Canada advances mandatory climate disclosures and sustainable investment guidelines

Posted on October 18, 2024 by Editor

The Government of Canada has continued its multi-year push toward ESG reporting by announcing mandatory climate-related financial disclosures for large, federally incorporated private companies. Unveiled at the Principles for Responsible Investment conference in Toronto, these measures aim to increase transparency in climate reporting and encourage greater private sector investment in sustainable activities.

The government plans to amend the Canada Business Corporations Act to implement these disclosures, with a regulatory process to nail down the details. Small- and medium-sized businesses are exempt for now, but the government is exploring ways to encourage voluntary reporting from them.

This expansion follows Canada's 2021 directive which called for the Task Force on Climate-related Financial Disclosures (TCFD) aligned reporting (now the remit of the ISSB, and incorporated into ISSB standards). In 2022, the Office of the Superintendent of Financial Institutions (OSFI) announced that federally regulated financial institutions would be required to publish TCFD-aligned disclosures by 2024.

The government also revealed plans for sustainable investment guidelines, which will help investors identify green and transition activities. These guidelines aim to provide a credible classification system, ensuring that capital flows into the right areas of the economy-like clean energy, electric vehicle production, and decarbonising heavy industry.

Canada, of course, needs to start its digital journey, recognising the importance not just of comparable, high quality information that management is accountable for, but ensuring that information is digital, accessible and discoverable. As always, XBRL International is here to help.

For more details, see the official government statement here.