Climate change presents material – if not unparalleled – economic risks and opportunities to companies and investors, given changes in the physical environment brought about by climate change, and given regulatory efforts to limit those changes and adapt to the environment as it changes. As a result of the increasing awareness of climate-related financial risks, shareholders are increasingly demanding strategic responses from their investee companies. Institutional investors, such as public pension funds and asset managers, and insurers, in particular, have significantly increased their corporate engagement on climate change risk management, driven in part by a number of high-profile inquiries into their own financial and fiduciary exposures.

One area of business practice to which regulators and investors have given particular attention is the disclosure by operating companies of risks and opportunities precipitated by climate change and transition initiatives, both mandatory disclosure pursuant to a country’s securities regime, and voluntary disclosure pursuant to leading initiatives such as CDP (formerly the Carbon Disclosure Project) or, more recently, the Financial Stability Board (“FSB”) Task Force on Climate-related Financial Disclosures (“TCFD” or “Task Force”). In this White Paper, we generally discuss the following questions related to (a) Canadian climate disclosure practices and (b) some liability issues engendered by those practices, in light of the transition to a lower-carbon economy.