Toronto and Calgary – The Canadian Securities Administrators (CSA) today announced a project to review the disclosure of risks and financial impacts associated with climate change. The project will gather information on the current state of climate change disclosure in Canada and internationally, and will include consultation with investors and reporting issuers.

The disclosure practices of public companies in relation to climate-related risks and financial impacts have attracted significant international attention in recent years. Several voluntary disclosure frameworks have been proposed, culminating in the publication in December 2016 of a set of recommendations by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures.

“In light of the increased scrutiny being placed upon reporting issuers’ climate-related disclosure, we believe it is appropriate to review the state of such disclosure in Canada,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.  “As securities regulators, it is important to assess whether issuers provide appropriate disclosure regarding risks and financial impacts associated with climate change, which in turn assists investors in making informed investment decisions.”

Reporting issuers in Canada are currently required to disclose material risks, which may include risks associated with climate change, among other environmental matters, in their periodic disclosure. The CSA has provided guidance with respect to these disclosure requirements in CSA Staff Notice 51-333 Environmental Reporting Guidance.

CSA Staff intend to review disclosure prepared by large TSX-listed reporting issuers on the material risks and financial impacts associated with climate change as well as related governance processes; gather feedback from reporting issuers about current disclosure practices through an anonymous online survey; and conduct focus groups with reporting issuers and investors. CSA Staff will also examine risk disclosure requirements related to climate change in other jurisdictions, as well as recently proposed voluntary disclosure frameworks.

The CSA expects to conduct its information gathering in spring and summer 2017 and publish a progress report outlining its findings upon completing its review.

A backgrounder with additional details regarding the climate change disclosure project can be found on CSA members’ websites.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

For more information:

Backgrounder: CSA climate change disclosure review project

Purpose

Many investors who are concerned about business risks and financial impacts associated with climate change are requesting improved disclosure by businesses in respect of such risks and impacts, and the actions being taken to address them. The demand for improved disclosure has resulted in the proposal of a number of voluntary frameworks for disclosure in respect of climate-related risks and impacts, along with other sustainability matters. In addition, a number of jurisdictions outside of Canada have adopted specific climate-related disclosure requirements for public companies.

With these considerations in mind, the CSA intends to review various matters in relation to the disclosure of risks and financial impacts associated with climate change.  The review will be conducted with a view to ensuring that issuers provide high quality disclosure of material information, which in turn assists investors in making informed investment and voting decisions.

Project Overview

The project includes three key components:

1)      Review of international disclosure requirements and voluntary frameworks

CSA Staff will review climate-related disclosure requirements in the securities laws of certain international jurisdictions, such as Australia, the United Kingdom and the United States, as well as recommendations contained in recently proposed voluntary disclosure frameworks with respect to climate-related disclosure, including:

• International Integrated Reporting Framework published by the International Integrated Reporting Council
• Global Standards for Sustainability Reporting published by the Global Reporting Initiative
• Climate Risk Technical Bulletin published by the Sustainability Accounting Standards Board
• Recommendations of the Task Force on Climate-Related Financial Disclosures published by the Financial Stability Board.

2)      Review of continuous disclosure by reporting issuers

CSA Staff will review public disclosure by Canadian reporting issuers in both their mandatory continuous disclosure filings and voluntary sustainability reports, to assess the extent to which these filings currently include disclosure concerning material climate-related risks and financial impacts, and the governance processes related to them. The review is expected to focus on disclosure prepared by large TSX-listed reporting issuers for the 2016 financial year.

3)      Consultations

CSA Staff will gather feedback from reporting issuers on climate-related disclosure and the associated costs. CSA Staff will also consult with investors to better understand the climate-related information they require to make an informed investment decision. These consultations will occur through an anonymous online survey of reporting issuers as well as focus groups with investors and reporting issuers.

Existing Disclosure Requirements

In Canada, reporting issuers are required to disclose material risks in their periodic disclosure, including climate-related risks. In 2010, the CSA published CSA Staff Notice 51-333 Environmental Reporting Guidance, which provided guidance to reporting issuers (other than investment funds) on existing continuous disclosure requirements relating to environmental matters under securities legislation in Canada.

Next Steps

The CSA expects to conduct its information gathering in spring and summer 2017 and publish a progress report outlining its findings upon completing its review.