Draft Regulation 51-107 respecting Disclosure of Climate-related Matters

Consultation
Climate-related Disclosure Update and
CSA Notice of Consultation
Draft Regulation 51-107 respecting
Disclosure of Climate-related Matters
October 18, 2021
PART 1 - Introduction
Since the publication of CSA Staff Notice 51-358 Reporting of Climate Change-related Risks in August 2019 (CSA Staff Notice 51-358), the Canadian Securities Administrators (CSA) have continued to follow developments in relation to climate-related disclosure. Most recently, CSA staff have conducted research on domestic and international developments in this area, as well as an issue-oriented review of recent climate-related disclosure by Canadian reporting issuers. Separately, the 2021 Ontario Budget, released on March 24, 2021, discussed Environmental, Social and Corporate Governance (ESG) disclosure requirements, and stated that the Ontario Securities Commission (OSC) would begin policy work to inform further regulatory consultation on ESG disclosure. The CSA are publishing Draft Regulation 51-107 respecting Disclosure of Climate-related Matters (the Draft Regulation) and its Policy Statement (the Draft Policy Statement) for a 90-day comment period. The Draft Regulation would introduce disclosure requirements regarding climate-related matters for reporting issuers (other than investment funds). We are issuing this notice to provide an update on recent developments regarding climate-related disclosure and to solicit your comments on the Draft Regulation and the Draft Policy Statement with this Notice. The text of the Draft Regulation is also available on the following websites of CSA jurisdictions:
www.lautorite.qc.ca www.bcsc.bc.ca www.albertasecurities.com www.osc.gov.on.ca nssc.novascotia.ca www.fcaa.gov.sk.ca www.fcnb.ca www.mbsecurities.ca The public comment period expires on January 17, 2022.

PART 2 – Substance and Purpose of the Draft Regulation
The focus on climate-related issues in Canada and internationally has grown rapidly in recent years with climate-related risks having become a mainstream business issue. There is growing discussion on moving toward mandatory climate-related disclosures that provide consistent, comparable and decision-useful information to market participants. Investors, particularly institutional investors, and other stakeholders are increasingly focused on climate-related risks and are seeking improved disclosure on issuer governance processes and the material risks, opportunities, and financial impacts of climate change. The CSA note concerns about current climate-related disclosures, including the following:

• issuers’ climate-related disclosures may not be complete, consistent, and comparable;
• quantitative information is often limited and not necessarily consistent;
• issuers may “cherry pick” by reporting selectively against a particular voluntary standard and/or
  frameworks; and
• sustainability reporting can be siloed and is not necessarily integrated into companies’ periodic
  reporting structures.
  Securities regulators have a role to play in promoting disclosures that yield decision-useful information for investors. This is achieved by requiring reporting issuers to disclose material information, which can be used by investors to inform their investment and voting decisions. The CSA believe that the climate-related disclosure requirements contained in the Draft Regulation would provide clarity to issuers on the information required to be disclosed and also facilitate consistency and comparability among issuers. Specifically, the climate-related disclosure requirements are intended to:
• improve issuer access to global capital markets by aligning Canadian disclosure standards with
  expectations of international investors;
• assist investors in making more informed investment decisions by enhancing climate-related
  disclosures;
• facilitate an “equal playing field” for all issuers through comparable and consistent disclosure;
  and
• remove the costs associated with navigating and reporting to multiple disclosure frameworks as
  well as reducing market fragmentation.
  We are sensitive to concerns related to the regulatory burden and additional cost of mandatory climate￾related disclosure. The CSA believe the Draft Regulation addresses this concern in three ways:

1. issuers will not be required to disclose scenario analysis, including a 2°C or lower scenario;

2. issuers may disclose their greenhouse gas (GHG) emissions or explain why they have not done
   so;
   1 and
   1 As an alternative, the CSA is also consulting on requiring issuers to disclose Scope 1 GHG emissions. Under this alternative, disclosure of Scope 2 and Scope 3 GHG emissions would not be mandatory. Issuers would have to disclose either their Scope 2 and 3 GHG emissions and the related risks, or the issuer’s reasons for not disclosing this information.

3. the disclosure requirements will be phased-in over a one-year period for non-venture issuers
   and over a three-year period for venture issuers. It is not anticipated that the Draft Regulation will come into force prior to December 31, 2022.2
   PART 3 – Existing Disclosure Requirements
   Current securities legislation in Canada requires disclosure of certain climate-related information in an issuer’s regulatory filings if such information is material. Existing requirements that may apply to climate-related information can be found in the following regulations:

• Regulation 51-102 respecting Continuous Disclosure Obligations (Regulation 51-102);

• Regulation 52-109 respecting Certification of Disclosure in Issuers' Annual and Interim Filings
  (Regulation 52-109);

• Regulation 52-110 respecting Audit Committees (Regulation 52-110); and

• Regulation 58-101 respecting Disclosure of Corporate Governance Practices (Regulation 58-101).
  In addition, guidance on corporate governance practices is provided in Policy Statement 58-201 to Corporate Governance Guidelines (Policy Statement 58-201). Existing disclosure requirements continue to apply and are not modified by the Draft Regulation. Please refer to Annex A for an overview of the relevant existing securities law provisions.
  PART 4 – Summary of findings of 2021 Climate-related Disclosure Issue Oriented Review
  In Spring 2021, staff in certain CSA jurisdictions3 (the review staff) conducted a targeted review of current public disclosure practices of 48 selected large Canadian issuers primarily from the S&P/TSX Composite Index, from a diverse range of industries, with respect to climate-related information (the Disclosure Review). The Disclosure Review was contemplated as part of the CSA’s follow-up work on CSA Staff Notice 51-358 to monitor disclosure of climate-related matters and to evaluate the current state of climate-related disclosure by Canadian issuers since its publication. Review staff assessed the extent to which material climate-related risks, financial impacts and related governance disclosure were provided in continuous disclosure (CD) filings. In addition, review staff reviewed voluntary disclosure reports provided by the selected issuers to gain a better understanding of additional climate-related disclosure being provided, and to assess whether potential material information had been omitted from issuers’ CD filings. Key findings of the review were as follows:
  2 Assuming the Draft Regulation comes into force December 31, 2022 and an issuer has a December 31 year-end, these disclosures would be included in annual filings due in 2024 and 2026 for non-venture issuers and venture issuers, respectively. 3 The Alberta Securities Commission, Autorité des marchés financiers, British Columbia Securities Commission, Financial and Consumer Affairs Authority of Saskatchewan, Financial and Consumer Services Commission of New Brunswick, and the Ontario Securities Commission.

• Generally speaking, when compared to the 2017 review findings published in CSA Staff Notice
  51-354 Report on Climate Change-related Disclosures Project (CSA Staff Notice 51-354), issuers are providing more climate-related information in their CD filings and voluntary reports. Risk disclosure increased across all risk types, and there was a marked improvement by issuers in addressing the qualitative financial impact of disclosed climate-related risks.

• While the volume of climate-related disclosures has increased and the quality has generally
  improved, review staff noted areas where disclosures were limited and lacked specificity. Although 92% of issuers disclosed climate-related risks in their CD filings, with regulatory and policy risks being the most commonly disclosed, on average only 59% of the risks were relevant, detailed and entity specific, while the remaining risks were either boilerplate, vague or incomplete. While 68% of the risk disclosures provided a qualitative discussion of the related financial impacts, 25% of risk disclosures did not address the financial impact at all, and no issuers quantified the financial impact of the identified risks.

• 92% of issuers provided climate-related disclosures in voluntary reports in a variety of forms, the
  most common being Sustainability or Environmental, Social, and Governance reports. Where voluntary third-party frameworks were referenced in voluntary disclosures, the Global Reporting Initiative (GRI) framework was the most common, followed by the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. On average, issuers referenced nearly three third-party frameworks in their voluntary reports. For further information on the findings of the Disclosure Review, please see Annex B.
  PART 5 – Background
  CSA Publications
  The CSA has issued the following publications regarding climate-related disclosures:

• CSA Staff Notice 51-333 Environmental Reporting Guidance (October 2010) (CSA Staff Notice 51-
  333);

• CSA Staff Notice 51-354 (April 2018); and

• CSA Staff Notice 51-358.
  CSA Staff Notice 51-333, issued in 2010, provided guidance to issuers on existing continuous disclosure requirements relating to environmental matters under securities legislation. CSA Staff Notice 51-358 reinforced and expanded on the guidance provided in 2010. The intent was to provide issuers, particularly smaller issuers, with guidance on how they might approach preparing disclosures of material climate-related risks. The notice did not create any new legal requirements or modify existing ones. CSA Staff Notice 51-358 followed the work conducted by the CSA to gather information on the state of climate change-related disclosure in Canada, which was reported in CSA Staff Notice 51-354. The work included a disclosure review, online survey, consultations and research. Based on this work, the CSA noted that it would consider further work including:

• proposing new disclosure requirements in the areas of issuers’ governance processes in relation
  to material risks and opportunities, including the board of directors’ (the board) responsibility

for oversight and the role played by management, and disclosure of how the issuer oversees the identification, assessment and management of material risks;

