Highlights
Nature-related Disclosures
The Canadian Sustainability Standards Board (CSSB) is seeking feedback from interested and affected parties in Canada on the International Sustainability Standards Board’s (ISSB) Exposure Draft, IFRS Practice Statement 1, Nature-related disclosures.
The ISSB proposed Practice Statement is intended to assist entities in identifying and disclosing material information about nature-related risks and opportunities. The ISSB Proposed Practice Statement builds on the requirements in IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures and are intended to support the application of the ISSB Standards in relation to nature-related matters.
The CSSB is consulting Canadians concurrently with the ISSB to understand whether the proposals are appropriate in the Canadian context and whether there are matters particular to Canada that should be considered. Feedback received through this consultation will inform the CSSB’s consideration of the ISSB’s proposals and its response to the ISSB.
The CSSB encourages interested and affected parties in Canada to consider both the ISSB’s questions and the Canadian-specific questions included in this document.
ISSB® Exposure Draft
The ISSB Exposure Draft, IFRS Practice Statement, Nature-related disclosures
The ISSB has developed proposed requirements to support entities in applying IFRS Sustainability Disclosure Standards when identifying, assessing and disclosing material information that could reasonably be expected to affect an entity’s prospects about nature-related risks and opportunities.
Nature encompasses a broad range of environmental matters and the relationships between entities and the natural environment. Nature-related risks and opportunities may arise through an entity’s dependencies and impacts on nature and may affect an entity’s prospects. The ISSB Proposed Practice Statement contains requirements that are intended to help entities determine what nature-related information is material to primary users of general-purpose financial reports and how that information should be disclosed. The proposed requirements will supplement requirements in IFRS S1 and IFRS S2.
The ISSB Exposure Draft should be read together with the accompanying illustrative examples and Basis for Conclusions. Respondents are encouraged to consider the full package of materials when providing feedback.
Form of the proposed requirements
An important aspect of the ISSB’s consultation concerns the form of the proposed requirements.
The ISSB is proposing the nature-related disclosure requirements in the form of an IFRS Sustainability Disclosure Practice Statement and is seeking feedback on whether this is the appropriate form of standard-setting. In developing its proposals, the ISSB considered alternative approaches, including amendments to IFRS S1, amendments to IFRS S2 and a new stand-alone IFRS Sustainability Disclosure Standard
What is an IFRS Practice Statement?
The ISSB describes an IFRS Practice Statement as “a stand-alone and prominent part of IFRS Foundation materials” that is subject to the full due process of the IFRS Foundation. The ISSB also explains that applying a Practice Statement is not required for an entity to assert compliance with IFRS Sustainability Disclosure Standards. However, where an entity applies a Practice Statement and asserts compliance with it, the entity would be required to comply with all of its requirements.
In proposing a Practice Statement, the ISSB considered the need to improve nature-related disclosures while minimizing disruption to the ongoing implementation and adoption of its sustainability disclosure standards, IFRS S1 and IFRS S2. The approach would also allow IFRS S1 and IFRS S2 to remain unchanged at this stage while enabling the ISSB to consider developments in nature-related disclosures and the architecture of IFRS Sustainability Disclosure Standards over time.
The ISSB has indicated that a Practice Statement can also provide a pathway to a future ISSB Standard. Nature-related content could subsequently be incorporated into a stand-alone Standard or another form, such as an appendix to IFRS S1, subject to public consultation.
The form of the proposals is therefore relevant to the CSSB’s consideration of the material in Canada. Feedback on this aspect of the ISSB’s proposals will help inform the CSSB’s consideration of the final ISSB material within the Canadian sustainability disclosure standards framework.
Canadian context
The CSSB works to advance the adoption of IFRS Sustainability Disclosure Standards in Canada, with modifications considered where necessary to reflect the Canadian public interest.
The CSSB issued CSDS 1 General Requirements for Disclosure of Sustainability-related Financial Information and CSDS 2 Climate-related Disclosures as Canada’s first sustainability disclosure standards. CSDS 1 and CSDS 2 are voluntary standards unless their application is required by legislation, regulation or another relevant authority.
The nature-related Proposed Practice Statement is relevant to the Canadian context because entities applying CSDS 1 may need to consider sustainability-related risks and opportunities beyond climate or other sustainability matters when those risks and opportunities could reasonably be expected to affect the entity’s prospects. Nature-related matters may therefore arise in applying the existing requirements in CSDS 1 even in the absence of specific Canadian nature-related disclosure requirements.
To better inform its considerations, the CSSB undertook targeted research of the nature-related reporting practices in Canada.
CSSB undertook a structured review of publicly available reporting by S&P/TSX 60 companies. The review found that nature-related information is widespread but uneven, with reporting most developed for established environmental matters such as water and pollution, waste and resource use. Companies generally provide more information about environmental measures and management responses than about their dependencies on nature and the connections between nature-related matters, risks and opportunities and financial prospects. Reporting varies by sector, business model and location, and has a focus on direct operations. Information is often dispersed across an entity’s reporting package, while Indigenous-related matters are not consistently connected to nature-related dependencies, impacts, risks and opportunities. These findings provide a baseline for considering the ISSB’s Proposed Practice Statement but should not be extrapolated to smaller entities or interpreted as an assessment of disclosure quality, financial materiality or readiness for future requirements.
Existing securities law disclosure obligations also form part of the Canadian context. As clarified in CSA Staff Notice 51-333 Environmental Reporting Guidance (2010), public companies (reporting issuers other than investment funds) are required under existing securities legislation to disclose material environmental risks and related information. These obligations encompass nature-related risks where material.
