The Canadian Securities Administrators (CSA) has published CSA Staff Notice 51-354 Report on Climate change-related Disclosure Project. The report summarizes the findings of the CSA’s previously announced project to review the disclosure by reporting issuers of risks and financial impacts associated with climate change and outlines its plans for future work.

“We now have a better understanding of the current state of climate change-related disclosure in Canada,” said Louis Morisset, CSA chair and president and CEO of the Autorité des marchés financiers. “Moving forward, we will aim to improve the disclosure of risks and related governance and oversight processes, while recognizing both investors’ and issuers’ perspectives.”

In the report, water availability and quality, along with changing weather patterns, are prime indicators of physical risk. Impacts cited as a result of these risks include asset damage, health and safety, operational disruptions, and others. The resulting financial impacts can take the form of asset write-offs, capital expenditures, increased costs, and reduced revenues.

There was, within the CSA’s consultations “uncertainty surrounding the timing and measurement of climate change-related risks presented a particular challenge for issuers with respect to assessing their materiality and, consequently, their inclusion in, or omission from, regulatory filings,” stated the report. The CSA found that uncertainty was girded by a need for regulatory guidance. “Our findings through the Project tended to confirm the need for further education and guidance for issuers and their advisors.”

The CSA intends to develop new guidance and initiatives to educate issuers about the disclosure of climate change-related risks, opportunities, and financial impacts. The CSA also intends to consider new disclosure requirements regarding non-venture issuers’ corporate governance practices in relation to material business risks including, for example, emerging or evolving risks and opportunities arising from climate change, potential barriers to free trade, cybersecurity, and disruptive technologies. As a general rule, materiality is the determining factor in considering whether information must be disclosed to investors.

In addition to these initiatives, the CSA will continue to monitor the quality of issuers’ climate change-related disclosures, best practices in this area, and developments in reporting frameworks. The CSA will also continue to assess whether investors require additional types of information, such as disclosure of certain categories of greenhouse gas emissions, to make investment and voting decisions.

The report reflects the CSA’s consideration of key research findings, a review of the disclosure of large TSX-listed issuers, a survey of TSX-listed issuers and extensive consultation with investors, issuers and other stakeholders. The CSA also reviewed how current Canadian securities disclosure requirements differ from or are consistent with international climate change-related disclosure requirements and voluntary frameworks.


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