• revising Policy Statement 58-201 to introduce corporate governance guidelines in the areas
  contemplated by any such new disclosure requirements;
• providing additional staff guidance on how any such new disclosure requirements apply in the
  context of climate change-related risk; and
• requiring the disclosure of GHG emissions.
  Please refer to Annex C for more details on previous CSA publications.
  Developments in Ontario
  In 2020, the Ontario government appointed the Capital Markets Modernization Taskforce (Modernization Taskforce) to review and make recommendations in relation to modernizing the capital markets regulatory framework in Ontario. Throughout the Modernization Taskforce’s consultations, the increased use of ESG disclosure received significant support from industry stakeholders. In its final report, the Modernization Taskforce recommended mandating disclosure by public companies of material ESG information, specifically climate-related disclosure that is compliant with the final TCFD recommendations (discussed below) for issuers through regulatory filing requirements of the OSC.4 The 2021 Ontario Budget subsequently noted the Modernization Taskforce consultation and final recommendations. The Budget also stated that the OSC would begin policy work to inform further regulatory consultation on ESG disclosure.5

Please refer to Annex C for more details on Canadian developments.
TCFD Recommendations
In 2015, the Financial Stability Board (FSB) established the TCFD in order to develop recommendations for more effective climate-related disclosures that could promote more informed investment, credit, and insurance underwriting decisions, and enable stakeholders to better understand the concentrations of carbon-related assets in the financial sector and the financial system’s exposures to climate-related risks.6 In June 2017, the TCFD released its final recommendations, providing a framework for companies and other organizations to develop more effective climate-related financial disclosures through existing reporting practices. The TCFD organized its recommendations of climate-related financial disclosures around four core elements: governance, strategy, risk management, and metrics and targets. 4 Capital Markets Modernization Taskforce Final Report (January 2021), online: https://files.ontario.ca/books/mof-capital￾markets-modernization-taskforce-final-report-en-2021-01-22-v2.pdf, p. 71. 5 Ontario’s Action Plan : Protecting People’s Health and Our Economy (2021 Ontario Budget), online:
https://budget.ontario.ca/2021/pdf/2021-ontario-budget-en.pdf at p. 113. 6 Task Force on Climate-related Financial Disclosures, online: https://www.fsb-tcfd.org.

Since the release of the TCFD final recommendations in 2017, there has been growing convergence around disclosure aligned with the TCFD recommendations.7 Please also refer to Annex D for more details on the TCFD and other notable international developments.
PART 6 – Summary of the Draft Regulation and the Draft Policy Statement
Application of the Draft Regulation
The Draft Regulation would apply to all reporting issuers, other than investment funds, issuers of asset￾backed securities, designated foreign issuers, SEC foreign issuers, certain exchangeable security issuers and certain credit support issuers.8 Disclosure requirements in the Draft Regulation The Draft Regulation would require an issuer to disclose certain climate-related information in compliance with the TCFD recommendations (subject to certain modifications discussed below). The Modernization Taskforce’s report noted that the TCFD recommendations are “a widely prevalent framework that has global support and meets investor needs for concise, standardized metrics on material climate-related issues”. 9 Several international jurisdictions are working to adopt the TCFD recommendations into their legal and regulatory frameworks.10 The disclosure requirements are set out in Part 2 of the Draft Regulation, Form 51-107A and Form 51- 107B and contemplate disclosure related to the four core elements of the TCFD recommendations:

• governance;
• strategy;
• risk management; and
• metrics and targets.
  Details regarding the disclosure requirements are set out in the table below.
  7 For example, the United Kingdom recently adopted disclosure rules for premium listed issuers that require issuers to ensure their disclosures are aligned with the TCFD recommendations. The IFRS Foundation also recently announced that a new sustainability standards board would build on the TCFD recommendations. In Canada, CEOs of Canada’s eight largest pension plan investment managers, in a statement released in November 2020, cited the TCFD as one disclosure standard that companies should adopt. In 2018, the federal government’s Expert Panel on Sustainable Finance also recommended defining and pursuing “a Canadian approach to implementing the recommendations of the TCFD.” Please see Annexes C and D for more information. 8 Please refer to section 1.2 of the Draft Regulation. 9 Capital Markets Modernization Taskforce Final Report (January 2021), online: https://files.ontario.ca/books/mof-capital￾markets-modernization-taskforce-final-report-en-2021-01-22-v2.pdf, p. 70. 10 IOSCO, Report on Sustainability-related Issuer Disclosures Final Report (June 28, 2021), online: < https://www.iosco.org/library/pubdocs/pdf/IOSCOPD678.pdf>, p. 2.

Core element in TCFD recommendations Related disclosure requirements in the Draft Regulation Governance Disclose the organization’s governance around climate-related risks and opportunities Reporting issuers would be required to describe the following:

• the board’s oversight of climate-related
  risks and opportunities
• management’s role in assessing and
  managing climate-related risks and opportunities Strategy Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning where such information is material Reporting issuers would be required to describe the following, where such information is material:
• the climate-related risks and
  opportunities the issuer has identified over the short, medium, and long term
• the impact of climate-related risks and
  opportunities on the issuer’s businesses, strategy, and financial planning Risk management Disclose how the organization identifies, assesses, and manages climate-related risks Reporting issuers would be required to describe the following:
• the issuer’s processes for identifying and
  assessing climate-related risks
• the issuer’s processes for managing
  climate-related risks
• how processes for identifying, assessing,
  and managing climate-related risks are integrated into the issuer’s overall risk management Metrics and targets Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material Reporting issuers would be required to disclose:
• the metrics used by the issuer to assess
  climate-related risks and opportunities in line with its strategy and risk management process where such information is material
• Scope 1, Scope 2, and Scope 3 GHG
  emissions, and the related risks or the issuer’s reasons for not disclosing this information. The CSA is also consulting on an alternative approach, which would

Core element in TCFD recommendations Related disclosure requirements in the Draft Regulation require issuers to disclose Scope 1 GHG emissions.

• the targets used by the issuer to manage
  climate-related risks and opportunities and performance against targets where such information is material Modifications to the TCFD recommendations (1) Scenario analysis Under the Draft Regulation, reporting issuers would not be required to provide a “scenario analysis”. This disclosure would have described how resilient an issuer’s strategies are to climate-related risks and opportunities, taking into consideration a transition to a lower-carbon economy consistent with a 2°C or lower scenario and, where relevant to the issuer, scenarios consistent with increased physical climate￾related risks. The CSA have heard concerns from stakeholders regarding scenario analysis, including:
• From an investor perspective, there are concerns regarding the usefulness, consistency and
  comparability of scenario analysis without a standardized set of assumptions.
• From an issuer perspective, there are concerns with the costs associated with developing
  scenario analysis. In addition, there are also questions surrounding the appropriate approach and methodology as climate-related scenario analysis may not be perceived as mature at this time. (2) GHG emissions Reporting issuers would have to disclose Scope 1, Scope 2, and Scope 3 GHG emissions and the related risks, or the issuer’s reasons for not disclosing this information. This would provide reporting issuers with flexibility in complying with these disclosure requirements. As an alternative, the CSA is also consulting on requiring issuers to disclose Scope 1 GHG emissions. Under this alternative, disclosure of Scope 2 and Scope 3 GHG emissions would not be mandatory. Issuers would have to disclose either their Scope 2 and 3 GHG emissions and the related risks, or the issuer’s reasons for not disclosing this information. The Draft Regulation would also provide issuers with flexibility in providing GHG disclosure in accordance with a “GHG emissions reporting standard”. As discussed in the Draft Policy Statement, a GHG emissions reporting standard is the GHG Protocol, or a reporting standard for calculating and reporting GHG emissions if it is comparable with the GHG Protocol. Where an issuer uses a reporting standard that is not the GHG Protocol, it would also be required to disclose how the reporting standard used is comparable with the GHG Protocol. This approach enables issuers to utilize alternative methodologies, while facilitating comparability between issuers providing GHG disclosure.

Location of disclosure
The climate-related disclosure requirements relating to governance would be included in a reporting issuer’s management information circular. For issuers that do not send a management information circular to its securityholders, the disclosure would be provided in the issuer’s annual information form (AIF) or its annual management’s discussion and analysis (MD&A), if the issuer does not file an AIF.11 The climate-related disclosures related to strategy, risk management and metrics and targets specified by the Draft Regulation would be included in the reporting issuer’s AIF, or its annual MD&A, if the issuer does not file an AIF. Transition To facilitate a proportionate approach, the Draft Regulation contemplates a phased-in transition of the disclosure requirements over one and three-year periods. The length of the transition phase would depend on the issuer’s status as a venture or non-venture issuer, with non-venture issuers being required to comply with the proposed disclosure requirements first. The following table sets out when non-venture and venture issuers would be required to comply with the Draft Regulation. Category of issuer Transition phase Non-venture issuers Financial years beginning on or after January 1 of the first year after the effective date of the Draft Regulation (one-year transition phase) Venture Issuers Financial years beginning on or after January 1 of the third year after the effective date of the Draft Regulation (three-year transition phase) The following illustrates how the transition periods would work in practice for a reporting issuer with a December 31 financial year-end. The illustration assumes that the Draft Regulation would come into force on December 31, 2022. Category of issuer Transition requirements Non-venture issuers Disclosure requirements would apply to annual filings in respect of the financial year ending December 31, 2023 These annual filings would be due in March 2024 11 We note that the CSA published for comment in May 2021 CSA Notice of Consultation, Draft Regulation to amend Regulation 51-102 respecting Continuous Disclosure Obligations and Other Draft Amendments Relating to Annual and Interim Filings of Non-Investment Fund Reporting Issuers, which contemplates amendments to the continuous disclosure regime to combine the financial statements, MD&A and AIF into one reporting document called the annual disclosure statement for annual reporting purposes, and the interim disclosure statement for interim reporting purposes.

