The impact of new standards for sustainability disclosures in Europe will be felt by Canadian firms with access to European Union (EU) capital markets, or significant operations in EU countries.

Based on current reporting practices and given Canada’s lack of a robust sustainable finance framework, Canadian firms could have a significant challenge in meeting these disclosure requirements. This will add compliance costs on Canadian firms and even create additional barriers for them to attract foreign capital from the EU and other sustainability-conscious markets.

The Institute for Sustainable Finance’s Briefing Note for decision-makers in finance, business and government takes a closer look at which Canadian companies and sectors of the economy are most impacted by the newly enforced Corporate Sustainability Reporting Directive (CSRD) and the accompanying European Sustainability Reporting Standards (ESRS) in the EU. The authors also draw implications for Canada’s sustainable finance policy design, specifically, Canada’s forthcoming green and transition finance taxonomy.