Understanding Canada’s ESG and Sustainability Reporting Framework
Canada’s ESG reporting framework is different from the more centralized systems developing in the European Union. Canada does not currently have one nationwide mandatory ESG reporting law covering all companies.
Instead, sustainability disclosure requirements arise from securities laws, federal financial-sector regulation, corporate governance requirements and specific environmental legislation. The Canadian Securities Administrators (CSA) coordinates securities regulators across Canada’s provinces and territories, while the Office of the Superintendent of Financial Institutions (OSFI) regulates federally regulated financial institutions.
An important development is that Canada’s Canadian Sustainability Standards Board (CSSB) issued CSDS 1 and CSDS 2 in December 2024, aligned with the ISSB standards. However, these standards remain voluntary unless adopted by a regulator. In April 2025, the CSA paused its work on developing a new mandatory climate-disclosure rule.
Q1. What is ESG reporting in Canada?
ESG reporting refers to the disclosure of environmental, social and governance information that can help investors and other stakeholders understand a company’s sustainability-related risks, opportunities, governance and performance.
Q2. Is ESG reporting mandatory in Canada?
There is no single mandatory ESG reporting law applicable to all Canadian companies.
However, certain ESG-related information can be mandatory under existing securities disclosure requirements, and federally regulated financial institutions are subject to specific climate-risk requirements under OSFI’s Guideline B-15.
Q3. Which regulators are important for ESG reporting in Canada?
The two most important regulatory bodies are:
- Canadian Securities Administrators (CSA) – securities regulation and disclosure requirements for reporting issuers.
- Office of the Superintendent of Financial Institutions (OSFI) – prudential regulation of federally regulated financial institutions.
Provincial and territorial securities regulators implement securities requirements in their respective jurisdictions.
Q4. Does Canada have a national securities regulator?
No.
Canada’s securities regulation is primarily administered by provincial and territorial regulators. The CSA is an umbrella organization that coordinates and harmonizes securities regulation across the country.
Q5. What is the CSA’s position on mandatory climate reporting?
In April 2025, the CSA announced that it was pausing its work on developing a new mandatory climate-related disclosure rule.
The CSA said it would monitor developments in Canada and internationally and revisit the issue in future years.
Q6. What was CSA’s proposed NI 51-107?
National Instrument 51-107 – Disclosure of Climate-related Matters was a proposed Canadian securities framework intended to establish more consistent climate-related disclosures for reporting issuers.
The CSA’s proposed framework was influenced by the TCFD recommendations.
Q7. Is NI 51-107 currently mandatory?
No.
The proposed climate-specific rule has not become a generally applicable mandatory reporting requirement. The CSA paused its work on the project in 2025.
Q8. Does that mean Canadian public companies have no climate disclosure obligations?
No.
Public companies remain subject to existing securities disclosure requirements concerning material information.
If climate-related risks or opportunities are material to a company’s business, financial condition or prospects, they may need to be disclosed under existing securities rules.
Q9. What is materiality in Canadian ESG reporting?
Materiality generally focuses on information that could reasonably be expected to influence an investor’s decisions.
Therefore, a company cannot simply ignore a significant climate or other ESG risk because there is no separate ESG reporting law.
Q10. What are the Canadian Sustainability Disclosure Standards?
The Canadian Sustainability Standards Board (CSSB) issued:
- CSDS 1 – General Requirements for Disclosure of Sustainability-related Financial Information
- CSDS 2 – Climate-related Disclosures
They were issued in December 2024 and are based on the international ISSB standards, with modifications considered appropriate for Canada.
Q11. Are CSDS 1 and CSDS 2 mandatory?
No.
The CSSB is a standard-setting body and does not have the authority to mandate disclosure.
The standards become mandatory only if an appropriate regulator, such as a securities regulator, incorporates them into applicable requirements.
Q12. When did CSDS 1 and CSDS 2 become effective?
The standards are effective for annual reporting periods beginning on or after January 1, 2025, with earlier application permitted.
However, their effective date as standards does not make them mandatory for all Canadian companies.
Q13. What is the relationship between CSDS and ISSB?
The Canadian standards are closely aligned with the International Sustainability Standards Board (ISSB) standards.
This approach is designed to improve international comparability while incorporating Canadian-specific considerations.
Q14. What is IFRS S1?
IFRS S1 is the ISSB’s general sustainability-related financial disclosure standard.
It focuses on sustainability-related risks and opportunities that could reasonably be expected to affect an entity’s cash flows, access to finance or cost of capital.
Q15. What is IFRS S2?
IFRS S2 focuses specifically on climate-related disclosures.
It covers climate-related risks and opportunities, including physical and transition risks.
Q16. What is the significance of Canada’s adoption of ISSB-aligned standards?
It positions Canada within the global movement toward a common sustainability disclosure architecture.
The Canadian government has also continued to support the ISSB’s Montreal presence and international sustainability-reporting work.
Q17. What is OSFI Guideline B-15?
