CSSB StandardsCSSB Standards

Keeping Pace in the Global Race for Sustainability Standards:
What CPAs Need to Know About Canadian Sustainability Disclosure Standards

The Canadian Sustainability Standards Board (CSSB), the standard setting body for sustainability disclosure standards in Canada, released the Canadian Sustainability Disclosure Standards (CSDS) exposure drafts for comment on March 13, 2024. The exposure drafts consist of:

  • CSDS 1 - General Requirements for Disclosure of Sustainability-related Financial Information
  • CSDS 2 - Climate-related Disclosures; and
  • Criteria for modifications Consultation Paper

The CSDS are based on the International Financial Reporting Standards (IFRS) Sustainability Standards issued by the International Sustainability Standards Board (ISSB), with amendments to reflect a uniquely Canadian context.

The CSDS exposure drafts will be open for comment until June 10, 2024, with a plan to issue the final CSDS by the end of 2024.

Canadian CPAs now have an unprecedented opportunity to shape the Canadian sustainability reporting standards. Visit Financial Reporting and Assurance Standards Canada to review the exposure drafts and have your say on how we can build a more sustainable future for Canada.

Does this mean sustainability disclosures are now mandatory in Canada?

Not yet. The CSSB is a standard setting organization and does not have the authority to mandate disclosure requirements. It is the role of regulators, such as the Canadian Securities Administrators (CSA) and the Office of Superintendent of Financial Institutions (OSFI) to mandate reporting in accordance with specific standards.

What are Canadian regulators saying?

The CSA has announced that, once the consultation on 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 anticipates adopting only those provisions of the CSDS which are necessary to support climate-related disclosures, which means it may only adopt CSDS 2 and certain provisions of CSDS 1. In other words, the CSA may not require disclosure of sustainability-related matters outside of climate-related risks and opportunities. This is an important distinction, and one that Canadian CPAs should take notice of when the CSA release their revised regulation for comment.

In addition to the CSA commentary, the 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.

To keep up to date on the sustainability reporting regulatory landscape in Canada, visit our sustainability reporting regulation page on Sustainability Simplified, as well as our FAQs.

How does the CSDS differ from the IFRS Sustainability Standards? What changes have been made?

CSDS 1 and CSDS 2 are broadly aligned to IFRS S1 and IFRS S2, with the following specific amendments:

  • Extension of the effective date for CSDS 1 and CSDS 2 by one year to January 1, 2025.

Transition Relief Extensions

  1. One extra year is allowed for disclosing sustainability topics outside of climate risks/opportunities.
    This relief applies to reporting periods starting on or after January 1, 2027.
    • If this relief is taken, companies get one more year before needing to disclose comparative information on all sustainability risks and opportunities, meaning they can report on comparative information for reporting periods starting on or after January 1, 2028.
  2. Companies have one additional year before disclosing Scope 3 (value chain) greenhouse gas emissions. This extension applies to reporting periods starting on or after January 1, 2027.

How are Indigenous Peoples rights considered?

The rights of First Nation, Métis and Inuit Peoples are inherent and specific in Canada and must be upheld as outlined in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and Canadian Constitution. According to CSDS 1, advancing reconciliation with First Nations, Métis and Inuit Peoples in Canada is fundamental to the work of Canadian standard setting for sustainability disclosures.

As a first step, the CSSB has committed to creating an engagement plan informed by the needs and interests of First Nation, Métis and Inuit Peoples, communities, governments, and businesses to ensure these groups are involved in the development of its standards.

The inaugural strategic plan consultations of the CSSB will begin in Q4 2024.

What is the CSSB seeking comments on?

Proposed CSDS 1 Scope

CSDS 1 adopts IFRS S1 with two changes on effective date and transition relief beyond climate-related matters. The CSSB seeks comment on whether the extension of the effective date and transition relief is appropriate and adequate for a Canadian context.

Timing of Reporting

Aligning sustainability and financial reporting timing improves connectivity and ensures decision-useful information for users of general-purpose financial reports. However, challenges exist with aligning the timing of both sustainability and financial reporting. The CSSB is seeking feedback on whether further accommodation on timing of reporting is needed, and how critical is it that users of this information receive it at the same time as its related financial statements.

Climate Resilience (Scenario Analysis)

Scenario analysis provides critical information for users of general-purpose financial reports to assess climate risks/opportunities, but it is a relatively new concept and the availability of necessary expertise and resources to perform such analysis is a major concern for many entities. This is an area of opportunity for CPAs to establish governance and controls over scenario analysis, while also facilitating the collaboration of subject matter experts across relevant disciplines.

The CSSB is seeking comment on whether transition relief is needed for climate resilience disclosure and whether further guidance is necessary. 

Scope 3 GHG Emissions

Scope 3 emissions are a significant portion of total GHG emissions of many organizations, and therefore Scope 3 emissions are critical for users of general-purpose financial reports.

However, preparers have concerns about measurement uncertainty and capacity to disclose Scope 3 along with financial reports. The CSSB is seeking feedback on whether the proposed relief of two years for Scope 3 reporting is adequate to address these concerns.

To stay up to date on Canadian Sustainability Standards, be sure to bookmark CPA Ontario’s Sustainability Simplified.