With respect to climate resilience disclosure, opinions vary on the need for transition relief. A notable 26% of respondents believe no transition relief is required, suggesting an appetite for the disclosures. This feedback indicates a need for climate resilience information, which may require enhancing existing capabilities to enable organizations to provide such disclosures.
However, one quarter of stakeholders advocate for voluntary compliance, reflecting a preference for a more flexible approach and allowing entities to opt in. As the CSSB considers this feedback, it is tasked with balancing the urgency of climate resilience disclosures against the practical realities faced by reporting entities. The challenge will be finalizing standards that are effective in promoting transparency and flexible enough to accommodate the diverse needs and capabilities of the public interest.
Additional recommendations
Respondents provided additional considerations for changes to the proposed Canadian Sustainability Disclosure Standards. Leading those considerations, 38% of respondents suggested the CSSB consider aligning with the US SEC climate rules. This recommendation underscores the close relationship between the Canadian and US capital markets, emphasizing the need for similar disclosures for consistency, comparability and reduced complexity for entities operating in both jurisdictions.
Feedback also highlighted the need to consider the inclusion of Indigenous Peoples' rights and interests, recognizing their significant expertise and contributions to climate and biodiversity matters, which are increasingly essential to sustainability reporting.
Other recommendations include additional guidance and provisions for small and medium-sized enterprises to ensure an accessible and practical framework for businesses of all sizes, further clarification on definitions and more guidance, and for industry-specific guidance to be optional.
What’s next?
As the CSSB moves forward with its Annual Plan for FY25, these insights will be crucial in shaping a balanced and effective approach to implementation. Once the CSSB standards are finalized, estimated to be in Q4 2024, the Canadian Securities Administrators (CSA) anticipates issuing for comment a revised rule setting out climate-related disclosure requirements.
Despite remaining uncertainties around the new sustainability reporting landscape, Canadian entities can use this crucial period for proactive preparation with no regret actions. This includes determining which sustainability disclosure regulations will affect an entity, determining the material information to report, and assessing current reporting practices and identifying potential changes to operating models.
The transformation journey to sustainability reporting is a strategic process that necessitates cross-functional collaboration, technology enablement, robust controls, risk management and contributions from diverse teams. Seizing this vital opportunity to prepare and collaborate in advance will be critical for Canadian entities to prepare for the transition from voluntary to mandatory reporting and position themselves for future success.
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