March 24, 2022

Summary of 131 submissions to CSA on proposed National Instrument 51-107 Disclosure of Climate-related Matters

March 24, 2022, Vancouver – The Canada Climate Law Initiative (CCLI) today released a report summarizing the 131 submissions made to the Canadian Securities Administrators (CSA) on proposed National Instrument 51-107 Disclosure of Climate-related Matters (NI 51-107). The report reveals strong support for strengthening Canadian securities law to require more effective governance of climate-related financial risks.  

27 submissions were made by investors, 96% of which are institutional investors with $21 trillion in assets under management. Submissions from issuers included companies in the energy, mining, automotive, agricultural, commodities, and financial services sectors. 16 industry associations made submissions and 64 submissions were made by a range of third parties, including foundations, law firms, accounting and actuarial organizations, financial services providers, and civil society organizations.

“Careful examination reveals two themes in the vast majority of submissions”, Dr. Janis Sarra, one of the report’s co-authors notes, “All users of financial statements need to have reliable, relevant, clear, and comparable information on climate-related risks and opportunities aligned with the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TCFD); and the CSA must act quickly to strengthen and finalize NI 51-107 to create effective disclosure standards that align with international regulatory developments so that Canadian issuers can effectively compete in domestic and global capital markets.”

29 submissions asked the CSA to amend proposed NI 51-107 to require disclosure of transition plans including interim and final targets towards net-zero emissions, how the issuer intends to deliver on its targets, and annual progress in meeting targets. These submissions are not surprising given that 130 countries announced their commitment to net-zero emissions by 2050 at COP 26, and the Glasgow Financial Alliance for Net Zero (GFANZ), representing 450 financial institutions controlling $130 trillion in assets, is committed to mobilizing capital by driving convergence around science-based net-zero transition plans.

The majority of submissions call for the CSA to require mandatory disclosure of Scope 1 and Scope 2 greenhouse gas (GHG) emissions rather than the current proposed “comply or explain” approach. Such requirements align with global regulatory developments, including proposals made this week by the US Securities and Exchange Commission (SEC). Of the 104 submissions that addressed disclosure of GHG emissions, 79% support mandatory disclosure of Scope 1 emissions and 68% support mandatory disclosure of Scope 2 emissions for all issuers.

The majority of submissions recognize the importance of disclosing Scope 3 emissions as part of climate disclosures, although the proposals varied. Overall, 43 submissions support Scope 3 emissions disclosure where Scope 3 emissions are material. 27% submissions are in favour of mandatory disclosure of Scope 3 emissions, 14% support disclosure where material, 23% are in favour of a comply-or-explain approach, and 35% of the submissions are not in favour of requiring disclosure of Scope 3 emissions at this time.

Of the investor submissions that commented, 90% are in favour of embedding climate-related disclosure in the annual financial reporting. 51 submissions commented on the CSA’s proposal to require disclosure of governance and risk management of climate-related matters regardless of materiality, with 88% of investors supporting this requirement.

21 submissions discussed the need to improve climate-related disclosure through reconciliation and partnership with Indigenous Peoples. Six submissions called for a just transition to net-zero emissions as key to protecting Canadian investors and other stakeholders.

About the Canada Climate Law Initiative

CCLI is Canada’s climate governance knowledge mobilization and policy hub. In partnership with our Canadian Climate Governance Experts, we bring together knowledge and trusted insights to advise Canadian businesses and governments on how to respond to today’s urgent climate risks and opportunities through effective climate governance. CCLI is led by three principal investigators, Dr. Janis Sarra and Dr. Carol Liao from the Peter A. Allard School of Law, University of British Columbia, and Professor Cynthia Williams from the Osgoode Hall Law School, York University.

CCLI acknowledges that the UBC Point Grey campus is situated on the traditional, ancestral and unceded territory of the xʷməθkʷəy̓əm (Musqueam).

Media Contact

Sonia li Trottier
Interim Director