Sustainability Reporting Regulation

Who’s impacted?

CSA NI 51-107: Venture and non-venture issuers
OSFI Guideline B-15: All federally regulated financial institutions, except foreign bank branches

What’s the latest?

The CSA announced in March 2024 that, once the consultation on the Canadian Sustainability Disclosure Standards (CSDS) is complete and they are finalized, the CSA anticipates that they will seek comment on a revised rule to NI 51-107 – Disclosure of Climate-related Matters. The CSA also stated that they may consider additional modifications considered appropriate for Canadian capital markets. The CSA also noted that they expect only adopting provisions of the CSDS necessary to support climate-related disclosures.

OSFI announced on March 20, 2024 updates to its climate regulation, Guideline B-15 to align the disclosure expectations in the Guideline’s Annex 2-2, Minimum mandatory climate-related financial disclosure expectations to the IFRS S2 Climate-related Disclosure requirements.

What do Canadian CPAs need to know?

While neither the IFRS Sustainability Standards or the CSDS are mandatory in Canada right now, the signals from the CSA are that they intend to adopt certain provisions from the standards to support climate-related disclosure.

OSFI’s climate-related regulation, B-15 is already in force and is requiring certain federally regulated financial institutions to report beginning in 2024.

It is not just companies that are regulated by the CSA or OSFI that will be impacted. These regulations may require certain disclosures pertaining to the regulated entity’s value chain, which means companies that sit within the value chain of a regulated entity may be asked to provide information to the regulated entity. Refer to our article, Why Businesses Can’t Ignore Sustainability for more information. 

Where can I learn more?

For more information, please refer to our At a Glance: Sustainability Reporting Standards and Regulations and related FAQs.
You can also refer to:
CSA NI 51-107
CSA Announcement, March 13, 2024
OSFI B-15

Who’s impacted?

All SEC registrants, except asset-backed issuers and certain Canadian companies who file under the Multijurisdictional Disclosure System (MJDS).

What’s the latest?

The SEC’s final Climate Rule was issued on March 6, 2024. However, in response to pending litigation against the Rule, on April 4, 2024, the SEC issued a stay order of the Rule, pending the completion of the judicial reviews.

What do Canadian CPAs need to know?

The scope of the draft Rule will impact nearly all SEC registrants.

Canadian companies that are registrants with the SEC that file using the Multi-jurisdictional Disclosure System (MJDS) and file their Exchange Act registration statements and annual reports on Form 40-F will not be subject to reporting under the Rule.

However, Canadian companies that are either U.S. domestic registrants that file their Exchange Act registration statements and Annual Reports on Form 10-K, or Foreign Private Issuers (FPI) that file their Exchange Act registration statements and Annual reports on Form 20-F, will be subject to the Rule.

Additionally, a Canadian subsidiary of a company that is in-scope of the Rule (e.g., a Canadian subsidiary of a U.S. domestic filer) could find themselves in a position needing to provide climate-related information required by the Rule to their parent company.

Where can I learn more?

For more information, please refer to our SEC Climate Rule Summary and our FAQs

You can also refer to:

• SEC Final Climate Disclosure Rule

• All companies with securities listed on an EU-regulated market
• "Large" EU companies that are not listed, with "large" defined as exceeding two of the three following metrics for two consecutive balance sheet dates:
  • Total assets of €25 million
  • Net turnover (revenue) of €50 million
  • Average of 250 employees 
• EU companies of a "Large group" and not listed, with "Large group" defined the same as above, but for the consolidated group 

^{* The criteria listed here are guidelines only and should not be considered a substitute to professional / legal advice}

What’s the latest?

As noted, the CSRD entered into force in January 2023. EU Member States have until July 2024 to transpose the CSRD into their national laws. The first set of 12 European Sustainability Reporting Standards (ESRS) were approved as final standards by the European Commission in June 2023 and with no objection from the European Parliament and European Council in October 2023, paving the way for the ESRS to be used in the CSRD.

What do Canadian CPAs need to know?

While the CSRD and therefore the ESRS do not directly apply to Canadian companies, Canadian companies with EU operations that meet the size requirements may be required to report sustainability information for their EU subsidiary(ies); or if on a consolidated basis the criteria for a large group is met, consolidated sustainability reporting would be required, inclusive of non-EU operations.

The extra-territorial impacts of the CSRD should not be understated and Canadian CPAs should be aware of the potential reporting requirements which could extend beyond EU subsidiaries.

It is not just companies that are subject to the CSRD regulation that will be impacted. The CSRD requires certain disclosures pertaining to the regulated entity’s value chain, which means companies that sit within the value chain of a regulated entity may be asked to provide information to the regulated entity. Refer to our article, Why Businesses Can’t Ignore Sustainability for more information.

Where can I learn more?

For more information, please refer to our At a Glance: Sustainability Reporting Standards and Regulations and related FAQs.

• European Commission CSRD
• Final ESRS