The Canada Climate Law Initiative (CCLI) is calling for immediate action from the Canadian Securities Administrators (CSA) to finalize and implement the National Instrument 51-107 Disclosure of Climate-related Matters (NI 51-107).
The move comes amid growing concerns over the financial risks of climate change and the increasing risk of litigation against publicly traded companies in Canada due to the lack of clear climate-related disclosure guidelines.
Canada is currently behind other countries that have implemented similar policies, and the CCLI believes that finalizing NI 51-107 is crucial for aligning Canadian securities law with international standards. According to CCLI, this alignment is essential for protecting investors from unfair practices, fostering competitive capital markets, and ensuring the financial system's stability as it transitions to a net-zero economy.
After extensive consultations with climate governance experts nationwide, the CCLI has submitted seven key recommendations to the CSA. These recommendations aim to harmonize NI 51-107 with the International Financial Reporting Standards (IFRS) Foundation International Sustainability Standards Board (ISSB) IFRS S2 Climate-related Disclosures. This standard is recognized globally as the most universally accepted provision for climate-related financial disclosure.
Dr. Janis Sarra, Professor of Law Emerita at the University of British Columbia (UBC) and principal co-investigator of the CCLI, emphasized the importance of providing investors with comprehensive information on issuers' climate-related financial risks and opportunities. "Our submission offers a roadmap to ensure Canadian securities law disclosure is in line with global developments, helping investors make informed decisions," Dr. Sarra stated.
The CCLI's submission also urged the CSA to work closely with the Canadian Sustainability Standards Board (CSSB), which plans to release its proposed Canadian Sustainability Disclosure Standards (CSDS) next month. The CSSB intends to adopt IFRS S2, with specific accommodations for venture issuers.
Catherine McCall, CEO of the Canadian Coalition for Good Governance, said, “Investors need clear climate disclosure standards so that they can make effective investment and engagement decisions, and the CCLI’s submission offers detailed insights into how the CSA can move forward to ensure Canada keeps pace with global developments.”
The CCLI emphasized the importance of not further delaying disclosure standards for Canadian issuers, given the need to protect Canadian capital markets in transitioning to a net-zero economy.