OSFI Guideline B-15 – Climate Risk Management establishes expectations for federally regulated financial institutions regarding governance, risk management and climate-related disclosures.
It is one of Canada’s most significant mandatory climate-risk frameworks.
Q18. Which institutions are covered by OSFI Guideline B-15?
It applies to federally regulated financial institutions, including banks, federally regulated insurers and other institutions within OSFI’s supervisory mandate, subject to the guideline’s applicability provisions.
Q19. Is OSFI B-15 mandatory?
Yes, for institutions within its scope.
Unlike the voluntary CSSB standards, OSFI’s Guideline B-15 forms part of OSFI’s regulatory expectations for federally regulated financial institutions.
Q20. When did B-15 reporting begin?
Implementation was phased.
Large federally regulated financial institutions began reporting for fiscal year-ends in 2024, while other in-scope institutions began on a later timetable.
Q21. Does B-15 require Scope 3 emissions reporting?
Yes, for applicable institutions under the relevant implementation timetable.
OSFI updated B-15 in March 2025, including changes to align Scope 3 disclosure timing with the Canadian sustainability standards. Scope 3 disclosure is scheduled for fiscal year 2028 under the updated framework.
Q22. What are Scope 1 emissions?
Scope 1 emissions are direct greenhouse-gas emissions from sources owned or controlled by an organization.
Examples include emissions from company-owned vehicles, industrial processes and fuel combustion.
Q23. What are Scope 2 emissions?
Scope 2 emissions are indirect emissions associated with purchased or acquired electricity, steam, heating or cooling.
Q24. What are Scope 3 emissions?
Scope 3 emissions are other indirect emissions occurring throughout an organization’s value chain.
Examples include purchased goods, transportation, business travel, employee commuting and use of sold products.
Q25. Why is Scope 3 important for Canadian financial institutions?
Financial institutions can have significant indirect climate exposure through their lending and investment portfolios.
Therefore, climate-risk management can require information beyond the institution’s own operational emissions.
Q26. Are Canadian banks required to consider climate risk?
Yes.
Federally regulated banks fall within OSFI’s climate-risk management framework and are expected to integrate climate-related risks into governance, risk management and disclosure processes.
Q27. Does ESG reporting apply to Canadian insurance companies?
Yes, where the institution falls within OSFI’s regulatory scope.
Climate-related risks can affect underwriting, investments, physical assets and financial resilience.
Q28. Are Canadian listed companies required to report social ESG information?
There is no single comprehensive mandatory social-reporting framework applicable to all listed companies.
However, companies remain subject to existing corporate, securities, employment, human-rights and governance laws, and material social risks may need to be disclosed.
Q29. Is diversity reporting mandatory in Canada?
Certain diversity-related disclosure requirements continue to apply to non-venture issuers under National Instrument 58-101, particularly regarding representation of women on boards and among executive officers.
The CSA confirmed in 2025 that these existing requirements would continue.
Q30. Is governance reporting mandatory in Canada?
Yes, Canadian securities rules contain governance-related disclosure requirements.
Public companies are expected to disclose relevant information regarding corporate governance practices, boards and committees.
Q31. Is environmental reporting mandatory for Canadian public companies?
There is no single comprehensive environmental ESG report required for every Canadian public company.
However, environmental information can become mandatory when it constitutes material information or is required by specific environmental or securities regulations.
Q32. Can climate risk become a material disclosure?
Yes.
If climate-related risks could materially affect a company’s operations, financial position, strategy or prospects, they may need to be disclosed under existing securities requirements.
Q33. What is greenwashing?
Greenwashing occurs when an organization makes environmental or sustainability claims that are misleading, exaggerated or insufficiently supported.
Canadian regulators have indicated that they will continue monitoring misleading ESG disclosures, including greenwashing.
Q34. Can Canadian companies voluntarily use CSDS?
Yes.
The CSA has encouraged issuers to consider the CSSB standards as a useful voluntary framework for sustainability and climate-related disclosures.
Q35. Can Canadian companies use IFRS S1 and IFRS S2?
Yes.
CSDS 1 and CSDS 2 are Canadian standards closely aligned with ISSB’s IFRS S1 and IFRS S2.
Companies may use these standards voluntarily unless a regulator requires a different framework.
Q36. Is double materiality mandatory in Canada?
Canada’s sustainability disclosure architecture is primarily focused on sustainability-related financial information and investor-relevant financial effects.
It therefore differs from the EU’s broader double-materiality approach.
Q37. What is financial materiality?
Financial materiality considers sustainability-related risks and opportunities that could reasonably be expected to affect an entity’s financial prospects, cash flows, access to finance or cost of capital.
Q38. What is climate transition risk?
Transition risk arises from the economic transition toward a lower-carbon economy.
Examples include:
- Regulatory changes
- Carbon pricing
- Technology disruption
- Changing customer preferences
- Energy-market changes
- New competitors
Q39. What are physical climate risks?
