The Canadian Securities Administrators recently issued a “statement on proposed climate-related disclosure requirements.”

Here it is in its entirety:

• The Canadian Securities Administrators (CSA) welcomes the publication on June 26, 2023 of the International Sustainability Standards Board (ISSB)’s first two sustainability disclosure standards: IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures (together, the ISSB Standards).
• The CSA commends the ISSB for developing a global framework for investor-focused disclosure that is responsive to market demand for more consistent and comparable disclosures. The CSA is also encouraged by the ISSB’s proposed capacity building efforts to support adoption of the ISSB Standards.
• The CSA also welcomes the June 26 announcement by the Canadian Sustainability Standards Board (CSSB) that it is now operational, having appointed a quorum of members. The CSA looks forward to engaging and collaborating with the CSSB with respect to the ISSB Standards.
• CSA members are responsible for developing climate-related disclosure requirements for reporting issuers in Canada. CSA staff intend to conduct further consultations to adopt disclosure standards based on ISSB Standards, with modifications considered necessary and appropriate in the Canadian context. A further market update from the CSA will follow in the coming months.
• The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

That’s probably not destined to rank among the great “statements” of our time, but never mind: it’s a reminder that the issuance of those two standards by the ISSB was only the start of a multi-stage, jurisdiction-by-jurisdiction implementation process. The Globe and Mail, for one example, stated in its coverage of the ISSB release that “Canadian businesses will have several months to prepare as a domestic standards body and financial regulators work out the details of how they will be adopted in this country,” but several years would certainly be closer to the mark. (You might recall that the CSA already issued for comment in October 2021 a different proposal for climate-related disclosure, but that seems unlikely to go anywhere now).

While we’re at it, Canadian Accountant recently suggested we should temper our expectations for the Canadian Sustainability Standards Board:

• The new rules were purportedly designed in part to stop greenwashing but may in fact do just that. The CSSB announced its newest appointees this past week and they read like a who’s who of polluters — energy, mining, and fertilizer companies — in addition to the (previously reported) energy sector investors … Not a single sustainability advocate in the bunch….
• As CPAs across Canada question the value of funding CPA Canada, which in turn uses member fees to fund standard-setters like the CSSB, one wonders how regulatory capture and greenwashing might affect the reputation of the profession in the future

Well, it’s surely a fair point, given that the aforementioned “modifications considered necessary and appropriate in the Canadian context” aren’t likely to require more disclosure than the ISSB is proposing. The messaging of pending dilution is everywhere – for example, the CSSB Chair Charles-Antoine St-Jean referred to ensuring that “sustainability disclosure standards reflect our country’s unique needs.” If you’re wondering when that term “unique” last cropped up in this blog, it was CPA Ontario’s citing its own uniqueness to justify pulling out of CPA Canada. Perhaps Canada’s real federal and provincial uniqueness, regulatorily speaking, lies in its whininess and capacity for special pleading. Anyway, one aspect of that will likely be the disclosure of Scope 3 emissions: the CSA’s proposed rule already indicated a willingness to give ground on this:

• Reporting issuers would have to disclose Scope 1, Scope 2, and Scope 3 GHG emissions and the related risks, or the issuer’s reasons for not disclosing this information. This would provide reporting issuers with flexibility in complying with these disclosure requirements. As an alternative, the CSA is also consulting on requiring issuers to disclose Scope 1 GHG emissions. Under this alternative, disclosure of Scope 2 and Scope 3 GHG emissions would not be mandatory. Issuers would have to disclose either their Scope 2 and 3 GHG emissions and the related risks, or the issuer’s reasons for not disclosing this information.

Whatever modifications and dilutions this succeeds in bringing to Canada’s version of the sustainability standards, it’s unlikely it will be superior to a simpler and more transparent rule that adopted the ISSB standards wholesale, with perhaps some industry-specific, time-limited scope for companies to explain why they couldn’t or wouldn’t comply with defined aspects of it (thus making the limitations of their disclosure transparent to stakeholders, who can then react to the omission as they see fit). I hope the CSA will seriously consider taking that approach, but the wind (by which I mean Canada’s uniquely disruptive and bone-chilling wind) doesn’t seem to be blowing in that direction…

The opinions expressed are solely those of the author.