CSSB standards a major step forward for sustainable finance

December 19, 2024

The Canadian Sustainability Standards Board has released its highly anticipated CSDS 1, General Requirements for Disclosure of Sustainability-related Financial Information, and CSDS 2, Climate-related Disclosures.

This represents a major step forward for sustainable finance in Canada. Investors have been waiting for credible standards for clear, comparable reporting to guide investments aligned with the transition to net zero. The CSSB’s announcement, along with the federal government’s recently announced plan to adopt a green and transition taxonomy are key elements to Canada’s developing sustainable finance framework.

Key takeaways from the announcement:

• It is very positive that CSSB has largely resisted requests from industry to significantly weaken its standards for climate-related reporting and that the Canadian standards generally align with the leading International Sustainability Standards Board requirements they are based on, aside from the length of transitional relief periods for certain reporting requirements.

• While many would like to see reporting of Scope 3 emissions required before Jan. 1, 2028, it should be acknowledged challenges still remain for companies in collecting data on Scope 3 and some relief is likely necessary. Canadian companies are encouraged to get ahead of the required timeline. Those that report Scope 3, or supply chain emissions, earlier will benefit from that information in transition planning and improved access to capital.

• Canadian Securities Administrators should move quickly to translate the new standards for climate-related reporting into securities law. The CSA’s process has been on hold since draft climate-related disclosure rules were released in 2021, awaiting the results of CSSB’s process. While there has been progress in voluntary corporate climate-related reporting, mandatory requirements for consistent, comparable climate reporting are necessary for Canada to remain competitive and meet net zero targets.

Quotes from ISF leadership

“Congratulations to the CSSB for delivering on its mandate. Canada’s institutional investors have been waiting for the kind of quality information on sustainability from issuers that will be enabled by these new standards,” said Jim Leech, ISF Advisory Board Chair and former President and CEO of the Ontario Teachers' Pension Plan.

“This is a really important step for sustainable finance in Canada,” said ISF Director of Research Ryan Riordan. “Having consistent, comparable reporting coming from Canadian firms is vital for investors and will help keep Canada competitive in the global race for climate capital. While companies should be encouraged to start reporting according to these standards right away, voluntary reporting can only take us so far. Now we need to see these rules swiftly translated into securities law.”

“Along with the taxonomy, climate-related disclosures are a necessary piece of the sustainable finance framework in Canada,” said ISF Interim Executive Director Maya Saryyeva. “While this is progress, we’re still lagging behind other jurisdictions in the race for climate capital. Canada needs to build on this momentum.”

About the Institute for Sustainable Finance

The Institute for Sustainable Finance was launched in 2019 as the first-ever cross-cutting and collaborative hub in Canada that fuses academia, the private sector, and government with the singular focus of increasing Canada’s sustainable finance capacity. The institute's mission is to align mainstream financial markets with Canada’s transition to a prosperous sustainable economy.

Media contact

David Watson
Associate Director, Communications, Institute for Sustainable Finance
david.watson@queensu.ca
C: 613.796.3605