Together, these obligations, current reporting practices and other Canadian-specific considerations provide a basis for assessing how the ISSB’s proposals could support more connected and decision-useful nature-related disclosures in Canada.
The Board is interested in understanding whether the ISSB’s proposals can be applied effectively in Canada and whether there are Canadian-specific matters that should inform the CSSB’s consideration of the proposals.
Comments Requested
Why the CSSB is seeking your views
The CSSB has not reached a conclusion on how the final ISSB nature-related material should be addressed within the Canadian sustainability disclosure framework. Feedback from this consultation will help the CSSB understand:
- whether the ISSB’s proposals are appropriate for application in Canada;
- whether any aspects of the proposals raise specific issues in the Canadian context;
- whether Canadian-specific modifications or considerations may be necessary; and
- views relevant to the CSSB’s consideration of the final ISSB material in Canada.
The CSSB will consider the feedback received through this consultation when developing its response to the ISSB and in considering the final ISSB material in Canada.
Responding to the consultation
The CSSB welcomes feedback from any interested party on any or all the questions posed in this Exposure Draft.
You can provide feedback to the CSSB on the proposals in a variety of ways:
- Participate in the Connect.FRASCanada.ca survey.
- Connect directly with the CSSB by attending a discussion session on the Exposure Draft. To register for a session, please visit our Project Page or email [email protected] to set up an individual session.
- Write a response letter and upload it via our online platform.
The CSSB encourages interested and affected parties in Canada to respond to the ISSB’s Exposure Draft. Specific questions on which the ISSB would like input are provided in the Invitation to Comment in its Exposure Draft. The CSSB requests that comment letters be sent directly to the ISSB with a copy to the CSSB.
Respondents do not need to answer every question. Feedback is most helpful when it clearly identifies the aspect of the proposals being addressed, explains the reasons for the respondent’s views and, where applicable, identifies alternative approaches or considerations for the CSSB or ISSB to consider.
The Canadian-specific questions are intended to complement, rather than duplicate, the questions in the ISSB’s Exposure Draft. Respondents are encouraged to provide feedback directly to the ISSB on the international proposals and to provide the CSSB with their views on matters relevant to the application and consideration of the proposals in Canada
The ISSB’s Exposure Draft also seeks feedback on its proposals relating to interactions, including engagement, with Indigenous Peoples, Local Communities and affected stakeholders. Given the particular relevance of these matters in Canada, the CSSB has included an additional Canadian-specific question to seek feedback on considerations relating to Indigenous Peoples in Canada that may be relevant to the proposals.
The CSSB would like input from Canadian respondents on the following additional questions regarding the proposed Practice Statement:
- Appropriateness for Canadian application
The ISSB developed the proposed IFRS Practice Statement under its due process for global application.
- Assuming the ISSB finalizes and approves the proposed IFRS Practice Statement, is it appropriate for application in Canada?
- If not, identify the aspects and circumstances that make it inappropriate for Canadian entities applying CSDS 1?
- Would another form of non-authoritative support material be more appropriate for the Canadian market?
- Canadian modifications
- Are any additions, deletions or other modifications needed for Canada under the Criteria for Modifications set out in the Appendix?
- If so, identify and explain each proposed modification. Explain how it would serve the Canadian public interest while maintaining the quality of Canadian sustainability disclosure.
- Handbook inclusion and future decisions
- Should the final IFRS Practice Statement be included in the CPA Canada Handbook – Sustainability as non-authoritative material? Why or why not?
- If included, what should the CSSB clarify about its status, use or relationship to CSDS 1 and CSDS 2?
- Indigenous Peoples
In Canada, Indigenous Peoples' rights are recognized in Section 35 of the Constitution and in the United Nations Declaration on the Rights of Indigenous Peoples Act, 2021 which includes provisions to uphold free, prior and informed consent. Do the proposed disclosure requirements provide sufficient guidance for entities to consider their interactions, including engagement, with Indigenous Peoples when identifying, assessing and disclosing nature-related risks and opportunities? Why or why not?
We value your input and look forward to your feedback. Comments to the ISSB are due by February 19, 2027. If you would like the CSSB to consider your feedback prior to finalizing its comment letter to the ISSB, please sent your comments to CSSB by January 29, 2027. Responses to the CSSB on the additional questions set out above are also due by January 29, 2027.
APPENDIX: Criteria for Additions to, Deletions From or Amendments to IFRS Sustainability Disclosure Standards
The CSSB recognizes the benefits of global standardization of sustainability disclosure standards to the Canadian public interest and, therefore, supports the incorporation of IFRS Sustainability Disclosure Standards in Canada to the fullest extent possible. The Board also recognizes that there may be circumstances where amendments are required in the Canadian public interest. The following sets out criteria for the circumstances in which the Board would make amendments to the IFRS Sustainability Disclosure Standards in setting Canadian standards based on them:
- Subject to paragraph 2 below, the CSSB will generally limit additions to, deletions from, or other amendments to an IFRS Sustainability Disclosure Standard to the following:
- Requirements or guidance, the application of which are not permitted by, or require addition, deletion or amendment to be consistent with, applicable Canadian law or regulation.
- Requirements or guidance, where the ISSB recognizes that different provisions or practices may apply in different jurisdictions and Canada is such a jurisdiction.
- The CSSB may make additions to, deletions from, and/or amendments to an IFRS Sustainability Disclosure Standard with respect to requirements or guidance beyond those described in paragraph 1 above (including effective dates and transition periods) where it believes such additions, deletions and/or amendments are required to serve the Canadian public interest and maintain the quality of sustainability disclosure in Canada.