Category of issuer Transition requirements
Venture Issuers Disclosure requirements would apply to annual filings in respect of the financial year ending December 31, 2025 These annual filings would be due in April 2026 Summary of the Draft Policy Statement The purpose of the Draft Policy Statement is to provide guidance relating to how the CSA intend to interpret and apply the Draft Regulation. The Draft Policy Statement includes a discussion regarding the following:
(1) Summary of TCFD Recommendations
The disclosure requirements of the Draft Regulation are set out in Form 51-107A and 51-107B and, subject to certain modifications, are consistent with the TCFD recommendations. Notably, the Draft Regulation does not require issuers to disclose scenario analysis, which is the TCFD recommended disclosure that describes the resilience of an issuer’s strategy, taking into consideration different climate-related scenarios. In addition, issuers may elect to not disclose the TCFD recommended disclosure respecting GHG emissions and their related risks, provided they instead disclose their reasons for not including this disclosure. As noted above, as an alternative, the CSA is also consulting on requiring issuers to disclose Scope 1 GHG emissions. The alternative requirement is set out in a text box in the Draft Regulation. (2) Materiality Materiality is the determining factor in any assessment of whether information is required to be disclosed in an issuer’s continuous disclosure. Only material information needs to be included in an issuer’s Form 51-102F1 Management’s Discussion and Analysis (Form 51-102F1) and Form 51-102F2 Annual Information Form (Form 51-102F2). For purposes of those forms, information is likely material if a reasonable investor’s decision whether to buy, sell or hold securities in an issuer would likely be influenced or changed if the information in question was omitted or misstated. Consistent with the TCFD recommendations and with disclosure requirements respecting corporate governance matters under Regulation 58-101, however, the disclosure required by the Draft Regulation relating to the climate-related “Governance” and “Risk Management” are not subject to a materiality assessment. Accordingly, issuers must provide this disclosure in the applicable continuous disclosure document as required by the Draft Regulation. (3) GHG Emissions Item 4(a) of Form 51-107B requires an issuer to disclose each of its Scope 1, Scope 2 and Scope 3 GHG emissions and the related risks, or the issuer’s reasons for not disclosing this information. Accordingly, where an issuer has disclosed its Scope 1 and Scope 2 GHG emissions but has elected to not disclose its Scope 3 GHG emissions, the issuer would be required to disclose its reasons for not providing this information. Where an issuer has elected to not disclose any GHG emissions, the issuer may provide its

reasons for not doing so in respect of GHG emissions as a whole, as opposed to a separate explanation for each scope. Certain issuers are already required to disclose GHG emissions under existing reporting programs, including for example, on a per facility basis under the federal Greenhouse Gas Reporting Program. The CSA expect issuers that are subject to an existing GHG emissions reporting program to disclose Scope 1 GHG emissions under the Draft Regulation. However, should they elect not to disclose Scope 1 GHG emissions under the Draft Regulation, they should clearly explain their election in light of such pre￾existing reporting obligations. Subsection 4(2) of the Draft Regulation requires an issuer to use a GHG emissions reporting standard to calculate and report its GHG emissions. A GHG emissions reporting standard is the GHG Protocol, or a reporting standard for calculating and reporting GHG emissions if it is comparable with the GHG Protocol. Issuers that provide GHG disclosure using a reporting standard that is not the GHG Protocol, must disclose how such standard is comparable with the GHG Protocol. (4) Forward-Looking Information Disclosure provided by issuers pursuant to the Draft Regulation may constitute forward-looking information (FLI). When an issuer discloses FLI, it must comply with the requirements set out in Part 4A,
Part 4B and section 5.8 of Regulation 51-102.
PART 7 – Annexes
The following annexes are attached to this notice:

• Annex A – Existing Securities Legislation
• Annex B – CSA Disclosure Review
• Annex C – Domestic Developments
• Annex D – International Developments
• PART 8 – Alternatives Considered and Reliance on Unpublished Studies, etc.
  Alternatives considered
  At this time, based on our ongoing review of developments in this area, as well as the recommendations of the Modernization Taskforce, the CSA are of the view that it is important to propose climate-related disclosure requirements rather than maintain the status quo. The CSA have previously issued staff guidance in relation to climate-related disclosure. The Draft Regulation builds on the further work contemplated in CSA Staff Notice 51-354, specifically the contemplation of new climate-related disclosure requirements related to issuer governance processes and material risks and opportunities and GHG emissions. No alternatives to rule-making are being considered by the CSA at the present time. As described in greater detail in Part 5 and Annex B, the CSA’s 2021 Disclosure Review found that issuers are providing more climate-related information compared with the 2017 review findings published in CSA Staff Notice 51-354. While the review found that some aspects of climate-related disclosure have

improved, there continue to be areas where reporting issuer disclosure could be improved further. These findings are consistent with some of the concerns noted by the CSA on the current state of climate￾related disclosures in Part 2. Throughout the Modernization Taskforce’s consultations, the increased use of ESG disclosure received significant support from a variety of stakeholders, including issuers, investment firms, banks and law firms. The Draft Regulation reflects the growing international convergence around the TCFD recommendations. In developing the Draft Regulation, the CSA reviewed the TCFD recommendations and developments in Australia, New Zealand, Switzerland, the United Kingdom, the European Union and the United States. The CSA also reviewed the recent proposals by the International Financial Reporting Standards Foundation (IFRS Foundation), the prototype climate standard developed by the group of five sustainability reporting organizations and the Report on Sustainability-related Issuer Disclosures Final Report by the International Organization of Securities Commissions (IOSCO) Sustainable Finance Task Force. We note that the CSA has expressed support for the IFRS Foundation’s proposal to establish a sustainability standards board and believe that its development, including its focus initially on climate￾related disclosure that builds on the TCFD recommendations, will result in standards that are complementary to the Draft Regulation. The Draft Regulation will facilitate the provision of useful information to investors and our market’s eventual transition towards international standards. The CSA will continue to monitor international developments, including the developments by the IFRS Foundation, to further inform our approach. Reliance on unpublished studies, etc. In developing the Draft Regulation, the CSA did not rely upon any significant unpublished study, report or other written materials.
PART 9 – Local Matters
Where applicable, an annex is being published in any local jurisdiction that is making related changes to local securities laws, including local notices or other policy instruments in that jurisdiction. It also includes any additional information that is relevant to that jurisdiction only.
PART 10 – Request for Comments
We welcome your comments on the Draft Regulation and Draft Policy Statement and also invite comments on the following specific questions. In each instance, please provide an explanation for your answer.

Experience with TCFD recommendations

1. For reporting issuers that have provided climate-related disclosures voluntarily in accordance
   with the TCFD recommendations, what has been the experience generally in providing those disclosures? Disclosure of GHG Emissions and Scenario Analysis
2. For reporting issuers, do you currently disclose GHG emissions on a voluntary basis? If so, are
   the GHG emissions calculated in accordance with the GHG Protocol?
3. For reporting issuers, do you currently conduct climate scenario analysis (regardless of whether
   the analysis is disclosed)? If so, what are the benefits and challenges with preparing and/or disclosing the analysis?
4. Under the Draft Regulation, scenario analysis would not be required. Is this approach
   appropriate? Should the Draft Regulation require this disclosure? Should issuers have the option to not provide this disclosure and explain why they have not done so?
5. The TCFD recommendations contemplate disclosure of GHG emissions, where such information
   is material.

• The Draft Regulation contemplates issuers having the option to disclose GHG emissions
  or explain why they have not done so. Is this approach appropriate?
• As an alternative, the CSA is consulting on requiring issuers to disclose Scope 1 GHG
  emissions. Is this approach appropriate? Should disclosure of Scope 1 GHG emissions only be required where such information is material?
• Should disclosure of Scope 2 GHG emissions and Scope 3 GHG emissions be mandatory?
• For those issuers who are already required to report GHG emissions under existing
  federal or provincial legislation, would the requirement in the Draft Regulation to include GHG emissions in the issuer’s AIF or annual MD&A (if an issuer elects to disclose these emissions) present a timing challenge given the respective filing deadlines? If so, what is the best way to address this timing challenge?

6. The Draft Regulation contemplates that issuers that provide GHG disclosures would be required
   to use a GHG emissions reporting standard in measuring their GHG emissions, being the GHG Protocol or a reporting standard comparable with the GHG Protocol (as described in the Draft Policy Statement). Further, where an issuer uses a reporting standard that is not the GHG Protocol, it would be required to disclose how the reporting standard used is comparable with the GHG Protocol.

