Better late than never, but never late is better. For many issuers, aligning climate-related disclosure practices, processes and procedures with the TCFD recommendations has been a multi-year endeavour. Issuers that have referenced other voluntary frameworks, such as the Global Reporting Initiative framework or the Sustainability Accounting Standards Board recommendations, will have to adjust in relatively short order. For issuers that have ignored climate-related disclosure altogether despite its ever-increasing importance to both regulators and investors, the inconvenient truth is that there may not be enough time to fully comply.
– The SEC’s impact. Although MJDS issuers will be paying careful attention to whether the SEC reverses course and subjects them to U.S. requirements, all issuers should keep an eye on whether and to what extent the CSA tweaks its proposed approach to more closely align with the SEC’s in the interests of moving toward a global baseline for climate-related disclosure.
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