CSSB | Sustainability reporting

CSDS 1 General Requirements for Disclosure of Sustainability-related Financial Information and CSDS 2 Climate-related Disclosures expanded upon the incremental transition reliefs proposed in their respective exposure drafts.

Other than the transition reliefs provided, the content requirements within CSDS 1 and CSDS 2 remained the same.

The CSSB Standards will be effective for annual reporting periods beginning on or after January 1, 2025, on a voluntary basis in Canada.

The standards are currently voluntary. Canada’s provincial and territorial regulators and legislators will determine whether CSDS 1 and CSDS 2 should be mandated, and if so, who will need to apply the standards and over what time frame. In parallel with the release of CSDS 1 and CSDS 2, the Canadian Securities Administrators (CSA) issued a statement noting that “the CSA continues to work towards a revised climate-related disclosure rule that will consider the CSSB Standards and may include modifications considered appropriate for the Canadian capital markets. The CSA is taking a climate-first approach and therefore is focusing on those requirements necessary to support a climate-related disclosure rule.” ¹

CSDS 1 and CSDS 2 are aligned with the International Sustainability Standards Board (ISSB) global baseline disclosure standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, with specific modifications for Canadian context, including a later effective date and additional transition reliefs.

What transition reliefs are provided under these standards?

The CSSB Standards include the following transition reliefs:

The general standard underpins reporting under all CSSB Standards, defining the scope and objectives of reporting and providing core content, presentation and practical requirements. It requires disclosure of material information on all sustainability-related risks and opportunities that could reasonably be expected to affect the company’s prospects – not just those related to climate.

CSDS 2 provides requirements for climate-related disclosures, including physical and transition risks, greenhouse gas (GHG) emissions, and the use of transition plans and scenario analysis.

Disclosure of Scope 3 GHG emissions is required under CSDS 2, but there is a three-year transition relief period to allow companies additional time to prepare.

If this relief is applied, companies are also permitted to exclude comparative information on Scope 3 GHG emissions in their fourth year of reporting.

Neither limited nor reasonable assurance is required for CSDS 1 and CSDS 2 at this time. This requirement may change depending on whether regulators make these reporting standards mandatory for publicly-listed companies, and whether they mandate assurance.

The CSSB has chosen to fully align its standards with the ISSB Standards while providing additional transition relief, unlike some jurisdictions that have adopted a carve-out approach. This alignment aims to facilitate global comparability and ease adoption for Canadian companies.

CSDS 1 and CSDS 2 are intended for use by publicly accountable enterprises, and may apply to public sector entities currently reporting under IFRS Accounting Standards, such as Crown corporations. Adoption will depend on reporting instructions issued by central agencies such as the Treasury Board at the federal, provincial and territorial government levels. Public sector entities reporting under PSAB will be impacted by the International Public Sector Accounting Board (IPSASB)’s upcoming Climate-related Disclosures standard, which is also adapted from ISSB’s IFRS S2 Climate-related Disclosures.

The Federal government announced in October 2024 its intention to amend the Canada Business Corporations Act to require climate-related financial disclosures for large, federally incorporated private companies. Disclosure requirements along with implementation timing has not yet been provided. It is not yet known if this requirement will also eventually be applied to provincially incorporated private companies as well.

Bill C-59’s anti-greenwashing amendments to the Competition Act apply to all sustainability disclosures available in the public domain, including those made under CSDS 1 and CSDS 2. Organizations must properly and adequately substantiate their sustainability disclosures or face significant financial penalties and reputational harm.