AMF Announces Proposal on Climate Related Disclosure Requirements
The Autorité des marchés financiers (or AMF, which is a financial regulator for Quebec, Canada) announced that the Canadian Securities Administrators (CSA) proposed climate-related disclosure requirements. These requirements aim to address the need for more consistent and comparable information to help inform investment decisions. The consultation period for these disclosure requirements ends on January 17, 2022. AMF Canada also updated the disclosure guide for trust and savings companies licensed in Quebec.
The requirements contemplate disclosure that is largely consistent with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. The requirements are intended to address costs associated with reporting across multiple disclosure frameworks, improve access to global markets, and facilitate an equal playing field for issuers. The proposed requirements contemplate disclosure by issuers related to the four core elements of the TCFD recommendations:
- Governance covers an issuer’s board’s oversight of and management’s role in assessing and managing climate-related risks and opportunities.
- Strategy covers the short-, medium- and long-term climate-related risks and opportunities the issuer has identified and the impact on its business, strategy, and financial planning, where such information is material. As a modification from the TCFD recommendations, the proposed disclosure would not include the requirement to disclose “scenario analysis,” which is an issuer’s description of the resilience of its strategy within different climate-related scenarios.
- Risk management covers how an issuer identifies, assesses and manages climate-related risks and how these processes are integrated into its overall risk management.
- The fourth disclosure element refers to the metrics and targets used by an issuer to assess and manage climate-related risks and opportunities where the information is material.
Issuers would be required to disclose their Scope 1, Scope 2, and Scope 3 greenhouse gas emissions and the related risks, or their reasons for not doing so. CSA is also consulting on an alternative approach that would require issuers to disclose Scope 1 greenhouse gas emissions. Under this alternative, disclosure of Scope 2 and Scope 3 greenhouse gas emissions would not be mandatory. The disclosure requirements would be phased in, as outlined in the notice, to give companies sufficient time to plan for implementation.
Comment Due Date: January 17, 2022
Keywords: Americas, Canada, Banking, Securities, Climate Change Risk, ESG, Governance, CSA, TCFD Recommendations, Disclosures, AMF
Featured Experts
Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Previous Article
EU to Explore Potential of Establishing a Joint Cyber UnitRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.