What do sustainability disclosure standards cover exactly?
In general, sustainability disclosures standards look beyond financial statement performance alone to consider the broader environmental and societal issues that affect the entity’s governance, strategy, risk management and performance.
This means the answer depends on the nature of the entity (e.g., its size, organizational structure, industry, and region). What’s critical to measure and disclose in one industry may not be critical for another.
Why do we need a Canadian Sustainability Standards Board?
A common set of standards will help conscientious companies achieve sustainability goals in a way that instills investor confidence.
The decision to establish the Canadian Sustainability Standards Board (CSSB) included strong support from the market. Voices from across the country and across industry sectors told us this was the right move. In fact, Canada has taken a lead in establishing a national sustainability standards board. Other countries who have established national sustainability standards boards include Japan and Korea.
We hope to be a model for how other countries can interact with the International Sustainability Standards Board (ISSB).
Read more about the decision to establish the CSSB and watch our video on the CSSB’s role.
How will the CSSB reconcile all the other sustainability reporting frameworks out there?
There’s been considerable consolidation of sustainability-related standards and frameworks at the global level. Of course, businesses still face choices when it comes to choosing which standards to apply depending on the focus and objectives of their sustainability disclosures. They might also be subject to specific jurisdictional requirements.
The CSSB’s role is not to reconcile other reporting frameworks, but instead to work in coordination with the ISSB to support the adoption of global baseline sustainability standards.
When are sustainability disclosure standards effective in Canada?
The ISSB has set the effective date for IFRS S1 General Sustainability-related Disclosures and IFRS S2 Climate-related Disclosures for reporting periods beginning on or after January 1, 2024. This means entities could begin reporting climate-related information in 2025.
But it is important to remember that until those standards are mandated by jurisdictional regulators, they are voluntary.
Are sustainability disclosure standards mandatory in Canada?
Currently, IFRS Sustainability Disclosure Standards – including IFRS S1 and S2 – are not mandatory in Canada.
However, they may be in future. Here’s how this decision might look should it be made:
Step 1. The CSSB will review the ISSB’s global baseline standards for use in Canada. As part of this process, the CSSB will consider whether further requirements are needed to reflect Canadian interests and priorities.
In March 2024, the CSSB will launch a public consultation to advance the adoption of sustainability disclosure standards in Canada.
Three key documents will be issued for public comment that will shape Canada’s first sustainability disclosure standards: drafts of the proposed Canadian Sustainability Disclosure Standard (CSDS) 1 and CSDS 2 – which align with IFRS S1 and S2 – and a paper discussing how the CSSB proposes to introduce changes to IFRS Sustainability Disclosure Standards for use in Canada. Read more about the CSDS 1 and 2 consultation.
Step 2. Canada’s regulators and legislators will consider whether – and over what time frame – CSDS should be mandated.
Until further decisions are made, the standards would apply to whomever chooses to use them on a voluntary basis.
Who will need to apply CSDS if they become mandatory?
Canada’s regulators and legislators will determine who will need to apply CSDS.
Entities that aren’t subject to the standards might have their own reasons to apply them. These could include, for example, ensuring the information needs of their supply chain partners are met.
What about Canadian specific industries – how will CSDS support these?
CSDS 1 and 2 are meant to be applied by publicly listed enterprises, but they also have an industry-based approach embedded in them. They leverage the Sustainability Accounting Standards Board’s subset of sustainability issues that are relevant to the performance of 77 industries.