Canadian Securities Administrators – Resilient LLP (formerly DeMarco Allan LLP)

The U.S. Securities and Exchange Commission (SEC) today adopted final rules for the “Enhancement and Standardization of Climate-Related Disclosures for Investors” (the Rules). The Rules require registrants to disclose climate-related risks that have had, or are reasonably likely to have, a material impact on business strategy, results of operations, or financial condition, together with their associated actual or potential material impacts. The Rules do not require reporting on Scope 3 emissions or greenhouse gas (GHG) emissions originating in a registrant’s value chains or outside of its direct operations (as was proposed in earlier versions – see our earlier bulletin here). The Rules notably require more disclosure from registrants on capitalized costs, expenditures expensed, and losses related to material use of carbon credits. Disclosure requirements will be phased-in between 2025-2033, with compliance dates dependent on the type of registrant. The SEC also published a fact sheet alongside today’s release. This bulletin briefly summarizes key details of the Rules. Content of the disclosures. The Rules will require a registrant to disclose, among other things: Strategy. The Rules require disclosure of the following strategy-related climate risks and impacts: actual and potential material impacts of any identified climate-related risks on the registrant’s strategy, business model, and outlook; if, as part of its strategy, a registrant has undertaken activities to mitigate or adapt to a material climate-related risk or has adopted a transition plan to manage material risks, a quantitative and qualitative description of material expenditures incurred and material impacts on financial estimates and assumptions that directly result from such mitigation or adaptation activities; and specified disclosures regarding a registrant’s activities, if any, to mitigate or adapt to a material climate-related risk including the use, if any, of transition plans, scenario analysis, or internal carbon prices. Risk management. The Rules require disclosure of a registrant’s climate-related risk management, including: any oversight…

The Canadian Securities Administrators (CSA) yesterday published the proposed National Instrument 51-107 Disclosure of Climate-related Matter (the Proposed Instrument) and a companion policy addressing the need for climate-related disclosure requirements. The Proposed Instrument seeks to provide consistent and comparable climate-related disclosure information for investors and is mostly aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. This bulletin briefly summarizes the Proposed Instrument and highlights key differences with the TCFD recommendations. Disclosure requirement of the Proposed Instrument. The Proposed Instrument would require disclosure consistent with the core elements in the TCFD recommendations as follows: Governance. Reporting issuers would be required to describe: board oversight of climate-related risks and opportunities; and management’s role in assessing and managing climate-related risks and opportunities. Strategy. Reporting issuers, where material, would be required to describe: climate-related risks and opportunities the issuer has identified over the short, medium, and long term; and impact of climate-related risks and opportunities on the issuer’s businesses, strategy, and financial planning. Risk management. Reporting issuers would be required to describe: the issuer’s processes for identifying and assessing climate-related risks; the issuer’s processes for managing climate-related risks; and how processes for identifying, assessing, and managing climate-related risks are integrated into the issuer’s overall risk management. Metrics and targets. Reporting issuers would be required to disclose: the metrics used by the issuer to assess climate-related risks and opportunities in line with its strategy and risk management process where such information is material; Scope 1, Scope 2, and Scope 3 GHG emissions, and the related risks or the issuer’s reasons for not disclosing this information; and the targets used by the issuer to manage climate-related risks and opportunities and performance against targets where such information is material. Modifications to the TCFD recommendations. The Proposed Instrument would not require issuers to provide a “scenario analysis”, which describes how resilient an…