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Climate-related disclosure

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The Canadian Institute for Climate Choices today released its timely report “Sink or Swim: Transforming Canada’s economy for a global low-carbon future” (the Report). The Report is the first of its kind in Canada and is critical in prudent planning in a rapidly changing global economy that directly affects Canadians, Canadian companies, and Canadian exports. The Report moves from qualitative transition paradigms and platitudes to quantified realities for Canadian business, workers, and communities as the world rapidly progresses in its transition to a decarbonized global economy. The key findings and recommendations of the Report follow.   Findings   Net zero emissions. The Report indicates growing support for net zero emissions by 2050, currently including economies representing over 60% of the world’s GDP and over 50% of global emissions, and that an ambitious low-carbon transition will cost less than inaction. We expect that number to increase dramatically at or around the upcoming UNFCCC COP26 negotiations during the first two weeks of November.   Canadian exports and jobs are at risk. Approximately 70% of Canadian exports and 60% of foreign direct investment come from transition-vulnerable sectors, with over 800,000 Canadian workers in these sectors. Alberta has the highest percentage of workers in transition-vulnerable sectors whereas Ontario has the highest absolute numbers in such sectors. Transition-vulnerable sectors include: mining and mineral products;  downstream and midstream oil and gas; auto manufacturing and parts; chemical, plastic, and rubber materials; airlines; oil and gas exploration and productions; and high-carbon power. Private finance. Canadian companies listed on the TSX are more exposed to transition risks than other major international stock markets and are facing a -14% market capitalization impact by 2050.   Transition opportunity. Industries best positioned to profit from the transition include those associated with biofuels, batteries and storage, fuel cells, and solar and wind equipment. The Report notes…

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…