Physical risks arise from climate-related events or longer-term climate changes.
Examples include:
- Wildfires
- Floods
- Extreme heat
- Drought
- Storms
- Water scarcity
Q40. Do Canadian companies need ESG data controls?
Even where ESG reporting is voluntary, strong controls are increasingly important.
Companies should establish:
- Data ownership
- Documentation
- Calculation methodologies
- Approval procedures
- Internal controls
- Evidence retention
- Review processes
Q41. Is ESG assurance mandatory in Canada?
There is currently no general mandatory assurance requirement for sustainability or climate disclosures across Canadian companies.
Some organizations voluntarily obtain independent assurance.
Q42. Why is ESG assurance becoming important?
Assurance can improve:
- Reliability
- Credibility
- Investor confidence
- Data quality
- Internal controls
- Regulatory preparedness
It can also help companies prepare for future mandatory requirements.
Q43. Can Canadian companies be affected by foreign ESG regulations?
Yes.
A Canadian company may be affected by ESG requirements in another jurisdiction if it:
- Is listed abroad
- Has substantial overseas operations
- Has an overseas subsidiary
- Supplies a regulated multinational
- Is part of an international value chain
Q44. Can Canadian companies be affected by EU ESG regulations?
Potentially, yes.
A Canadian company with qualifying EU operations or group structures may fall within applicable European sustainability requirements.
Even where it is not directly regulated, it may be asked to provide ESG data by an EU-regulated customer or subsidiary.
Q45. Can Canadian companies be affected by U.S. ESG rules?
Yes.
Canadian businesses operating in the United States or doing business with companies subject to U.S. state or federal requirements may face additional ESG data demands.
Q46. What role does the CFO play in Canadian ESG reporting?
The CFO increasingly connects sustainability information with financial reporting and corporate decision-making.
Key responsibilities may include:
- ESG budgeting
- Climate-risk analysis
- Carbon accounting
- Internal controls
- Disclosure review
- Scenario analysis
- Assurance coordination
Q47. What role can CPAs play in ESG reporting?
Canadian CPAs can contribute to:
- Sustainability reporting
- ESG assurance
- Internal controls
- Carbon accounting
- Risk management
- Data governance
- Financial impact assessment
- Regulatory compliance
Q48. What role can CMAs and management accountants play?
Management accountants can help translate sustainability information into business and financial decisions.
Their role can include:
- ESG cost analysis
- Carbon costing
- Sustainability KPIs
- Budgeting
- Investment appraisal
- Scenario analysis
- Performance measurement
- Management dashboards
- Risk analysis
Q49. What should a Canadian company do to prepare for future mandatory ESG reporting?
A practical roadmap is:
- Identify applicable federal and provincial regulations.
- Determine whether the company is an issuer or federally regulated financial institution.
- Conduct an ESG materiality assessment.
- Map Scope 1, Scope 2 and relevant Scope 3 emissions.
- Establish ESG data owners.
- Develop ESG policies and governance.
- Build internal controls over ESG information.
- Consider adopting CSDS 1 and CSDS 2 voluntarily.
- Prepare documentation and audit trails.
- Monitor CSA, OSFI, CSSB and international developments.
Q50. What is the future of mandatory ESG reporting in Canada?
Canada is moving toward greater alignment with international sustainability reporting standards, but the regulatory path is currently more cautious than in jurisdictions such as the EU.
The CSSB standards provide a Canadian ISSB-aligned framework, while the CSA has paused development of a new mandatory climate-disclosure rule. Meanwhile, OSFI’s B-15 continues to impose climate-risk expectations on federally regulated financial institutions.
The Canadian government also continues to support internationally aligned sustainability disclosures and has indicated continued work with provinces and territories toward broader adoption of international climate-disclosure standards.
Conclusion
Canada’s ESG reporting framework can best be described as partly mandatory, partly voluntary and highly regulatory-specific.
For ordinary Canadian listed companies, there is currently no single mandatory ESG report comparable to the EU’s CSRD framework. However, existing securities law requires disclosure of material information, including material climate-related risks.
For federally regulated financial institutions, the situation is significantly more developed. OSFI Guideline B-15 establishes mandatory climate-risk management and disclosure expectations, with phased implementation covering areas such as greenhouse-gas emissions.
At the standards level, CSDS 1 and CSDS 2 provide Canada’s national sustainability disclosure standards and are closely aligned with ISSB standards, but they remain voluntary until adopted by regulators.
For Canadian businesses, the strategic lesson is important: waiting for mandatory ESG regulation may create unnecessary risk. Companies that establish reliable ESG data, governance, internal controls and climate-risk processes today will be better positioned for future regulation and international business requirements.
For CA, CMA and CPA professionals, Canada’s evolving ESG environment creates opportunities in sustainability reporting, assurance, carbon accounting, climate-risk management, internal controls, management accounting and strategic decision-making.
The Worldonomics Times will continue tracking ESG reporting developments across Canada, the United States, Europe, India and other major economies.