Global ESG Regulatory Watch: Canada's Climate Disclosure Rules and What the CSA's Proposed Framework Means for Issuers

Canada is the odd one out. While the UK, Australia, Singapore, China and much of Asia have moved climate disclosure from proposal to obligation, Canada's securities regulators have gone the other way. The mandatory rule that Canadian reporting issuers have been expecting since 2021 is not close to finalisation. It is paused, with no timetable.

That leaves issuers in an awkward position. There is a proposed National Instrument on the books, a full set of Canadian disclosure standards ready to use, and no securities rule connecting the two. Meanwhile several other obligations do bite, just not through the channel most people are watching.

Here is where things actually stand.

The Proposed Instrument, and why it Stopped

On 18 October 2021, the Canadian Securities Administrators published proposed National Instrument 51-107, Disclosure of Climate-related Matters, together with a companion policy, for public comment. It would have introduced mandatory climate disclosure for most reporting issuers, both venture and non-venture, built on the recommendations of the Task Force on Climate-related Financial Disclosures.

It was never issued in final form. The proposal drew a large volume of comment, strongly supportive from some quarters and strongly opposed from others, and then sat in limbo while the CSA waited to see what happened elsewhere. First it waited on the SEC's climate rule and the ISSB standards. In July 2023 it signalled further consultation to reshape the draft around the ISSB framework. In December 2024 it confirmed that any revised rule would take account of the newly issued Canadian standards.

Then, on 23 April 2025, the CSA announced it was pausing the project entirely, along with planned amendments to diversity disclosure requirements. The stated reason was to support Canadian markets and issuers adapting to recent developments in the United States and globally. Stan Magidson, the CSA Chair and head of the Alberta Securities Commission, pointed to a rapidly changed economic and geopolitical landscape, increased uncertainty, and rising competitiveness concerns for Canadian issuers. The timing was not subtle: the announcement came roughly four weeks after the SEC voted to stop defending its own climate rule in court.

The CSA said it would monitor domestic and international developments and expects to revisit the project in future years. As of mid 2026, the pause remains in place. No revised draft has been published, no consultation reopened, and no target date given.

What a Future Rule Would Probably Look Like

The 2021 draft is now largely of historical interest, because any rule the CSA eventually brings forward is unlikely to resemble it closely. The CSA has already indicated that a revised instrument would be built around the Canadian Sustainability Disclosure Standards rather than the TCFD structure of the original proposal.

Those standards exist and are ready. The Canadian Sustainability Standards Board issued CSDS 1, covering general sustainability-related financial disclosure, and CSDS 2, covering climate, on 18 December 2024. Both are adapted from the ISSB's IFRS S1 and IFRS S2, with Canadian specific modifications, and both are available for voluntary use for annual reporting periods beginning on or after 1 January 2025.

Two features of the Canadian adaptation matter for anyone preparing early.

The standards take a climate first approach. Transition relief allows an entity to concentrate on climate related disclosure in its initial reporting periods before extending to the broader sustainability requirements of CSDS 1. That mirrors the sequencing used in the UK and elsewhere, and it means an issuer can build in the order the work naturally happens.

CSDS 2 also provides three years of transition relief for the quantitative elements of climate scenario analysis. Qualitative scenario analysis does not attract the same relief, so it may be expected earlier. Scenario analysis is the piece most issuers underestimate, and the relief is narrower than it first appears.

So the ISSB alignment question in Canada has effectively been answered at the standards level and left open at the regulatory level. Canada has ISSB aligned standards. What it does not have is a securities rule requiring anyone to use them.

What is Actually Mandatory Right Now

The absence of a CSA rule does not mean the absence of obligations. Three separate channels are live.

Federally regulated financial institutions. OSFI Guideline B-15, Climate Risk Management, sets binding expectations on governance, risk management and climate related disclosure for federally regulated financial institutions, excluding foreign bank branches. It is already operative: effective from fiscal year end 2024 for domestic systemically important banks and internationally active insurance groups headquartered in Canada, and from fiscal year end 2025 for other in scope institutions.

OSFI updated the guideline in early 2025 to stay interoperable with the CSSB standards. The most significant change was to Scope 3 timing. Scope 3 disclosure for all federally regulated financial institutions now applies from fiscal year end 2028, pushed back from fiscal year end 2025 for the largest banks and insurers and fiscal year end 2026 for everyone else. Scope 3 for the off balance sheet component of assets under management is set at fiscal year end 2029. For any institution in this category, this is the real climate disclosure deadline, and it is considerably firmer than anything the CSA has proposed.

Provincially regulated financial institutions in Quebec. The Autorité des marchés financiers revised its Climate Risk Management Guideline in March 2025. It sets expectations covering governance, integrated risk management, climate scenarios and stress testing, capital and liquidity adequacy, fair treatment of clients, and climate related financial disclosure, with the disclosure expectations drawn largely from the CSSB standards.

Large federally incorporated private companies, eventually. In October 2024 the federal Department of Finance announced an intention to amend the Canada Business Corporations Act to require climate related financial disclosure from large federally incorporated private companies. Neither the timing, the framework, nor the definition of "large" has been published. Treat it as a signal rather than a plan.

Beyond those, ordinary continuous disclosure obligations still apply. Material climate related risks have to be disclosed under existing requirements, and the CSA's older staff notices on environmental reporting and climate risk reporting remain the operative guidance. The pause does not create a holiday from materiality.

The Greenwashing Rules Moved, and Issuers Should Notice

The most consequential Canadian development for climate disclosure in the past year was not a disclosure rule at all. It was a competition law amendment.

