Why did the CSSB undertake this project?
The CSSB’s response letter on the ISSB’s proposed amendments suggested several changes, some of which were reflected in the ISSB’s final amendments to IFRS S2. This includes providing entities with flexibility in choosing a widely accepted industry classification method appropriate for their business, if it is a system other than Global Industry Classification Standards (GICS).
This project supports the CSSB’s commitment to:
- maintaining alignment with the global baseline to the fullest extent possible;
- promoting high‑quality, decision‑useful climate‑related disclosures in Canada; and
- ensuring Canadian standards remain practical and fit for purpose.
What are the key proposals?
The CSSB proposes to adopt the ISSB’s amendments to IFRS S2 into CSDS 2, with Canadian modification as appropriate
1. Alignment with ISSB amendments on greenhouse gas (GHG) emissions disclosures
The proposed amendments to CSDS 2 reflect the ISSB’s final amndments as below. The ISSB explains its reasons for making these amendments to IFRS S2 in its Basis for Conclusions.
Scope 3 Category 15 GHG emissions (derivatives, investment banking and (re)insurance)
The proposed amendments would clarify that an entity is permitted to limit measurement and disclosure of Scope 3 Category 15 GHG emissions to financed emissions. This provides permanent relief for measurement and disclosure of:
- emissions associated with derivatives and certain investment banking activities (facilitated emissions); and
- emissions associated with insurance and reinsurance underwriting.
Respondents to the ISSB’s Exposure Draft raised concerns about comparability. To address these, the ISSB further amended IFRS S2 to:
- require an entity to disclose the total Category 15 GHG emissions included in its measure of Scope 3 GHG emissions, and
- require an entity to disclose the subtotal of financed emissions in that total (paragraph 29C of IFRS S2).
Industry classification system for disclosure of information on financed emissions
The proposed amendments would also allow entities with commercial banking or insurance activities to use an industry classification system other than the GICS when disaggregating its absolute gross financed emissions by industry.
Alternative GHG measurement methods
The proposed amendments would clarify that an entity is allowed to use a GHG measurement framework other than the GHG Protocol, if that entity is required, in whole or in part, by a jurisdictional authority or an exchange on which it is listed to use a different method for measuring its GHG emissions. If only part of an entity (e.g., the Japanese subsidiary of a Canadian-based parent company) faces such a requirement, then only that part of the entity may use this requirement.
Alternative global warming potential (GWP) values
The proposed amendments would extend relief to allow entities to use GWP values other than 100‑year values from the latest Intergovernmental Panel on Climate Change assessment, if required by a jurisdictional authority or stock exchange, in whole or in part. If only part of an entity faces such a requirement, then the relief applies only to the part of the entity facing the requirement.
2. Canadian modification: effective date
The CSSB proposes a Canadian modification related to timing.
- The ISSB amendments to IFRS S2 are effective January 1, 2027, with earlier application permitted.
- The CSSB proposes that the corresponding amendments to CSDS 2 be effective January 1, 2028, with earlier application permitted.
This approach follows the CSSB’s past practice in issuing CSDS 1, General Requirements for Disclosure of Sustainability-related Financial Information, and CSDS 2, each of which had an effective date of one year later than the corresponding international standards. This approach provides Canadian preparers with time to implement the changes, supporting high‑quality disclosures.
3. Permanent relief for some types of Scope 3 Category 15 GHG emissions
The CSSB and other Canadian interested and affected parties expressed concerns about the permanent nature of relief proposed for requirements related to measurement and disclosure of Scope 3 Category 15 GHG emissions.
The CSSB noted aspects of Canada’s climate disclosure context, including regulatory requirements and existing accounting methodologies for Scope 3 Category 15 GHG emissions, which were relevant to the ISSB’s consideration of its amendments. The CSSB noted that permanent relief could diminish ongoing capacity building for these disclosures and fails to acknowledge the ongoing development and maturity of relevant methodologies. The ISSB considered this feedback and retained permanent relief.
The CSSB is not proposing a Canadian modification on these matters at this time but is seeking input on whether a different approach might better serve the Canadian public interest.
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CO2 equivalent
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The universal unit of measurement to indicate the global warming potential of each greenhouse gas, expressed in terms of the global warming potential of one unit of carbon dioxide. This unit is used to evaluate releasing (or avoiding releasing) different greenhouse gases against a common basis.
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Financed emissions
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The portion of gross greenhouse gas emissions of an investee or counterparty attributed to the loans and investments made by an entity to the investee or counterparty. These emissions are part of Scope 3 Category 15 (investments) as defined in the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011).
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| global warming potential |
A factor describing the radiative forcing impact (degree of harm to the atmosphere) of one unit of a given greenhouse gas relative to one unit of CO2.
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greenhouse gases
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The seven greenhouse gases listed in the Kyoto Protocol – carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), nitrogen trifluoride (NF3), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6).
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latest international agreement on climate change
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An agreement by states, as members of the United Nations Framework Convention on Climate Change, to combat climate change. The agreements set norms and targets for a reduction in greenhouse gases.
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Scope 3 greenhouse gas emissions
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Indirect greenhouse gas emissions (not included in Scope 2 greenhouse gas emissions) that occur in the value chain of an entity, including both upstream and downstream emissions. Scope 3 greenhouse gas emissions include the Scope 3 categories in the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011).
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Scope 3 categories
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Scope 3 greenhouse gas emissions are categorized into these 15 categories – as described in the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011):
(1) purchased goods and services;
(2) capital goods;
(3) fuel- and energy-related activities not included in Scope 1 greenhouse gas emissions or Scope 2 greenhouse gas emissions;
(4) upstream transportation and distribution;
(5) waste generated in operations;
(6) business travel;
(7) employee commuting;
(8) upstream leased assets;
(9) downstream transportation and distribution;
(10) processing of sold products;
(11) use of sold products;
(12) end-of-life treatment of sold products;
(13) downstream leased assets;
(14) franchises; and
(15) investments.
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When are the proposals effective?
- Expected CSSB approval of final amendments: Q4 2026
- Proposed effective date for amended CSDS 2: January 1, 2028
- Earlier application: Permitted
We want your feedback!
The CSSB welcomes comments on all aspects of the Exposure Draft and is particularly interested in views on the two questions below. Your feedback will help the CSSB assess whether the proposed approach appropriately balances global alignment, comparability, and Canadian public interest considerations.
- Effective date: In adopting the ISSB’s amendments to GHG emissions disclosures into CSDS 2, do you agree with the proposed Canadian modification related to effective date of the amendments? If not, what Canadian modification, if any, do you believe is required, and why? Please explain how the modification you propose meets the Criteria for Modification Framework set out in the Appendix to the Due Process Manual.
- Relief for facilitated and insurance-related emissions: Given concerns Canadians raised about the permanent nature of the relief for facilitated emissions and insurance-related emissions included in the ISSB’s final amendments to IFRS S2, do you think that CSDS 2 should instead provide time-limited relief? If yes, explain your reasoning in the context of the Criteria for Modification Framework set out in the Appendix to the Due Process Manual and indicate your preferred duration for the relief.
Staff Contacts
John Cameron
Principal, Sustainability Standards
[email protected]
1 647-956-7334