Toronto’s Bay Street Financial District sits near the CN Tower on Friday, August 5, 2022. Photo credit: Nathan Denette / The Canadian Press.
The Canadian Securities Administrators (CSA) has announced an indefinite halt to its plans for introducing stricter climate and diversity reporting requirements for businesses. This move comes after major legal setbacks in the United States regarding similar policies, prompting Canadian regulators to rethink their approach.
Stan Magidson, the CSA's chair, explained that the decision aims to support businesses facing a rapidly changing global and economic environment. Instead of pressing ahead with new reporting demands, the CSA will now focus on strengthening the Canadian financial market's stability and global competitiveness.
For years, many investors and advocacy groups have been urging companies to be more transparent about how climate change could impact their operations. These demands included revealing their carbon emissions and outlining steps taken to reduce them. There’s also been growing interest in seeing more diversity in corporate leadership, especially regarding women’s representation on boards.
The U.S. Securities and Exchange Commission (SEC) had introduced its own climate-related disclosure rules, but those regulations quickly ran into legal trouble. In March, the SEC stepped back from defending those rules in court, essentially putting them on hold. That decision has now rippled into Canada’s regulatory plans.
While the CSA is shelving new mandates for now, it clarified that existing requirements remain in place. Companies must still share any climate-related risks that could significantly affect their business, as part of their general disclosure obligations. Similarly, current rules around the representation of women in boardrooms still stand.
The Canadian Sustainability Standards Board rolled out voluntary climate disclosure guidelines late last year. The CSA was expected to adopt these into formal rules, but that plan has now been suspended. Meanwhile, the federal government announced last fall that it would require climate-related reporting from privately owned corporations under federal jurisdiction, though that effort is also in its early stages.
For now, Canadian companies can expect a slower rollout of climate and diversity mandates, as regulators weigh their next steps in a turbulent global climate for disclosure laws.
