As we addressed here, the Canadian Sustainability Standards Board issued for comment its first two proposed standards.

These are proposed Canadian Sustainability Disclosure Standard (CSDS) 1 General Requirements for Disclosure of Sustainability-related Financial Information  and CSDS 2 Climate-related Disclosures, built on the pre-existing IFRS S1 and S2; the CSSB didn’t propose any major changes to the underlying ISSB standards except to modify proposed effective dates and transitional reliefs. We already looked at some of the feedback, including Deloitte’s comment that “We fully support the Board’s objectives to perform a robust consultation process to understand the perspectives and priorities of First Nations, Métis and Inuit Peoples in the context of developing its standards in an inclusive manner.” Let’s follow that train of thought a little further now.

Last year in its final report, the Independent Review Committee on Standard Setting in Canada recommended “the creation of an Indigenous Council on Financial Reporting and Standards Setting (ICFRSS – a provisional name) that would act nationally as an Indigenous representative intermediary and facilitate effective representation and input to standard-setting and other regulatory and policy-making bodies.” The recommendation was rooted in an identified “need for a new relationship between standard setters and Indigenous Peoples – one that achieves greater participation by Indigenous Peoples in standard-setting processes in a way that is effective, impactful, and mutually beneficial.” Deloitte’s comment, and those of some other respondents to the CSSB, point to one area in which such a Council, or something like it, might be of value. The Anishnawbe Business Professional Assocation likewise recommended “that an independent body be established to express the views of First Nation, Metis, Inuit peoples for sustainability reporting on their traditional territories (and that) the CSSB collaborate with other First Nation-led organization, Tribal Councils, Political Territorial Organizations and National Indigenous Organizations like the Assembly of First Nations (AFN) to create a better process for engagement with Indigenous peoples and that a future state of sustainability reporting be developed with robust data and involvement from the respective Indigenous organizations.” They provide the following critical passages:

• While urban areas are grappling with poor air quality, many First Nation communities closest to wildfires suffer losses to forest ecosystems, infrastructure and services, homes, personal items, and often relocation or evacuation. First Nations in Northern Ontario are impacted even further due to losses of cultural and ceremonial items and activities and destruction of traditional and sacred places. First Nations leaders must have a leading role in the transition to a low-carbon future, decarbonizing the economy and guiding how companies report on environmental, social and governance (ESG) aspects of their operations. It was recently reported that 70% of companies are abandoning acquisition due to their ESG concerns.
• Companies must respect First Nations’ inherent rights, knowledge systems and spiritual and cultural connections to the land that requires a seven generations way of thinking. This is detrimental to linking materiality risks to financial affects as the investor base is seeking disclosures on climate that material to their business.
• Without the Indigenous component of ESG it will create a major blind spot and negatively impact the mergers and acquisitions activity which drives much of our capital formation and economy growth in Canada.

That last point is a key one from a regulatory point, leading to a suggestion that “the CSSB ensure that CSDS includes consideration of a data framework that is more informed with Indigenous knowledge systems that help companies track and measure the biodiversity indicators and cultural benefits of First Nations impacted by company’s activities.” The First Nations Financial Management Board makes a related but somewhat different suggestion:

• We recommend that the CSSB include a clause setting out that there is a rebuttable presumption that entities should have consulted with Indigenous groups and that entities should make disclosures accordingly.
• We make this recommendation because of the high percentage of Indigenous-intensive industries in Canada that will be making sustainability disclosures. Including such a clause would be in keeping with the United Nations Declaration on the Rights of Indigenous Peoples, and the Truth and Reconciliation Calls to Action. Should an entity not need to consult Indigenous Peoples, it would merely state that it does not have to do so in narrative disclosures. This should not result in any additional costs to an entity. This ensures that all investors receive the same information regarding Indigenous consultation, which will increase clarity and comparability between sustainability disclosures.

Similarly, a unit of the University of Waterloo commented: “In a Canadian context it would be important to provide additional guidance on how consultation with Indigenous peoples (First Nations, Inuit and Métis) has been integrated into managing climate-related risks that may impact the financial performance of the reporting entity.” Given such perspectives, Canadian regulators may see some value in supporting the formation of an ICFRSS-type body, even if its mandate is initially limited. Whether its output would be genuinely valued and acted upon though, given the chronic foot-dragging on sustainability-related rule-making, is far from clear…

The opinions expressed are solely those of the author.