Climate disclosure

On February 11, 2025, the Acting Chairman of the US Securities and Exchange Commission (SEC) issued a statement on the SEC’s March 2024 Climate-Related Disclosure Rule (the Rule). On issuance, the Rule was immediately subject to litigation challenges and the SEC stayed effectiveness of the Rule pending completion of the litigation. The statement can be summed up in the opening statement: “The Rule is deeply flawed and could inflict significant harm on the capital markets and our economy.”

The Acting Chairman went on to comment: “…I continue to question the statutory authority of the Commission to adopt the Rule, the need for the Rule, and the evaluation of costs and benefits. I also question whether the agency followed the proper procedures under the Administrative Procedure Act to adopt the Rule.”

In connection with these comments, the Acting Chairman noted that the recent change in the composition of the SEC and the recent Presidential Memorandum regarding a Regulatory Freeze bear on the conduct of the litigation challenges to the Rule, indicating that the SEC was deliberating the appropriate next steps.

In our January 2025 client alert, Climate-related disclosure scenario: Canadian Sustainability Standards Board Standards released: now back to the Canadian Securities Administrators’ 2021 Climate-related disclosure proposal?, we noted the prospect that the revocation of the SEC’s climate-related disclosure rule could result in a scaled-back Canadian mandatory climate-related disclosure rule notwithstanding the release of the CSSB’s Standards following the ISSB’s model.

Diversity, Equity, Inclusion (DEI)

President Trump has signed a suite of executive orders overturning diversity, equity and inclusion programs in the US federal government. This included an executive order requiring federal agencies to investigate diversity programs at publicly traded corporations, nonprofits, colleges and foundations in an attempt to discourage this work outside the government.

In connection with this policy change, numerous US companies have scaled back at least their externally apparent DEI programs, including abandoning or watering down public DEI initiatives and targets, and reducing or eliminating public disclosure on DEI matters. There are reports of internal directives to remove pronouns from email signatures. Several major corporations across various industries, including retail, automotive, technology, consulting and banking, have taken some or all of these steps.

Very notably, on February 11, 2025, the proxy advisory firm Institutional Shareholder Services (ISS) announced that for shareholder meeting reports published on or after February 25, ISS will no longer consider the gender and racial and/or ethnic diversity of a company’s board when making vote recommendations with respect to the election or re-election of directors at US companies.

More recently, we have seen the US Federal Communications Commission (FCC) announce it was starting an investigation into a large US media company, for “possibly promoting invidious forms of DEI in a manner that does not comply with FCC regulations.” We are watching for signs that other US federal agencies, which Canadian companies routinely engage with ─ like the Federal Energy Regulatory Commission and the Federal Trade Commission ─ are taking similar steps when reviewing transactions.

In Canada, Canadian public companies face requirements or pressures for public diversity disclosure including under TSX rules, securities law, requirements of the Canada Business Corporations Act, governance rating organizations including the Canadian Coalition for Good Governance and The Globe and Mail Board Games, and from proxy advisory firms like ISS and Glass Lewis, as well as from other stakeholders. The Canadian Securities Administrators still have an outstanding April 2023 proposal for new public disclosure requirements pertaining to diversity and board renewal. On February 14, 2025, the Government of Canada announced that it will compel Canadian banks to make diversity disclosure regarding their boards of directors and senior management on women, visible minorities, Indigenous peoples and persons with disabilities.

Looking ahead, increasingly, Canadian companies operating in the United States will need to carefully consider their legal and stakeholder requirements for DEI disclosure in light of operating and political imperatives required of their US regulators and stakeholders.

For more information on this topic, please contact the author, Bill Gilliland.