Canada Pauses Mandatory Climate Disclosure Rules

Recently, the Canadian Securities Administrators (the umbrella organization of Canada's provincial securities regulators) announced that it would pause the development of certain sustainability reporting initiatives, including a proposed mandatory climate-related disclosure rule.  

This development is emblematic of an overall retreat from mandatory climate disclosures and similar rules that has occurred over the past several months, stemming in large part from recent political developments in the United States, which have discouraged a climate focus in the financial context.  As further evidence of this trend, the EU has begun to retreat from its sustainability reporting through the “Omnibus” process, which is delaying and reducing the scope of CSRD disclosures, and, in perhaps the paradigmatic example, the SEC has abandoned entirely the mandatory climate disclosure rule that it had promulgated under the Biden Administration.

Nonetheless, this trend should not be overstated.  Certain key regulators from economically-important jurisdictions--including the State of California--are proceeding vigorously in promulgating mandatory climate disclosure rules and similar regulations.  And the “pause” recently announced by the Canadian regulators is not an abandonment of this area of regulation, as this process could easily restart when circumstances change.