UPDATE: The Canadian Securities Administrators (CSA) announced on March 13, 2024 that it anticipates seeking comment on a revised rule setting out climate-related disclosure requirements once the CSSB consultation is complete and its standards are finalized. The CSSB standards must be incorporated into a CSA rule in order to become mandatory under Canadian securities legislation. — The Canadian Sustainability Standards Board (CSSB) today announced the release of exposure drafts for the proposed Canadian Sustainability Disclosure Standards (CSDS), which include: CSDS 1, General Requirements for Disclosure of Sustainability-related Financial Information (CSDS 1); and CSDS 2, Climate-related Disclosures (CSDS 2). The International Sustainability Standards Board (ISSB) published IFRS S1 and IFRS S2 in June 2023. Those disclose standards served as the baseline for the development of CSDS 1 and CSDS 2, respectively. The CSSB also published a consultation paper on criteria for modifying the IFRS Sustainability Disclosure Standards when formulating Canadian standards based on them. The CSSB has proposed to make the new standards effective as of annual reporting periods beginning on or after January 1, 2025. Comments on the proposed standards are due June 10, 2024. CSSB will host a webinar on the exposure drafts on April 10, 2024. This bulletin provides a brief summary of the objectives and key conceptual foundations / core content of CSDS 1 and CSDS 2, as well as the Canadian changes as compared to the ISSB standards. CSDS 1: General Requirements for Disclosure of Sustainability-related Financial Information Objective. The objective of CSDS 1 is to require an entity to disclose information about its sustainability-related risks and opportunities that is useful to primary users of general-purpose financial reports in making decisions relating to providing resources to the entity. An entity would be required to disclose information about all sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, its…
The International Sustainability Standards Board (ISSB), a standard-setting board of the IFRS Foundation, has published Exposure Draft IFRS S2 Climate-related Disclosures (the Climate Exposure Draft) and Exposure Draft IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (the Sustainability Exposure Draft). The Climate Exposure Draft is based on the recommendations of the Task Force on Climate-Related Financial Disclosure and incorporates industry-based disclosure requirements from the SASB Standards. The Sustainability Exposure Draft provides overall requirements for disclosing sustainability-related financial information about significant sustainability-related risks and opportunities. This bulletin provides key information on both documents and the recently launched consultations. Climate Exposure Draft Objective. The objectives of the Climate Exposure Draft include, among others, requiring disclosure of information about exposure to significant climate-related risks and opportunities, enabling users of an entity’s general purpose financial reporting to: Assess the effects of significant climate-related risks and opportunities on enterprise value. Understand how the use of resources, and corresponding inputs, activities, outputs and outcomes support responses to and strategy for managing significant climate-related risks and opportunities. Evaluate the ability to adapt planning, business model, and operations to significant climate-related risks and opportunities. Enable users of general-purpose financial reporting to understand the governance processes, controls, and procedures used to monitor and manage climate-related risks and opportunities and the strategies for addressing significant climate-related risks and opportunities. Scope. The Climate Exposure Draft would apply to climate-related risks an entity is exposed to including physical and transitional risks, and climate-related opportunities available to an entity. Sustainability Exposure Draft Objective. The objectives of the Sustainability Exposure Draft include, among others: Require disclosure of significant sustainability-related risks and opportunities useful to the primary users of general purpose financial reporting when assessing enterprise value and deciding whether to provide resources. Require disclosure of material information about exposure to all significant…