• As issuers have the option of providing GHG disclosures, should a specific reporting
  standard, such as the GHG Protocol, be mandated when such disclosures are provided?
• Is the GHG Protocol appropriate for all reporting issuers? Should issuers be given the
  flexibility to use alternative reporting standards that are comparable with the GHG Protocol?
• Are there other reporting standards that address the disclosure needs of users or the
  different circumstances of issuers across multiple industries and should they be specifically identified as suitable methodologies?

7. The Draft Regulation does not require the GHG emissions to be audited. Should there be a
   requirement for some form of assurance on GHG emissions reporting?
8. The Draft Regulation permits an issuer to incorporate GHG disclosure by reference to another
   document. Is this appropriate? Should this be expanded to include other disclosure requirements of the Draft Regulation? Usefulness and benefits of disclosures contemplated by the Draft Regulation
9. What climate-related information is most important for investors’ investment and voting
   decisions? How is this information incorporated into these decisions? Is there additional information that investors require?
10. What are the anticipated benefits associated with providing the disclosures contemplated by
    the Draft Regulation? How would the Draft Regulation enhance the current level of climate￾related disclosures provided by reporting issuers in Canada? Costs and challenges of disclosures contemplated by the Draft Regulation
11. What are the anticipated costs and challenges associated with providing the disclosures
    contemplated by the Draft Regulation?
12. Do the costs and challenges vary among the four core TCFD recommendations related to
    governance, strategy, risk management, and metrics and targets? For example, are some of the disclosures more (or less) challenging to prepare?
13. The costs of obtaining and presenting new disclosures may be proportionally greater for venture
    issuers that may have scarce resources. Would more accommodations for venture issuers be needed? If so, what accommodations would address these concerns while still balancing the reasonable information needs of investors? Alternatively, should venture issuers be exempted from some or all of the requirements of the Draft Regulation?

Guidance on disclosure requirements
14. We have provided guidance in the Draft Policy Statement on the disclosure required by the
Draft Regulation. Are there any other tools, guidance or data sources that would be helpful in preparing these disclosures that the Draft Policy Statement should refer to?
15. Does the guidance set out in the Draft Policy Statement sufficiently explain the interaction of
the risk disclosure requirement in the Draft Regulation with the existing risk disclosure requirements in Regulation 51-102? Prospectus Disclosure
16. Form 41-101F1 Information Required in a Prospectus does not contain the climate-related
disclosure requirements contemplated by the Draft Regulation. Should an issuer be required to include the disclosure required by the Draft Regulation in a long form prospectus? If so, at what point during the phased-in implementation of the Draft Regulation should these disclosure requirements apply in the context of a long form prospectus? Phased-in implementation
17. The Draft Regulation contemplates a phased-in transition of the disclosure requirements, with
non-venture issuers subject to a one-year transition phase and venture issuers subject to a three-year transition phase. Assuming the Draft Regulation comes into force December 31, 2022 and the issuer has a December 31 year-end, these disclosures would be included in annual filings due in 2024 and 2026 for non-venture issuers and venture issuers, respectively.

• Would the transition provisions in the Draft Regulation provide reporting issuers with
  sufficient time to review the Draft Regulation and prepare and file the required disclosures?
• Does the phased-in implementation based on non-venture or venture status address the
  concerns, if any, regarding the challenges and costs associated with providing the disclosures contemplated by the Draft Regulation, particularly for venture issuers? If not, how could these concerns be addressed? Future ESG considerations

18. In its comment letter to the IFRS Foundation’s consultation paper published in September 2020,
    the CSA stated that developing a global set of sustainability reporting standards for climate￾related information is an appropriate starting point, with broader environmental factors and other sustainability topics to be considered in the future. What broader sustainability or ESG topics should be prioritized for the future?

PART 11 – How to Provide Comments
Please submit your comments in writing on or before January 17, 2022. If you are not sending your comments by email, please send us an electronic file containing the submissions (in Microsoft Word Format). Address your submission to the CSA jurisdictions as follows:
Alberta Securities Commission
Autorité des marchés financiers
British Columbia Securities Commission
Financial and Consumer Services Commission, New Brunswick Financial and Consumer Affairs Authority of Saskatchewan Manitoba Securities Commission Nova Scotia Securities Commission Nunavut Securities Office Office of the Superintendent of Securities, Newfoundland and Labrador Ontario Securities Commission Office of the Superintendent of Securities, Northwest Territories Office of the Yukon Superintendent of Securities Superintendent of Securities, Department of Justice and Public Safety, Prince Edward Island Deliver your comments only to the addresses listed below. Your comments will be distributed to the remaining jurisdictions. Me Philippe Lebel Corporate Secretary and Executive Director, Legal Affairs Autorité des marchés financiers Place de la Cité, tour Cominar 2640, boulevard Laurier, bureau 400 Québec (Québec) G1V 5C1 Fax: 514-864-6381 consultation-en-cours@lautorite.qc.ca The Secretary Ontario Securities Commission 20 Queen Street West 22nd Floor, Box 55 Toronto, Ontario M5H 3S8 Fax: 416-593-2318 comment@osc.gov.on.ca Comments received will be publicly available We cannot keep submissions confidential because securities legislation in certain provinces requires publication of the written comments received during the comment period. All comments received will

be posted on the websites of each of the Autorité des marchés financiers at www.lautorite.qc.ca and the Ontario Securities Commission at www.osc.gov.on.ca. Therefore, you should not include personal information directly in comments to be published. It is important that you state on whose behalf you are making the submission.
PART 12 – Questions
If you have any questions, please contact any of the CSA staff listed below.
Autorité des marchés financiers
Suzanne Poulin Martin Latulippe
Chief Accountant, Senior Policy Advisor,
Direction de l’information financière Direction de l’information continue 514 395-0337, ext.4411 514 395-0337, ext. 4331 suzanne.poulin@lautorite.qc.ca martin.latulippe@lautorite.qc.ca Ontario Securities Commission Jo-Anne Matear Samreen Beg Manager, Corporate Finance Senior Legal Counsel, Corporate Finance 416 593-2323 416 597-7817 jmatear@osc.gov.on.ca sbeg@osc.gov.on.ca Katie DeBartolo Steven Oh Senior Accountant, Corporate Finance Senior Legal Counsel, Corporate Finance 416 593-2166 416 595-8778 kdebartolo@osc.gov.on.ca soh@osc.gov.on.ca Alberta Securities Commission Timothy Robson Tonya Fleming Manager, Legal, Corporate Finance Senior Legal Counsel, Corporate Finance 403 355-6297 403 355-9032 timothy.robson@asc.ca tonya.fleming@asc.ca Kyra Plata Jan Bagh Securities Analyst, Corporate Finance Senior Legal Counsel, Corporate Finance 403 297-8893 403 355-2804 kyra.plata@asc.ca jan.bagh@asc.ca

British Columbia Securities Commission
Melody Chen Nazma Lee
Senior Legal Counsel Senior Legal Counsel
Legal Services, Corporate Finance Legal Services, Corporate Finance 604-899-6530 604-899-6867 mchen@bcsc.bc.ca nlee@bcsc.bc.ca Victoria Yehl Senior Geologist, Corporate Finance 604-899-6519 vyehl@bcsc.bc.ca Financial and Consumer Services Commission, New Brunswick Ella-Jane Loomis Senior Legal Counsel 506 453-6591 ella-jane.loomis@fcnb.ca Financial and Consumer Affairs Authority of Saskatchewan Heather Kuchuran Director, Corporate Finance 306 787-1009 heather.kuchuran@gov.sk.ca Manitoba Securities Commission Wayne Bridgeman Patrick Weeks Deputy Director, Corporate Finance Senior Analyst, Corporate Finance 204 945-4905 204 945-3326 wayne.bridgeman@gov.mb.ca patrick.weeks@gov.mb.ca Nova Scotia Securities Commission Abel Lazarus Jack Jiang Director, Corporate Finance Securities Analyst, Corporate Finance 902 424-6859 902 424-7059 abel.lazarus@novascotia.ca jack.jiang@novascotia.ca

Annex A - Existing Securities Legislation
The following summary provides a non-exhaustive overview of existing requirements that currently may apply to the disclosure of climate-related information.

