November 2, 2021

Climate Change Disclosure Rules: A Preview From Canada?

In case you’re not familiar with it, Letterkenny is a Canadian TV comedy that some of my hockey pals suggested to me. The show’s not for everybody – the language would make a longshoreman blush – but if you like non-stop banter & a steady stream of what hockey players call “chirps” delivered in a distinctive dialect, check it out. I think it’s hilarious.

Anyway, Letterkenny reminds me of how many things we import from Canada, including some legal doctrines that we usually think of as home grown. That’s why I thought you might find this Torys memo about proposed climate change regulations issued by the Canadian Securities Administrators interesting.  This excerpt from the memo summarizes the highlights of the proposal:

– The proposed rules would be phased-in over a one-year period for non-venture issuers and over a three-year period for venture issuers. For reporting issuers with a December 31 year-end, disclosures would be required in annual filings due in 2024 for non-venture issuers and in 2026 for venture issuers.

– Issuers would be required to make annual disclosure relating to the core elements of the TCFD framework, including governance, corporate strategy, risk management practices and data and metrics in respect of climate change risks and opportunities.

– Issuers would be required to disclose their Scope 1, 2 and 3 emissions or their reasons for not providing such disclosure. In the alternative, the CSA is considering mandatory disclosure of Scope 1 emissions, with the comply-or-explain option available only for Scope 2 and 3 emissions.

– The CSA has opted not to require disclosure of scenario analysis of a company’s resiliency under various climate transition assumptions.

The areas addressed in the proposed regulations track pretty closely those that SEC Chair Gary Gensler has suggested the SEC may address in its own proposal, and the CSA’s discussion of the proposal indicates that Canadian regulators have had to make the same kind of policy choices that the SEC will be making.  Since that’s the case, it may well turn out to be a preview of coming attractions.

John Jenkins