A new organization that will oversee adoption of global corporate sustainability standards in Canada has named the former head of the country’s accounting body as its first chairman, a key step in the move to formalize disclosure of environmental, social and governance metrics.
Charles-Antoine St-Jean, who was interim president of CPA Canada for nearly two years until March, will chair the Canadian Sustainability Standards Board, a group formed to co-ordinate with the International Sustainability Standards Board.
The international board is due to publish its first two frameworks for measuring and reporting climate and other related risks by the middle of this year. The measures are to start being put into force in early 2024.
The Canadian Sustainability Standards Board will tailor the new standards for the domestic market, and endorse them for use. Officials have said Canada’s economy requires standards that recognize its high proportion of resource-extraction companies as well as its large number of small and medium-sized enterprises.
The Canadian body already has feedback in hand from various domestic stakeholders after consultations done by the international board last year, Mr. St-Jean said in an interview. However, his group will be conducting further consultations across the country on climate-related standards as they are rolled out, he said.
“There are industries that make up the Canadian economic fabric, so we want to hear from all the major ones,” he said. “We’re going to be making sure that we hear from them and that [the standards] are applicable for Canada.”
The new rules are aimed at removing a hodgepodge of standards for non-financial items, and fight back against greenwashing, the practice of falsifying or exaggerating environmental benefits.
Mr. St-Jean will lead a Canadian board that includes Bindu Dhaliwal, senior vice-president of corporate governance and ESG at Canadian Imperial Bank of Commerce CM-T; Alyson Slater, head of sustainable investment at Manulife Investment Management; and Raylene Whitford, chair of the Indigenous advisory council at TC Energy Ltd. TRP-T Others will be named later.
The initial set of international board standards is based on methods set by the Task Force on Climate-Related Financial Disclosures and the Sustainability Accounting Standards Board. They mandate disclosure of material information about sustainability-related risks, in similar fashion as financial accounting. Under that standard sustainability and financial statements will be published at the same time.
The international board also calls for reporting of important climate-related factors, including risks tied to physical damage and the transition to lower-carbon energy, as well as opportunities from technological advances.
Disclosure of all three emission scopes is required for investors to understand transition risk, the international board says. Scope 1 includes carbon emissions from a company’s own operations. Scope 2 comprises emissions from the energy a company buys to power its plants. Scope 3 includes emissions along a company’s supply chain and from the end use of its products.
Lisa French, vice-president of Financial Reporting and Assurance Standards Canada, said the timeline calls for the first corporate reports to be issued in early 2025, but pointed out that the standards will not be made mandatory until regulators require it.