1. Materiality
   Generally, materiality is the determining factor in considering whether information is required to be disclosed. As provided in Form 51-102F1 and Form 51-102F2, information is likely material where a reasonable investor’s decision whether or not to buy, sell or hold securities of the issuer would likely be influenced or changed if the information was omitted or misstated.
2. Material Risk Factor Disclosure
   Item 5.2 of Form 51-102F2 requires an issuer to disclose in its AIF, risk factors relating to it and its business that would be most likely to influence an investor’s decision to purchase the issuer’s securities. Accordingly, any climate-related risks that are determined to be material to the issuer must be disclosed pursuant to this item. In certain instances, securities legislation may require the quantification of these types of risks. For example, Item 5.1(1)(k) of Form 51-102F2 requires an issuer to disclose the financial and operational effects of environmental protection requirements in the current financial year and the expected effect in future years. Item 1.4(g) of Form 51-102F1 requires an issuer to discuss in its MD&A, its analysis of its operations for the most recently completed financial year, including commitments, events, risks or uncertainties that it reasonably believes will materially affect its future performance.
3. Risk management and oversight
   Two sets of disclosure requirements provide insight into how issuers are managing material risks:

• Disclosure of environmental policies fundamental to operations
  o Item 5.1(4) of Form 51-102F2 requires issuers to describe environmental policies that are fundamental to their operations and the steps taken to implement them.
• Disclosure of board mandate and committees
  o The guidelines in section 3.4 of Policy Statement 58-201 state that an issuer’s board should adopt a written mandate that explicitly acknowledges responsibility for, among other things: (i) adopting a strategic process and approving, at least annually, a strategic plan that takes into account the opportunities and risks of the business; and (ii) the identification of the principal risks of the issuer’s business and ensuring the implementation of appropriate systems to manage these risks.

o Pursuant to section 2 of Form 58-101F1 Corporate Governance Disclosure, non-venture issuers are required to disclose the text of their board mandate, or if the board does not have a written mandate, to explain how they delineate roles and responsibilities. o Regulation 58-101 requires both venture and non-venture issuers to identify and describe the function of any standing committees other than audit, compensation and nominating committees (which would include environmental or other committees responsible for managing climate-related issues), and to disclose the text of the audit committee’s charter (for some issuers, the audit committee may have responsibility for, among other things, environmental risk management). With respect to the oversight of disclosure, Regulation 52-110 requires an issuer’s audit committee to review its financial statements and MD&A, and Regulation 51-102 requires their approval by the board of directors, although the approval of interim filings may be delegated to the audit committee. Regulation 52-109 requires an issuer’s Chief Executive Officer and Chief Financial Officer to certify certain matters in relation to the financial statements, MD&A and, if applicable, AIF. Finally, Policy Statement 58-201 and Regulation 52-110 establish guidelines and requirements intended to assist issuers in the implementation of policies and practices required for effective corporate governance and oversight over their business, including the identification and management of business risks.
4. Controls and Procedures
Under Regulation 52-109, to support the review, approval and certification process discussed above, an issuer must have adequate controls and procedures in place for its disclosure of material information, including climate-related information. The audit committee and certifying officers have key responsibilities in establishing these controls and procedures. In particular, the audit committee has responsibilities under Regulation 52-110 in respect of procedures in place for the review of the issuer’s public disclosure of financial information extracted or derived from financial statements.

Annex B – CSA Disclosure Review
A. Features of the Disclosure Review
Feature Details from Disclosure Review
Who was selected?

• 48 issuers selected primarily from the S&P/TSX Composite Index.
• Wide range of industries, including: finance and insurance, communications,
  consumer products, industrial, life sciences, healthcare, mining, oil and gas, oil and gas services, construction and engineering, pipelines, real estate, technology, and utilities.
• Market capitalization ranged from $800 million to nearly $180 billion, with:
  o 30% of issuers within the $2 billion to $5 billion range. o 21% of issuers within the $800 million to $2 billion range. o 17% of issuers within the $5 billion to $10 billion range. o 17% of issuers above $25 billion. o 15% of issuers within the $10 billion to $25 billion range. Which documents were reviewed?
• CD filings:
  o Financial statements, MD&As, AIFs, and information circulars.
• Voluntary disclosures:
  o Issuers’ websites, sustainability reports and other voluntary reports/presentations, public surveys, etc. What types of topics were considered?
• Current disclosure practices in CD filings, including:
  o A review of issuers’ climate-related disclosure in relation to existing disclosure requirements under securities legislation in Canada, with a focus on risk disclosure. o A review of issuers’ voluntary disclosure for potentially material climate - related information which was omitted from their CD filings. o Whether issuers disclosed their governance and risk management processes related to climate-related risks and impacts.
• Information included in voluntary disclosure, including:
  o What voluntary disclosure frameworks that focus on climate-related issues are being referenced. o Disclosure of emissions-related metrics.

B. Findings:
The following is a summary of our findings regarding the current disclosure practices of large Canadian issuers with respect to climate-related information.

1. Climate-related disclosure in regulatory filings

• Our Disclosure Review, which examined CD filings against existing securities disclosure requirements
  in Canada, did not result in any re-filings, restatements or other corrective actions being requested.
• 92% of the issuers disclosed climate-related risks in their MD&A and/or AIF, while the remaining
  issuers disclosed no climate-related risks. The principal reason given by issuers that disclosed no climate-related risks was that such disclosure was not material to their business from a Canadian securities law perspective. The issuers that disclosed no climate-related risks were from a wide range of industries, including financial services, life sciences, technology and consumer products and services.
• The most commonly disclosed climate-related risks were regulatory and policy risks, which were
  disclosed by 83% of the issuers reviewed. The following chart outlines the types of climate-related risk disclosure provided by issuers in the Disclosure Review:
• The quality of risk disclosure varied depending on the risk disclosed, with regulatory and policy risks
  generally being the most relevant, detailed and entity specific. On average, 59% of the risks disclosed were relevant, detailed and entity specific, while 41% of the risks were either boilerplate, vague or incomplete. For 59% of the climate-related risks reviewed, issuers provided discussion of their strategies and efforts to manage and mitigate the risks.
• For those climate-related risks disclosed, 68% of the risk disclosures provided a qualitative
  discussion of the related financial impacts, while 25% of risks disclosed did not address the financial impact at all. While no issuers quantified the financial impact of the identified climate-related risks in their CD filings, a few issuers disclosed estimated financial impacts in their voluntary reports. When asked why the financial impacts were not disclosed in their CD filings, the primary reason

cited was that the impacts were not material to the issuer from a Canadian securities law perspective.

• Only two issuers disclosed the effects of climate-related matters in their financial statements.
• 40% of issuers, primarily from the energy industry, disclosed entity specific opportunities related to
  climate change within their CD filings.
• Of the issuers reviewed, 33% identified specific climate-related responsibilities in their Board of
  Directors’ mandates, while 44% referred only to environmental issues in general. Thirty five percent of issuers disclosed that responsibility for climate-related matters falls under an issuer’s health, safety and environment (or comparable) committee or other risk committee. 46% of issuers provided some disclosure around board oversight of climate related risks and opportunities, such as the processes and frequency by which the board and/or board committees are informed about climate-related issues, whether the board and/or board committees consider climate-related issues when reviewing and guiding organizational strategic and operational activities, and how the Board monitors and oversees progress against goals and targets for addressing the climate issue.

2. Climate -related disclosure in voluntary reports

• 92% of issuers provided climate-related disclosures in voluntary reports, with the most common
  forms being Sustainability or ESG reports (84%) as well as public surveys, including the CDP (formerly, the Carbon Disclosure Project) survey (45%). Fourteen percent of issuers, primarily from the energy industry, published stand-alone climate reports in addition to an ESG or sustainability report.

• The majority of issuers who provided voluntary climate-related disclosures (86%) referenced at least
  one third-party framework in their voluntary reports, with on average, issuers referencing nearly three third-party frameworks. Seventy percent of issuers referenced the GRI framework, 57% referenced SASB and 55% referenced the TCFD recommendations. While half of the issuers referenced the TCFD recommendations in their voluntary disclosure, only eight issuers (from the communications, banking, insurance, and energy industries) have formally declared their public support12 for the TCFD recommendations. The following chart outlines the types of voluntary frameworks13 referenced by issuers:
  12Task Force on Climate-related Financial Disclosures, online : https://www.fsb-tcfd.org/supporters/. 13 UNSDG (United National Sustainable Development Goals); UNGC (United National Global Compact). For definitions of GRI, SASB and IIRC, please refer to Part 4.

• 82% of issuers who provided voluntary climate-related disclosures disclosed GHG emissions in their
  voluntary reporting. 39% disclosed Scope 1, Scope 2 and Scope 3 emissions, 56% disclosed Scope 1 and Scope 2 emissions, and 5% disclosed Scope 1 emissions only.

Annex C - Domestic Developments

1. Previous CSA Initiatives
   The CSA has issued publications regarding climate-related disclosures on three previous occasions:

• CSA Staff Notice 51-333 Environmental Reporting Guidance (October 2010);
• CSA Staff Notice 51-354 Report on Climate Change-related Disclosures Project (April 2018); and
• CSA Staff Notice 51-358 Reporting of Climate Change-related Risks (August 2019).
  CSA Staff Notice 51-333
  In October 2010 the CSA published CSA Staff Notice 51-333, which provided guidance to issuers on existing continuous disclosure requirements relating to environmental matters under securities legislation. In particular, this notice was intended to assist issuers in: (1) determining what information about environmental matters needs to be disclosed, and (2) enhancing or supplementing their disclosure regarding environmental matters, as necessary. CSA Staff Notice 51-354 In March 2017, the CSA announced a CSA-wide project to review the disclosure by public companies of the risks and financial impacts associated with climate change. The work completed, findings from our project and recommended areas of future work were published in April 2018 in CSA Staff Notice 51-354. The CSA completed an extensive and multifaceted review to gather information on the state of climate change-related disclosure in Canada. This work included:
• Disclosure review – Focused review of mandatory and voluntary climate change-related
  disclosure of 78 large issuers from the S&P/TSX composite Index.
• Online survey – Review of responses to a voluntary anonymous online survey sent to all TSX￾listed issuers regarding current climate change-related disclosure practices (97 issuers responded
  to survey).
• Consultations – Fifty consultations, including in-person focus groups with reporting issuers,
  investors, advisors and other users of disclosure (“users” refers to investors, investor advocates, experts, academics, crediting rating agencies and analysts).
• Research – Review of climate change-related disclosure requirements in selected jurisdictions
  outside of Canada, as well as prominent voluntary disclosure frameworks.
  CSA Staff Notice 51-354 noted variation among issuers in their disclosure practices regarding climate￾related risks and concluded that there was room for improvement in the disclosure of several reporting issuers. In addition, substantially all institutional investors and other users of disclosure who were consulted by the CSA expressed their desire for improvements in climate-related disclosures by issuers. One of the

outcomes of the review was that CSA staff would develop further guidance on the disclosure of material climate-related risks. Based on this work, the CSA noted that it would consider further work including:

• proposed new disclosure requirements in the areas of issuers’ governance processes in relation
  to material risks and opportunities, including the board’s responsibility for oversight and the role played by management, and disclosure of how the issuer oversees the identification, assessment and management of material risks;
• changing Policy Statement 58-201 to introduce corporate governance guidelines in the areas
  contemplated by any such new disclosure requirements;
• providing additional staff guidance on how any such new disclosure requirements apply in the
  context of climate change-related risk; and
• requiring the disclosure of GHG emissions.
  CSA Staff Notice 51-358
  On August 1, 2019, the CSA published CSA Staff Notice 51-358. The key objective of this notice was to provide issuers, particularly smaller issuers, with guidance on how they might approach preparing disclosures of material climate-related risks. The notice did not create any new legal requirements or modify existing ones, but instead reinforced and expanded on guidance provided in CSA Staff Notice 51- 333. The guidance contained in the notice primarily focused on issuers’ disclosure obligations as they related to the MD&A and AIF. In particular, CSA Staff Notice 51-358:
• provided an overview of the responsibilities of boards and management relating to risk
  identification and disclosure;
• outlined relevant factors to consider in assessing the materiality of climate-related risks;
• provided examples of some of the types of climate-related risks to which issuers may be exposed;
• included questions for boards and management to consider in the climate change context; and
• provided an overview of the disclosure requirements if an issuer chooses to disclose forward￾looking climate-related information.

2. Ontario Developments
   In 2020, the Ontario government appointed the Modernization Taskforce to review and make recommendations in relation to modernizing the capital markets regulatory framework in Ontario. Throughout the Modernization Taskforce’s consultations, the increased use of ESG disclosure received significant support from industry stakeholders. In its final report, the Modernization Taskforce recommended mandating disclosure by public companies of material ESG information, specifically climate-related disclosure that is compliant with the final TCFD recommendations for issuers through regulatory filing requirements of the OSC.14 14 Capital Markets Modernization Taskforce Final Report, online : https://files.ontario.ca/books/mof-capital-markets￾modernization-taskforce-final-report-en-2021-01-22-v2.pdf, p.71..

The key elements of the proposed ESG disclosure requirements outlined by the Modernization Taskforce were:

• the requirements would apply to all reporting issuers (non-investment fund);
• the requirements would include:
  o Mandatory disclosure recommended by the TCFD related to governance, strategy and risk management (subject to materiality). This would exclude mandatory disclosure of scenario analysis under an issuer’s strategy. o Disclosure of Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas emissions on a “comply-or-explain” basis. The Modernization Taskforce recommended a transition phase for all issuers to comply with the new disclosure requirements, calculated from the implementation date of the new requirements. After the transition phase is complete, the Modernization Taskforce recommended that the requirements apply to each issuer going forward. The Modernization Taskforce encouraged the CSA to proceed in alignment with Ontario and implement similar disclosure requirements across Canada. Subsequently, the 2021 Ontario Budget, released on March 24, 2021, included a section titled, “Increasing the Use of Environmental, Social and Corporate Governance Disclosure Requirements”. This
  section noted the Modernization Taskforce consultation and final recommendations. The Budget also
  stated that the OSC would begin policy work to inform further regulatory consultation on ESG disclosure.15

3. Other Noteworthy Domestic Developments
   There are a number of other domestic initiatives and developments in this area that highlight the increasing importance of issuer climate-related disclosure practices and growing influence of the TCFD recommendations. We have summarized a few noteworthy initiatives below. 2021 Federal Budget On April 19, 2021, the federal government released its 2021 Federal Budget. The Budget contains a
   section entitled “Strengthening Public climate-related Disclosures.” This section states that in order to
   give more clarity to the markets as technology advances, regulations evolve and consumer behaviours change in the face of climate change, the federal government “will engage with provinces and territories, with the objective of making climate disclosures, consistent with the Task Force on climate-related Financial Disclosures, part of regular disclosure practices for a broad spectrum of the Canadian economy.” 15 Ontario’s Action Plan : Protecting People’s Health and Our Economy (2021 Ontario Budget), online:
   https://budget.ontario.ca/2021/pdf/2021-ontario-budget-en.pdf, p. 113.

Sustainable Finance Action Council (SFAC)
In May 2021, the Canadian government launched the SFAC. The SFAC’s mandate is to make recommendations on critical market infrastructure needed to attract and scale sustainable finance in Canada, including enhanced assessment and disclosure of climate risks and opportunities, better access to climate data and analytics, and common standards for sustainable low-carbon investments. The SFAC’s initial emphasis, among other things, will be on enhancing climate-related financial disclosures that are aligned with the TCFD recommendations in Canada’s private and public sector. The SFAC will have an Official Sector Coordinating Group that will observe and advise the SFAC, and includes provincial securities commissions. Expert Panel on Sustainable Finance In 2018, the Canadian government created the Expert Panel on Sustainable Finance to investigate ways the financial sector could help encourage and direct funds to low-carbon Canadian initiatives, with a final report Mobilizing Finance for Sustainable Growth, released in 2019. The report contained 15 recommendations outlining opportunities for sustainable growth, including the recommendation to define and pursue “a Canadian approach to implementing the recommendations of the TCFD.”16 Bank of Canada and OSFI In November 2020, the Bank of Canada and OSFI announced plans for a pilot project to use climate change scenarios to better understand the risks to the financial system related to a transition to a low￾carbon economy.17 CPA Canada Study CPA Canada released a report in 2021, 2019 Study of Climate-Related Disclosures by Canadian Public Companies 18 (the 2019 Study). The objective of the 2019 Study was to review climate-related disclosures made by 40 TSX-listed Canadian companies in their regulatory findings and assess the alignment of such disclosures with the TCFD Recommendations. The key findings of the 2019 Study from the report are set out below.

• Almost all companies reviewed provided some TCFD-aligned disclosures, with slightly more than
  one-third of companies including disclosure in all four TCFD categories in regulatory and voluntary documents. On average, Canadian companies reviewed disclosed in 4.5 of the 11 TCFD subcategories versus the global average of 3.6. 16 Final Report of the Expert Panel on Sustainable Finance (2019), online :
  http://publications.gc.ca/collections/collection_2019/eccc/En4-350-2-2019-eng.pdf, p. IV.. 17 ”Bank of Canada and OSFI launch pilot project on climate risk scenarios” (November 16, 2020), online: https://www.osfi￾bsif.gc.ca/Eng/osfi-bsif/med/Pages/20201116-nr.aspx. 18 CPA Canada, 2019 Study of Climate-related disclosures by Canadian Public Companies, online:
  <https://www.cpacanada.ca/en/business-and-accounting-resources/financial-and-non-financial-reporting/mdanda-and-other￾financial-reporting/publications/climate-related-disclosure-study-2019- summary#:~:text=2019%20study%20of%20climate%2Drelated%20disclosures%20by%20Canadian%20public%20companies,- Learn%20what%20leading&text=The%20study%20looked%20at%20climate,alignment%20with%20the%20TCFD%20recommen dations>.

• The most commonly disclosed category was “Strategy” in regulatory filings and “Metrics and
  Targets” in voluntary documents. Eighty per cent of companies reviewed included climate￾related strategy disclosures in their regulatory filings.

• 80% of companies disclosed GHG emissions in voluntary reporting and 15% of companies
  disclosed GHG emissions in regulatory documents.
  Millani’s TCFD Disclosure Study
  A study by Millani in June 2021, Millani’s TCFD Disclosure Study: A Canadian Perspective, 19 noted that despite growing market and regulatory pressures for disclosure aligned with the TCFD recommendations, only 23% of issuers listed on the S&P/TSX composite Index indicated their reports were aligned with the TCFD recommendations, while 54% did not mention the TCFD in their publicly available information. The study further noted that even issuers who indicated reporting in accordance with the TCFD recommendations did not always provide information considered useful by investors. 19 Millani, Millani’s TCFD Disclosure Study: A Canadian Perspective (June 14, 2021), online: https://www.millani.ca.

Annex D - International Developments

1. Task Force on Climate-related Financial Disclosures
   In 2015, the Financial Stability Board (FSB) established the Task Force on Climate-related Financial Disclosures (TCFD) in order to develop recommendations for more effective climate-related disclosures that could promote more informed investment, credit, and insurance underwriting decisions, and enable stakeholders to understand better the concentrations of carbon-related assets in the financial sector and the financial system’s exposures to climate-related risks.20 In June 2017, the TCFD released its final recommendations, providing a framework for companies and other organizations to develop more effective climate-related financial disclosures through existing reporting practices. The TCFD divided climate-related risks into two categories:

• Transition risks: Risks related to the transition to a lower carbon economy (including risks related
  to policy and legal actions, technology, markets and reputations).
• Physical risks: Risks resulting from climate change impacts, which are classified as acute (i.e.
  event-driven) or chronic (i.e. longer-term shifts in climate patterns).
  The TCFD also organized its recommendations of climate-related financial disclosures around four core elements:
• Governance: the organization’s governance around climate-related risks and opportunities.
• Strategy: the actual and potential impacts of climate-related risks and opportunities on the
  organization’s businesses, strategy and financial planning.
• Risk Management: The processes used by the organization to identify, assess, and manage
  climate-related risks.
• Metrics and Targets: The metrics and targets used to assess and manage relevant climate-related
  risks and opportunities.

2. Group of five sustainability reporting organizations
   In September 2020, a group of five sustainability reporting organizations – CDP, the Climate Disclosure Standards Board (CDSB), the GRI, the International Integrated Reporting Council (IIRC) and the SASB21 – published a “Statement of Intent”. The Statement reflects how these frameworks and standards can be applied in a complementary and additive way, complement financial generally accepted accounting principles and serve as a natural starting point for progress towards a comprehensive corporate reporting system. Members of the alliance have been working collaboratively to explore how their complementary frameworks can be brought together under a common reporting approach. 20 Task Force on Climate-related Financial Disclosures, online : https://www.fsb-tcfd.org. 21 On June 9, 2021, the IIRC and SASB officially announced their merger to form the Value Reporting Foundation.

In December 2020, the alliance released the paper, Reporting on enterprise value: Illustrated with a prototype climate-related financial disclosure standard. 22 The paper contains a prototype of climate￾related financial disclosures that builds on the existing content of the alliance and their collective frameworks along with the TCFD recommendations. The prototype is intended to serve as a model for what an eventual standard could look like and could also give a future sustainability standards board (see discussion of IFRS Foundation, below) a “running start” in developing a future climate standard.23 IOSCO has established a Technical Expert Group (TEG) to engage with the IFRS Foundation as it works to establish a sustainability standards board. An important task of IOSCO’s TEG over the coming months will be to assess whether a refined version of the prototype developed by the group of five sustainability reporting organizations can form the basis for future standards development within a sustainability standards board.
3. IFRS Foundation
On September 30, 2020 the IFRS Foundation published a consultation paper to assess demand for global sustainability standards and whether the Foundation might contribute to the development of these standards. The consultation paper set out possible ways the Foundation might contribute to the development of global sustainability standards. On February 2, 2021 the IFRS Foundation indicated that it intended to produce a definitive proposal (including a road map with timeline) by the end of September 2021, possibly leading to an announcement on the establishment of a sustainability standards board at the meeting of the UN Climate Change Conference (COP26) in November 2021. The IFRS Foundation made further announcements in March 2021 around the strategic direction of a new sustainability standards board and the formation of a working group to accelerate the convergence in global sustainability reporting standards. The IFRS Foundation recently announced proposed amendments to its Constitution to accommodate the potential formation of a new sustainability standards board.
4. IOSCO Sustainable Finance Task Force
In October 2018, IOSCO established a Sustainable Finance Network (SFN) to provide a forum for members to exchange experience and have structured discussions on various sustainability issues. In April 2020, IOSCO published its report Sustainable Finance and the Role of Securities Regulators and IOSCO (April 2020 Report), which provided an overview of existing sustainable finance initiatives and a 22 Group of Five Sustainability Reporting Organizations, “Reporting on enterprise value: Illustrated with a prototype climate￾related financial disclosure standard” (December 2020), online: < https://29kjwb3armds2g3gi4lq2sx1-wpengine.netdna￾ssl.com/wp-content/uploads/Reporting-on-enterprise-value_climate-prototype_Dec20.pdf>. 23 IOSCO, “IOSCO sees strong support for its vision for an International Sustainability Standards Board under the IFRS Foundation” (10 May 2021), online: < https://www.iosco.org/news/pdf/IOSCONEWS603.pdf>. 24 IOSCO, Report on Sustainability-related Issuer Disclosures Final Report (June 28, 2021), online: < https://www.iosco.org/library/pubdocs/pdf/IOSCOPD678.pdf>, pp. 4-5.

detailed analysis of the most relevant ESG-related international initiatives and third-party frameworks and standards.25 With respect to disclosures, the report highlighted the evolving nature of this space. It also emphasized the need to improve the comparability of sustainability-related disclosures, noting that the lack of consistency and comparability across third party frameworks could create an obstacle to cross border financial activities and also raise investor protection concerns.26 The report recommended the creation of a Sustainability Taskforce so that IOSCO could play a driving role in addressing sustainable finance issues. Further to the recommendation in the April 2020 Report, IOSCO established a Board-level Sustainable Finance Taskforce (STF). The STF is carrying out work in three areas:

• Corporate issuers’ sustainability-related disclosures
• Asset managers’ disclosures and investor protection issues
• the role of ESG data and ratings providers.
  On February 24, 2021 the IOSCO Board announced three priority areas for improvement in sustainability￾related reporting: (1) encouraging globally consistent standards, (2) promoting comparable metrics and narratives and (3) coordination across approaches. The press release noted that the IOSCO Board was committed to working with the IFRS Foundation Trustees and other stakeholders to advance these priorities and IOSCO’s engagement would focus on establishing a sustainability standards board with a strong governance foundation. On June 28, 2021, the STF released a report on corporate issuers’ sustainability related disclosures. 27 The report highlighted (i) investor demand for sustainability-related information and evidence that this demand is not being properly met; and (ii) the need for improvements in the current landscape of sustainability standard-setting. The report identified core elements of standard-setting that could help meet investor needs and provided guidance to the IFRS Foundation as it develops an initial prototype climate reporting standard, building on the TCFD’s recommendations. The report also provided input to the IFRS Foundation on governance features and mechanisms for stakeholder engagement that will be essential to making the sustainability standards board initiative successful.

5. Climate-related Disclosure Requirements in Other Jurisdictions
   A number of jurisdictions have recently announced the introduction of climate-related disclosure or have indicated movement in that direction. Please refer to the chart below, which provides a summary of recent initiatives and announcements in certain jurisdictions. 25 IOSCO, Sustainable Finance and the Role of Securities Regulators and IOSCO Final Report (April 2020), online: < https://www.iosco.org/library/pubdocs/pdf/IOSCOPD652.pdf>. 26 Ibid. 27 IOSCO, Report on Sustainability-related Issuer Disclosures Final Report (June 28, 2021), online: < https://www.iosco.org/library/pubdocs/pdf/IOSCOPD678.pdf>.

Jurisdiction Summary of Initiative
United States Executive Order

• On May 20, 2021, President Biden signed an Executive Order stating that
  the Financial Stability Oversight Council (FSOC) will engage with FSOC members to consider actions including assessing in a detailed and comprehensive manner, climate-related financial risk, including both physical and transition risks, to the financial stability of the federal government and stability of the U.S. Financial system. SEC Consultation and Potential Rule Proposal
• On March 15, 2021, SEC Acting Chair Allison Herren Lee announced that
  the SEC was seeking public input on the Commission’s disclosure rules and guidance as they apply to climate change disclosures.28
• The input would feed into the evaluation conducted by SEC staff on its
  disclosure rules with an eye toward facilitating the disclosure of consistent, comparable and reliable information on climate change.
• In a speech on May 26, 2021, the Acting Chair stated that the SEC “needs
  your advice, your thoughts, and your expertise as we endeavour to craft a rule proposal for climate and ESG disclosures.”29
• On June 11, 2021, the SEC announced its regulatory agenda which
  includes SEC rulemaking areas including disclosure related to climate risk.30 SEC Climate and ESG Task Force (Enforcement)
• On March 4, 2021, the SEC announced the creation of a Climate and ESG
  Task Force in the Division of Enforcement that will develop initiatives to proactively identify ESG-related misconduct.31
• The initial focus will be to identify any material gaps or misstatements in
  issuers’ disclosure of climate risks under existing rules. The task force will also analyze disclosure and compliance issues relating to investment advisers and funds ESG strategies. 28 SEC “Public Input Welcomed on Climate Change Disclosures” (March 15, 2021), online: https://www.sec.gov/news/public￾statement/lee-climate-change-disclosures. 29 The Columbia Law School Blue Sky Blog, “SEC Commissioner Lee Speaks on Myths and Misconceptions about ‘Materiality’”, online: https://clsbluesky.law.columbia.edu/2021/05/26/sec-commissioner-lee-speaks-on-myths-and-misconceptions-about￾materiality/. 30 SEC, “SEC Announces Regulatory Agenda”, (June 11, 2021), online: https://www.sec.gov/news/press-release/2021-99. 31 SEC, “SEC Announces Enforcement Task Force Focused on Climate and ESG Issues” (March 4, 2021), online:
  https://www.sec.gov/news/press-release/2021-42.

