Want to keep up with climate news, law, and policy? You can sign up for the Green Economy Law Monthly Newsletter here. Each newsletter contains a roundup of blog posts (like this one) with additional commentary, firm offerings, event listings, and more.

Canadian Securities Administrators (CSA) released their proposed National Instrument 51-107 Disclosure of Climate Related Matters on Monday. If adopted, the Instrument would require firms offering public investments to disclose greenhouse gas emissions (or explain non-disclosure), as well as governance, strategy, risk management practices, and metrics pertaining to climate-related risks and opportunities. 

Though publicly traded companies in Canada often already make climate-related disclosures (and it is mandatory where the information is considered material to operations), the CSA’s notice states that quality of disclosure is often poor and there’s a problematic lack of consistency in the form disclosures take. Adoption of the proposed rules would help remedy these and other issues with current climate-related disclosures. 

It is, however, important to note that the CSA is not part of the Canadian federal government, but rather, an independent organization comprised of provincial and territorial securities regulators. 

Canada has no federal government securities regulation body for reasons related to its constitutional system of federalism, which splits power between federal and provincial governments. As the closest thing Canada has to an official federal securities regulation agency, like the US Securities and Exchange Commission (SEC), the CSA serves to organize and harmonize securities laws and regulations across Canada. 

That means whereas President Biden can issue an executive order directing SEC Chair Gary Gensler to put in place climate-related disclosure rules applicable to all American securities, decisions at the CSA will be determined by its provincial and territorial member regulators, rather than the federal Liberal government headed by Justin Trudeau. And National Instruments can even include carve-outs for certain provinces or territories, making their application inconsistent across Canadian jurisdictions.  

Environmentally-hostile provincial governments in Alberta, Saskatchewan, and Canada’s largest market for securities, Ontario, could therefore pose a challenge to the adoption of the proposed Instrument in the near term. 

Comments on the proposed National Instrument 51-107 can be sent to comment@osc.gov.on.ca or consultation-en-cours@lautorite.qc.ca until January 17, 2022.