On sustainability standards, Canada punches above its weight
The Canadian Sustainability Standards Board (CSSB) is set to issue new disclosure standards regarding reporting on climate-related risks, the adoption of which has the potential to create a positive national and international impact. These standards, modelled on the International Sustainability Standards Board (ISSB), will not only ensure that organizations are operating in the public interest regarding the critical issue of sustainability, but that Canada remains competitive on the global stage.
“Sustainability reporting is really a window into the risks and opportunities facing organizations,” said CPA Canada’s VP of Member Experience, Rosemary McGuire. “Consistent, comparable, reliable sustainability reporting enables investors to make informed purchasing and investment decisions with the best information available to them.”
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Transparent reporting doesn’t just affect investors — owners, customers, and employees are all supported by the most up-to-date information regarding our impact on the climate. “It’s about long-term, risk-informed decision making,” said CPA Canada’s Director of Research and Thought Leadership Taryn Abate. “We can look at what was presented at COP28 and see that we’re not on track to meet climate targets. You can only manage what you know.”
Disclosure standards already well established in places like the EU take that call seriously. “What we’re seeing is it trickling down into the value chain,” said McGuire. “It’s not just companies being held to account for their own operations, but also for the impacts being driven by their supply and purchasing chains.”
Following the lead of the ISSB when it comes to standards has many benefits, perhaps the most integral: becoming easily comparable with other nations. “We have to remember, our capital markets are global,” said McGuire. “Certainly, disclosure and reporting has been prevalent amongst the larger Canadian companies, but the quality has been inconsistent, and without clear parameters around reporting it’s not possible to do an accurate comparison.”
Having entirely different standards in Canada could create a higher reporting burden, where organizations would be required to report nationally, but then demonstrate how those standards extend internationally. Fortunately, the existence of the CSSB ensures nation-specific criteria, like Indigenous populations and our high percentage of smaller entities, are considered and applied. “We have the benefit of the CSSB, which gives us the ability to make modifications so we can remain globally comparable,” said Abate.
Adopting international standards also helps to avoid duplicate regulatory burden regarding bills like C-59, since the standards themselves can be a critical tool to mitigate the risk of greenwashing.
When it comes to sustainability and climate matters, the world is moving away from lip-service and towards real action. Without significant buy-in from the government on sustainability disclosure standards, Canada risks losing control of its story on the global stage. “In the absence of information, investors will fill in the blanks themselves,” said McGuire. “An absence of information says something as well; it implies sustainability isn’t a priority for the organization. It’s better to own your story.”
Abate agrees: “Investors want it. It puts us on a more level playing field, globally, and I think it drives more international capital to flow into Canada.”
Supporting the broader rollout of sustainability disclosure standards across all sectors of the economy is Canada’s opportunity to say to the international community, we are keeping pace in this critical area, and we want to set the pace. “Canada punches above its weight in a number of areas and respects,” says McGuire. “Standards is one of those areas.”