Climate change is reshaping the regulatory agenda and issuers’ reporting requirements. Knowing how to adapt, and thinking ahead, is key.
Climate change is reshaping the regulatory agenda in powerful ways.
The level of clarity regulators now seek from issuers of company filings isn’t necessarily new. Since 2017, the Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD) report has been considered the gold standard of voluntary climate-related financial disclosures.
Still, in the several years’ since, the very reach of climate change-related disclosure has expanded. The Canadian Securities Administrators’ (CSA) Staff Notice 51-358, Reporting on climate change-related risks dives deep into the issue.
Motivated by an uptick in investor interest, perceived room for improvement in disclosure, and developments both in Canada and abroad, 51-358 offers greater clarity around whether a particular climate change-related risk is material and requires disclosure.
At the heart of the matter is the definition of materiality itself. Under the latest notice, information is generally considered material if its omission or mis-statement would likely influence a reasonable investor’s decision to buy, sell or hold the issuer’s securities.
But making that call isn’t always straight-forward. In 51-358, the CSA outlines four guiding principles that, while not exhaustive, can help issuers’ determine materiality: