Amid growing concern about the risks associated with climate change, Canadian securities regulators are launching a review of public company disclosure on climate-related risks.
The Canadian Securities Administrators (CSA) unveiled plans on Tuesday to review the disclosure from large, public companies listed on the Toronto Stock Exchange on the risks and financial impacts of climate change. “The review will be conducted with a view to ensuring that issuers provide high quality disclosure of material information, which in turn assists investors in making informed investment and voting decisions,” the CSA says.
The review will focus on both issuers’ existing mandatory continuous disclosure filings, and voluntary reporting in 2016, “to assess the extent to which these filings currently include disclosure concerning material climate-related risks and financial impact,” along with their related governance processes.
The regulators indicate that they also plan to take other steps, including: a survey of issuers about current disclosure practices, and the costs of compliance, in an anonymous online poll; conducting focus groups on the subject with both issuers and investors; and, examining the disclosure requirements in other jurisdictions (such as the United States, United Kingdom and Australia), along with recently proposed voluntary disclosure efforts, such as initiatives from the Financial Stability Board, the Global Reporting Initiative, and the Sustainability Accounting Standards Board.
“In light of the increased scrutiny being placed upon reporting issuers’ climate-related disclosure, we believe it is appropriate to review the state of such disclosure in Canada,” said Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers.
As it stands, issuers in Canada are required to disclose material risks, which may include climate-related risks, in their periodic disclosure. The regulators have provided additional guidance on reporting environmental-related risks.
“As securities regulators, it is important to assess whether issuers provide appropriate disclosure regarding risks and financial impacts associated with climate change, which in turn assists investors in making informed investment decisions,” added Morisset.
The CSA says that it will carry out its research in the spring and summer, and plans to publish a report outlining its findings.
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