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As the clamour for more useful climate risk disclosure grows louder, the Canadian Securities Administrators (CSA) are proposing mandatory disclosure requirements for issuers.

The CSA published proposals Monday that would introduce climate disclosures for public companies that are largely in line with the standards set by the Task Force on Climate-related Financial Disclosures (TCFD).

The regulators said the proposals are intended to improve the comparability of the information that companies disclose and that inform investors’ decision-making while also combating the costs of complying with multiple reporting frameworks.

The CSA is seeking to mandate that issuers disclose their Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions and the related risks, or explain why those disclosures are not needed.

Scope 1 includes issuers’ direct GHG emissions, while Scope 2 covers indirect emissions created by purchasing heat and electricity. Scope 3 refers to all other indirect GHG emissions.

The regulators are also consulting on the idea of only requiring disclosure of Scope 1 emissions, but not Scope 2 and 3.

Additionally, the proposals call for companies to spell out their approach to overseeing climate-related risks (governance); their strategies for tackling material risks and opportunities created by global warming; their approach to risk management; and the specific metrics and targets used in assessing climate-related risks.

“We recognize some issuers already share certain climate-related information. Our proposed requirements will bring those disclosures into a harmonized framework benefitting investors and issuers alike by making information more consistent and comparable and aligning Canadian capital markets with the global movement towards mandatory standards,” said Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers (AMF), in a statement.

At the same time, the CSA indicated that it’s sensitive to the costs of new disclosure requirements. The regulators are seeking to address the costs by considering the two different options for emissions disclosure, not requiring companies to report scenario analysis, and phasing in the new requirements (over one year for senior issuers and three years for venture issuers).

“With global momentum building on sustainability-related disclosures in both the public and private sectors, these proposals reflect our vision and expectations for reporting issuers as we move towards a global baseline for such disclosures,” said Morisset.

The CSA said the rules aren’t expected to take effect before the end of 2022.

The proposals are out for comment until Jan. 17, 2022.

In Ontario, the CSA’s proposals follow the recommendations of a provincial task force, which were taken up by the government in its latest budget.

“We have moved quickly — with the support of our provincial government — to develop and publish these proposals. This is a milestone for Canada, making us among the first G7 nations to propose mandating climate-related disclosures,” said Grant Vingoe, chair and CEO of the Ontario Securities Commission (OSC), in a statement.

“On the eve of COP26, these proposals are a win for investors, who will have access to more consistent, comparable and useful information, and a win for issuers, who stand to attract more capital from domestic and international investors who increasingly expect action and clear disclosure on these issues,” Vingoe added.