Governance Insights 2025 A Preview of 2025: 10 Legal Updates GCs, Boards and Investors Need to Know
6. S low Progress Towards Mandatory Climate Disclosure
Canada made slow progress in 2024 towards implementing mandatory climate disclosure.
In October 2024, the federal government announced its intention to amend the Canada Business Corporations Act (CBCA) to mandate climate disclosure for large, federally incorporated private companies. The scope of the proposed disclosure has not been confirmed; nor has there been any indication whether similar amendments will be made by any of the provinces to their corporate statutes. The federal government has stated that it will seek to harmonize the CBCA climate disclosure with the CSA’s climate disclosure rule, which has remained in draft since 2021. In December 2024, the Canadian Sustainability Standards Board (CSSB) issued its final voluntary Canadian Sustainability Disclosure Standards – CSDS 1, which relates to sustainability disclosure broadly construed, and CSDS 2, which relates specifically to climate disclosure. Notwithstanding the extensive comments received during public consultations, the final CSSB standards are nearly identical to those issued by the International Sustainability Standards Board, furthering its objective of providing a global baseline of sustainability disclosure standards. In a statement released concurrently with the CSSB standards, the CSA confirmed that it continues to work towards a mandatory climate disclosure rule for Canadian public companies, and that it will consider both CSDS 2 and the feedback received during the CSSB consultations, and may include modifications appropriate for the Canadian capital markets. The CSA also indicated that, given the interconnectedness of the markets, it will be carefully considering developments in the United States. The mandatory climate disclosure rule adopted by the U.S. Securities and Exchange Commission (SEC) in March 2024 has been subject to numerous legal challenges and most commentators predict that the SEC’s climate disclosure rule will not survive the Trump administration. The precarious fate of the SEC’s climate disclosure rule leaves the CSA with the difficult task of finding a balanced approach that reasonably responds to investor demands for consistent, comparable and decision-useful disclosure, while not imposing a Canadian climate disclosure regime that departs too greatly from the approach taken by our neighbours to the south.
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