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
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.
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