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Canada’s New Sustainability Standards.

Read more in the March 22 edition of Invert Insights.

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The Canadian Sustainability Standards Board (CSSB) has published drafts of 2 new Canadian Sustainability Disclosure Standards for comment. 

The new standards are inline with the recommendations from International Sustainability Standards Board (ISSB) with some exceptions to account for nuances of Canadian businesses. The CSDS 1 seeks to standardize general requirements regarding sustainability-related financial information, while CSDS 2 contains requirements specifically related to climate disclosures around stakeholder risks and opportunities which could be expected to affect the entity’s cash flows. The CSDS 2 draft also requires disclosure on the planned use of carbon credits, including the type of credit, how the underlying offset is achieved (i.e. reduction or removal), which third-party schemes will verify or certify the credit, as well as other factors necessary to understand the credibility and integrity of the credit, such as assumptions regarding the permanence of the credit. 

The CSSB is now soliciting feedback on the proposed CSDS 1 and CSDS 2 standards until June 10, 2024. Once approved, these standards will remain voluntary in Canada and will capture reporting periods from January 2025, with Scope 3 disclosures being required two years later.

Invert Insights.

💡 CSDS 1 and CSDS 2 are the latest in standards being developed across the globe. The Securities and Exchange Commission (SEC) in the US recently adopted rules to enhance and standardize climate-related disclosures by public companies and in public offerings. This standardization across North America’s two largest markets helps ensure that carbon credits are credible, consistent and transparent, providing assurance to buyers and making it easier for buyers to compare different carbon credits and understand their environmental impact.

💡While establishing consistent standards will go a long way in providing clarity moving forward, there will also be confusion in the interim as companies and industries struggle to make sense of the new regulations. Ample access to education and guidance will be critical to the adoption and acceptance of these new standards.

💡 Continued investment into the standardization of the Voluntary Carbon Market is a signal that the industry is here to stay and carbon credits will play an important role in the decarbonization journey for organizations around the world.

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