February 5, 2024

Canada’s North Star in Climate Disclosure: Submission to the Canadian Securities Administrators (CSA) on proposed National Instrument 51-107 Disclosure of Climate-related Matters (NI 51-107)

It has been well over two years since the Canadian Securities Administrators (CSA) proposed National Instrument 51-107 Disclosure of Climate-related Matters (NI 51-107) and its companion policy. The Canada Climate Law Initiative (CCLI) made a submission strongly supporting a national instrument aligned with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), offering recommendations to strengthen its effectiveness.

Since then, the world has moved forward exponentially on commitments to transition to net-zero greenhouse gas (GHG) emissions and effective governance and disclosure of climate-related financial risks and opportunities. Canada’s failure to act has left Canadian issuers increasingly vulnerable to litigation and enforcement risk as they try, on an ad hoc basis, to craft disclosure that meets regulatory and civil liability materiality standards. Without clear requirements and guidance, the risk of litigation against issuers increases, as evident by the more than 2,300 climate litigation cases to date, 40% of which have been filed against corporations.

We believe it is critically important to finalize NI 51-107 and bring it into force as soon as possible, given the urgent systemic financial risks that climate change poses. Investors need information to be able to make effective investment and engagement decisions. Issuers require guidance as to their disclosure obligations pursuant to securities law and such guidance will enhance the fairness of Canadian securities markets, helping issuers navigate the dynamic reporting landscape.

The CCLI’s seven key recommendations in this submission will align NI 51-107 with the International Financial Reporting Standards (IFRS) Foundation International Sustainability Standards Board (ISSB) sustainability standards IFRS S2 Climate-related Disclosures (IFRS S2) and IFRS S1 General Requirements for Disclosure of Sustainability related Financial Information (IFRS S1).