New Sustainability Standards Signal Change for Canadian Businesses

The Canadian Sustainability Standards Board (CSSB) has released its first Canadian Sustainability Disclosure Standards (CSDSs), providing a framework for organizations to align with a global reporting baseline while considering the Canadian context. CSDS 1 and CSDS 2 are now included in the CPA Canada Handbook – Sustainability, marking a key development in standardizing sustainability disclosures across Canada.

Overview of CSDS 1 and CSDS 2

CSDS 1 outlines general requirements for disclosing material sustainability-related financial information, while CSDS 2 addresses climate-related risks and opportunities disclosures. These standards are supported by the Criteria for Modification Framework, which details how international standards, such as IFRS S1 and IFRS S2, can be adapted to align with Canadian public interests. The CSSB has emphasized the importance of providing consistent, high-quality sustainability information for decision-makers.

Transition Relief and Implementation Challenges

The CSSB has included transition relief measures to address market readiness. These measures provide organizations with additional time to:

• Align reporting with financial statements.
• Implement quantitative scenario analyses.
• Report on Scope 3 greenhouse gas (GHG) emissions.

These provisions aim to facilitate adoption while minimizing disruption. However, some stakeholders have raised concerns about the complexity and cost of implementation, particularly for smaller organizations that may lack the necessary resources.

Stakeholder Feedback and Pushback

The development of the CSDSs involved public consultations and feedback on Exposure Drafts. While many stakeholders support the alignment with international standards, others have expressed reservations. Concerns include:

• The feasibility of meeting disclosure requirements within the specified timelines.
• The perceived administrative burden, particularly for smaller entities.
• The adequacy of the transition relief measures, with some stakeholders calling for longer timelines or additional support.

Indigenous Collaboration and Inclusivity

The CSSB has committed to incorporating Indigenous perspectives by collaborating with First Nations, Métis, and Inuit Peoples. This effort seeks to ensure that sustainability standards reflect diverse voices and promote reconciliation. Despite these efforts, some critics have questioned whether the level of engagement has been sufficient to address Indigenous concerns fully.

Voluntary Nature and Educational Support

The CSDSs are voluntary unless mandated by regulators or governments. To support adoption, the CSSB plans to host an educational webinar in January 2025 and release a multi-year strategic plan for public comment. The plan aims to provide additional resources and address barriers to implementation.

The launch of the CSDSs represents a significant step toward standardized sustainability reporting in Canada. However, the path forward will require addressing stakeholder concerns, particularly around implementation challenges and inclusivity. The CSSB’s ongoing engagement and planned initiatives aim to build confidence and ensure the standards’ long-term success.

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