Bill C-59 received royal assent on 20 June 2024 and introduced express anti-greenwashing provisions into the Competition Act. Environmental claims about a business or its activities had to be substantiated in accordance with an internationally recognised methodology, a phrase left undefined, and from June 2025 private parties could seek leave to bring applications directly to the Competition Tribunal.

The market response was immediate and, from a transparency perspective, counterproductive. A number of companies, particularly in the energy sector, withdrew or curtailed their climate disclosures rather than risk challenge. Greenhushing became a documented Canadian phenomenon.

Bill C-15, the Budget Implementation Act implementing the November 2025 federal budget, received royal assent on 26 March 2026 and recalibrated the regime. Two changes matter. The internationally recognised methodology requirement is gone, so environmental claims about a business now need adequate and proper substantiation under the general standard. And private parties can no longer obtain leave from the Tribunal to pursue remedies for environmental claims about another party's business or business activities.

Read that carefully, because it is easy to overstate. This is not a repeal. The Competition Act still prohibits deceptive marketing including false or unsubstantiated environmental claims, the Bill C-59 provisions were not struck out, and enforcement risk from the Competition Bureau remains. Some commentators argue the amendments increase rather than reduce uncertainty, because the old language at least pointed companies toward recognisable frameworks such as ISO standards, the GHG Protocol and science based target methodologies, while the replacement offers a general due diligence standard with no signposts.

One useful clarification from the Competition Bureau's draft guidance: its focus is on marketing and promotional representations made to the public, rather than representations made exclusively for other purposes such as securities filings. That distinction is helpful but not absolute, and disclosure repurposed as marketing material sits in a grey zone.

The Realistic Timeline

Anyone budgeting against a Canadian mandatory climate rule should plan on the following.

There is no published timeline. The CSA has committed only to monitoring developments and revisiting the project at an unspecified point in future years. A revised rule would need fresh consultation before finalisation, and consultation has not begun.

The direction of travel outside Canada is mixed, which reduces the pressure to move. The SEC has abandoned its rule, Brazil reversed its ISSB mandate in May 2026, and the EU has cut its own requirements substantially through the Omnibus package. Against that, the UK, Australia, Japan, Singapore and others continue to move toward mandatory ISSB based reporting. The CSA is watching a genuinely divided field.

When a rule does come, it will almost certainly mandate CSDS 1 and CSDS 2 rather than resurrect the 2021 TCFD draft. That is the single most useful planning assumption available, because it means preparation done against the Canadian standards now will not be wasted.

What Issuers Should Do About it

The temptation is to treat the pause as permission to stop. Three reasons that is a mistake.

Investors and lenders have not paused. Canadian issuers with international investors, or with financing relationships involving federally regulated institutions subject to B-15, will be asked for climate data regardless of what the CSA requires. Banks pursuing their own Scope 3 obligations from fiscal year end 2028 will be sourcing financed emissions data from their corporate customers, which means the obligation flows down to companies that have no direct disclosure requirement at all.

Multi jurisdiction issuers are already caught. A Canadian company with operations or listings touching California, the EU or the UK is subject to those regimes irrespective of Canadian rules. For those companies, building to CSDS is largely redundant work if they are already building to ISSB or ESRS, but confirming the overlap is worth doing deliberately rather than assuming it.

Voluntary reporting is now a differentiator rather than a baseline. With no mandate and a greenhushing problem, an issuer that reports credibly against CSDS stands out. The countervailing consideration is that anything published remains subject to the Competition Act and to securities law liability for misleading disclosure, so quality matters more than volume.

The practical position, then, is that Canada has handed issuers an unusual thing: a fully developed, internationally aligned standard, a clear signal about what a future rule would use, and no deadline. That is a good environment in which to build carefully. It is a poor one in which to do nothing, because the pause is explicitly temporary and the standards it will eventually point to already exist.

Issuer Checklist

1. Confirm whether any group entity is a federally regulated financial institution subject to OSFI Guideline B-15, where obligations are already live.

2. If in scope for B-15, diarise Scope 3 at fiscal year end 2028 and off balance sheet assets under management at fiscal year end 2029.

3. For Quebec regulated financial institutions, review the AMF Climate Risk Management Guideline expectations separately.

4. Treat CSDS 1 and CSDS 2 as the likely basis of any future CSA rule and build against them rather than the 2021 TCFD draft.

5. Use the CSDS climate first transition relief to sequence work, taking climate before broader sustainability disclosure.

6. Note that the three year relief for scenario analysis covers quantitative work only, so qualitative scenario analysis may be needed sooner.

7. Continue meeting existing continuous disclosure obligations for material climate risks, which the pause does not affect.

8. Review environmental claims against the amended Competition Act standard, remembering that Bill C-15 narrowed but did not repeal the greenwashing regime.

9. Expect climate data requests from lenders and investors ahead of any regulatory mandate, particularly from banks building financed emissions inventories.

10. If reporting in California, the EU or the UK, map the overlap with CSDS rather than running a separate Canadian process.

Position as of July 2026. The CSA's climate disclosure project remains paused with no published timetable, and the Canada Business Corporations Act proposal has not been developed into draft legislation. Confirm current requirements against the CSA, OSFI, the AMF and the CSSB, and take professional advice for your own circumstances.

Sources

Canadian Sustainability Standards Board, Office of the Superintendent of Financial Institutions, Autorité des marchés financiers, Competition Act of Canada, IFRS Foundation, Norton Rose Fulbright, Torys, Cassels, Davies Ward Phillips and Vineberg, McMillan, MLT Aikins, Lawson Lundell, KPMG Canada, EY Canada, CPA Ontario, Canada Climate Law Initiative

This article is intended for general professional information and does not constitute legal, financial, or investment advice.