Jurisdiction Summary of Initiative
United Kingdom • In December 2020, the FCA published a final rule for UK premium listed companies titled ‘Policy Statement 20/17, Proposals to enhance climate￾related disclosures by listed issuers and clarification of existing disclosure obligations’ (PS20/17).32

• Premium listed companies must disclose compliance with the TCFD￾aligned recommendations on a comply-or-explain basis.
• PS20/17 implements a new listing rule and guidance that requires
  commercial companies with a UK premium listing to include a compliance statement in their annual financial report, stating whether they have made disclosures consistent with the recommendations of the TCFD or providing an explanation if they have not done so.
• This rule applies for accounting periods beginning on or after 1 January
  2021, and the first annual financial reports subject to this rule will be published in spring 2022.
• On June 22, 2021, the FCA announced a consultation on proposals to
  extend the application of the climate-related disclosure requirements to issuers of standard listed equity shares.33 European Union • In 2018, the Non-Financial Reporting Directive (NFRD) came into effect. In June 2019, as part of its Sustainable Finance Action Plan (SFAP), the European Commission updated its non-binding guidelines of the NFRD to provide further guidance to companies on how to disclose climate change-related risk information in line with the TCFD recommendations.
• Following a public consultation on the review of the NFRD mandated by
  the SFAP, the European Commission adopted in April 2021 a proposal for a Corporate Sustainability Reporting Directive (CSRD), which would amend the existing reporting requirements of the NFRD. This proposal expands the scope to all large companies and all companies listed on regulated markets (except listed micro-enterprises), requires assurance of reported information, introduces more detailed reporting requirements and a requirement to report according to mandatory EU sustainability reporting standards and requires companies to digitally ‘tag’ the reported information.34
• The first set of standards would be adopted by October 2022 and should
  at least encompass climate change-related disclosure on a TCFD compatible basis. 32 FCA, “PS20/17: Proposals to enhance climate-related disclosures by listed issuers and clarification of existing disclosure obligations” (December 21, 2020), online: https://www.fca.org.uk/publications/policy-statements/ps20-17-proposals￾enhance-climate-related-disclosures-listed-issuers-and-clarification. 33 FCA, “CP21/18: Enhancing climate-related disclosures by standard listed companies” (June 22, 2021), online:
  https://www.fca.org.uk/publications/consultation-papers/cp21-18-enhancing-climate-related-disclosures-standard-listed￾companies. 34 European Commission, “Corporate sustainability reporting”, online: https://ec.europa.eu/info/business-economy￾euro/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en. 35 Ibid.

Jurisdiction Summary of Initiative

• In 2020, the EU Taxonomy Regulation, a component of the SFAP, came
  into force. The Taxonomy is a classification system that sets out conditions that an economic activity has to meet in order to qualify as environmentally sustainable. The first company reports under the NFRD using the EU Taxonomy are due at the start of 2022 (for climate change mitigation and adaptation) and for all environmental objectives by December 31, 2023.
• The Sustainable Finance Disclosure Rule (SFDR), also a component of the
  SFAP, came into effect in March 2021. The SFDR requires sustainability disclosure for asset managers, institutional investors and financial advisers for all investment processes and for financial products that pursue the objective of sustainable investment. Australia • In 2019, the Australian Securities and Investment Commission’s (ASIC) updated its regulatory guidance on climate-related disclosure and encouraged reporting consistent with the TCFD recommendations. ASIC commenced market surveillance of climate-related disclosures of a group of large listed companies spanning a range of industries shortly thereafter.
• In February 2021, ASIC issued a statement on its review and noted that
  overall, voluntary adoption of TCFD reporting by some larger listed companies had materially improved standards of climate-related governance and disclosure in the market. Among larger listed companies, ASIC observed a significant and meaningful increase in the level of engagement and disclosure on climate-related matters since its last examination in 2017–18.36
• The statement noted that ASIC intends to adopt a consultative approach
  as it continues to monitor the adoption of TCFD reporting and the development of climate-risk disclosure practices and would consider enforcement action in the case of serious disclosure failures. New Zealand • In April 2021 the New Zealand government introduced legislation to make climate-related disclosures mandatory for some organizations, including publicly listed companies.
• If approved by Parliament, the legislation would require around 200 large
  Financial Markets Conduct reporting entities to start making climate￾related disclosures for financial years commencing in 2022, with disclosures being made in 2023 at the earliest.
• Reporting would be against a standard that would be issued by the
  External Reporting Board. The standard would be developed in line with the recommendations of the TCFD. 36 ASIC, “Managing climate risk for directors” (February 2021), online: https://asic.gov.au/about-asic/news￾centre/articles/managing-climate-risk-for-directors/.

Jurisdiction Summary of Initiative
Switzerland • In January 2021, the Swiss Federal Council (the Council) became a formal supporter of the TCFD. During 2021, the Council is working towards proposals to make the TCFD Recommendations binding. In the interim, the Council has requested that these recommendations are implemented on a voluntary basis by Swiss companies from all sectors of the economy.37

• In November 2020, the Swiss Financial Market Supervisory Authority
  (FINMA) announced a public consultation with respect to proposed amendments applicable to banks and insurance companies to increase transparency regarding climate change risks in the financial system, based on the TCFD recommendations. 38 The approach taken by FINMA is based on the TCFD recommendations. The consultation period closed in January 2021.

6. Other Noteworthy International Developments
   There are a number of other international initiatives and developments in this area that demonstrate the growing international support from governments for enhanced climate-related disclosures, including disclosures that are consistent with the TCFD recommendations. We have summarized a few noteworthy initiatives below. G7 and G20 In June 2021, the G7 Finance Ministers and Central Bank Governors, comprised of Canada, France, Germany, Italy, Japan, the United Kingdom, the United States and the European Union, announced their support through a Communiqué, for mandatory climate-related financial disclosures that are based on the TCFD framework. The Communiqué noted, “Investors need high quality, comparable and reliable information on climate risks. We therefore agree on the need for a baseline global reporting standard for sustainability, which jurisdictions can further supplement.”39 The G7 also noted its support for the IFRS Foundation’s work towards developing standards built from the TCFD framework and the work of sustainability standard-setters. A Communiqué on behalf of a meeting of the G20 Finance Ministers and Central Bank Governors in July 2021 welcomed the work of the IFRS Foundation to develop a global reporting standard and stated that they would work to promote implementation of disclosure requirements or guidance, building on the TCFD “to pave the way for future global coordination efforts, taking into account jurisdictions’ circumstances, aimed at developing a baseline global reporting standard.”40 37 Swiss Federal Council, “Switzerland promotes transparency on climate-related financial risks” (January 12, 2021), online:
   https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-81924.html. 38 FINMA, “Transparency obligations for climate risks – FINMA opens consultation” (November 10, 2020), online:
   https://www.finma.ch/en/news/2020/11/20201110-mm-transparenzpflichten-klimarisiken/. 39 UK Government, “G7 Finance Ministers and Central Bank Governors Communiqué” (June 5, 2021), online:
   https://www.gov.uk/government/publications/g7-finance-ministers-meeting-june-2021-communique/g7-finance-ministers￾and-central-bank-governors-communique. 40 G20, Third Finance Ministers and Central Bank Governors meeting Communiqué (July 9-10, 2021), online: < https://www.g20.org/wp-content/uploads/2021/07/Communique-Third-G20-FMCBG-meeting-9-10-July-2021.pdf>.

G20 Sustainable Finance Study Group
The G20 Sustainable Finance Study Group (SFSG) was re-established by the Italian G20 Presidency within the G20 Finance track (the group was originally established in 2016). The SFSG will begin by developing a multi-year climate-focused sustainable finance G20 roadmap in specific priority areas that can be adapted or expanded in future years to cover other topics. Financial Stability Board Workstreams and Roadmap In a letter published on July 7, 2021, the FSB Chair, Randal K. Quarles, stated that the FSB’s work to promote consistent, comparable and high-quality disclosures builds on its role as sponsor of the TCFD, and that work being done by the IFRS Foundation and IOSCO on establishing a global baseline standard for such disclosures would not preclude authorities from going further or at a faster pace in their jurisdictions.41 The FSB also published three climate-related report: (1) FSB Roadmap for Addressing Climate-Related Financial Risks; (2) The Availability of Data with Which to Monitor and Assess Climate￾Related Risks to Financial Stability; and (3) Report on Promoting Climate-Related Disclosures, in which the FSB called for an acceleration of progress in the implementation of climate-related disclosures, using a frameworks based on the TCFD recommendations, in line with jurisdictions’ regulatory and legal requirements.42 World Economic Forum The International Business Council of the World Economic Forum published a white paper in September 2020, setting out expanded metrics for sustainability reporting. Companies are encouraged to report against as many of the core and expanded metrics as they find material and appropriate, on the basis of a “disclose or explain” approach. 41 Financial Stability Board, “FSB Chair presents a comprehensive roadmap for addressing climate-related financial risks” (July 7, 2021), online: < https://www.fsb.org/2021/07/fsb-chair-presents-a-comprehensive-roadmap-for-addressing-climate-related￾financial-risks/>. 42 Financial Stability Board, Report on Promoting Climate-Related Disclosures (July 7, 2021), online: < https://www.fsb.org/wp￾content/uploads/P070721-4.pdf>.