The Canadian Securities Administrators (CSA) have found that there’s room for improvement in how TSX-listed issuers disclose risks associated with climate change.
Staff Notice 51-354 summarizes the findings of a CSA project to review the disclosure of reporting issuers on the material risks and financial impacts associated with climate change. This notice also outlines CSA’s plans on how to improve disclosure.
“We now have a better understanding of the current state of climate change-related disclosure in Canada,” said Louis Morisset, chair and president of CSA, in a release. “Moving forward, we will aim to improve the disclosure of risks and related governance and oversight processes, while recognizing both investors’ and issuers’ perspectives.”
The project reviewed the mandatory and voluntary disclosures of 78 TSX-listed issuers regarding their climate change-related risks, financial impacts and related governance. CSA also invited all TSX-listed issuers to respond to a voluntary survey, and received 97 responses.
More than half of companies (56%) disclosed specific climate change-related information in their Annual Information Form and Management Discussion & Analysis. The rest of the issuers provided a boilerplate disclosure or no disclosure at all. The review also found issuers were more likely to disclose climate-change related risks in their voluntary reports.
Regulatory risk was the one most often discussed. Few issuers disclosed their governance and risk management practices regarding climate change.
Disclosure of climate change-related risks was most common among issuers in the oil and gas industry.
CSA also consulted with investors for this project. Investors told CSA that disclosure needs to improve because in many cases it is not provided. When it is, it can be boilerplate, vague or perceived as incomplete.
Issuers told CSA they would like more education, “refreshed guidance and a solution consistent with the current approach to disclosure in Canada.”
Given this, CSA intends to:
- develop new guidance and initiatives to educate issuers about disclosing climate change-related risks, opportunities and financial risks;
- consider new disclosure requirements for non-venture issuers’ corporate governance practices in relation to material business risks;
- monitor the quality of issuers’ disclosures, best practices and developments in reporting frameworks; and
- continue to assess whether investors need more types of information, such as information about certain categories of greenhouse gas emissions, to make investment and voting decisions.