On October 18, 2021, the Canadian Securities Administrators (CSA) published a CSA Notice and Request for Comment (Notice) on proposed National Instrument 51-107 Disclosure of Climate-related Matters (NI 51-107) and its proposed Companion Policy 51-107CP (the Climate Disclosure Proposals). Comments are due by January 17, 2022, and for TSX-listed issuers with December 31 years ends would have effect in annual filings made in early 2024. A description of the Climate Disclosure Proposals can be found here.

The Climate Disclosure Proposals would require disclosure based on recommendations of the Task Force on Climate Related Financial Disclosures (TCFD), which was established by the Financial Stability Board of the G20 group of countries to improve the effectiveness of climate disclosures. The Climate Disclosure Proposals would require issuers to make disclosure in the following areas:

1. Governance – describe the boards oversight of climate-related risks and opportunities, and management’s role in assessing and managing climate-related risks and opportunities.
2. Strategy – describe any climate-related risks and opportunities identified over the short, medium and long term and describe the impact of these risks and opportunities on its business, strategy and financial planning.
3. Risk management – describe its processes for identifying, assessing and managing climate-related risks and how these processes are integrated into overall risk management.
4. Metrics and targets – describe its metrics used to assess climate-related risks and opportunities and targets used to manage these risks and opportunities.

The TCFD contemplates that issuers should disclose greenhouse gas emissions (Scope 1, 2 and 3). The Climate Disclosure Proposals would require issuers to make this disclosure or explain why they do not. The Climate Disclosure Proposals would not require issuers to disclose the resilience of their strategy with reference to various climate scenarios, a key element of the TCFD recommendations.

This insight outlines what the Climate Disclosure Proposals mean for directors, boards and public company governance, as well as steps boards of directors should consider in preparing to comply.

Please click here to download the insight.