The focus on climate change-related issues in Canada and internationally has grown rapidly in recent years. In order to make informed investment and voting decisions, investors, particularly institutional investors, are seeking improved disclosure on the material risks, opportunities, financial impacts and governance processes related to climate change.

Securities legislation in Canada requires reporting issuers (issuers) to disclose the material risks affecting their business and, where practicable, the financial impacts of such risks. Although climate change-related risks are expected to be more pervasive than some other types of risk, they can be difficult to assess and quantify as they may be subject to greater uncertainty.

We recognize that, while disclosure of material climate change-related risks is important for investors to make informed investment decisions, this disclosure presents challenges and other potential burdens for all issuers, especially smaller issuers with more limited resources. The key objective of this notice is to provide issuers, particularly smaller issuers, with guidance as to how they might approach preparing disclosures of material climate change-related risks. In particular, the guidance contained in this notice is primarily focused on issuers’ disclosure obligations as they relate to the MD&A and AIF. For purposes of those forms, information is likely material if a reasonable investor’s decision whether to buy, sell or hold securities in an issuer would likely be influenced or changed if the information in question was omitted or misstated. Securities legislation imposes a different test for materiality in certain other contexts, and issuers should consider the applicable test when preparing disclosure in respect of climate change-related information or other information.

In addition to addressing regulatory requirements, these disclosures provide issuers with an opportunity to inform investors about the sustainability of their business model and to provide insights into how they are mitigating and adapting to these risks.

This notice does not create any new legal requirements or modify existing ones. It reinforces and expands upon the guidance provided in CSA Staff Notice 51-333 Environmental Reporting Guidance (SN 51-333) and should be read in conjunction with SN 51-333, which continues to provide guidance to issuers on existing continuous disclosure requirements relating to a broad range of environmental matters, including climate change.