How to get Canadian boards ready for 2025 ESG and climate disclosure rules

Canadian ESG and climate disclosure rules are shifting fast. Boards now need clear oversight, better data controls, and credible disclosures aligned with new standards. This guide shows corporate lawyers and in-house teams exactly what to do, why it matters, and how to operationalize it quickly.

 

What changed in 2024–2025, and why it matters

Canadian regulators are aligning with global standards and tightening expectations. The Canadian Sustainability Standards Board is localizing ISSB rules through the proposed Canadian Sustainability Disclosure Standards, CSDS 1 (general) and CSDS 2 (climate), signaling the shape of mandatory reporting for Canadian issuers (CSSB CSDS 1 and CSDS 2). For federally regulated financial institutions, OSFI’s climate risk guidance embeds board oversight, metrics/targets, and disclosure expectations into prudential supervision (OSFI Guideline B-15: Climate Risk Management). Together, these developments raise the bar for governance, internal controls, and disclosure rigor across sectors.

Quick read: Expect board-level accountability for climate oversight, defined roles, reliable emissions data (Scope 1–2, with a plan for Scope 3), and controls that support assured disclosures.

 

A practical, step-by-step plan for governance counsel

Step 1. Map your scope and deadlines. Identify your issuer category (TSX, venture, CBCA distributing corporation, FRFI, cross-listed). Build a timeline for CSDS 2-aligned climate disclosures in annual filings. Note phased adoption or transitional relief where applicable.

Step 2. Stand up board oversight now. Update the board charter to explicitly cover climate risk, transition planning, and disclosure. Assign primary oversight to the audit or risk committee, document escalation paths, and add climate competency to the board skills matrix and director education plan.

Step 3. Upgrade data and disclosure controls. Treat climate data like financial data. Define boundaries (equity/operational control), select a GHG protocol method, and set internal controls over emissions, scenario analysis, and targets. Build documentation to support assurance-readiness.

Step 4. Align filings and narrative. Tie climate disclosures to strategy and risk factors in the AIF, MD&A, and proxy circular. Ensure consistency with investor decks, website ESG pages, and lender disclosures to avoid greenwashing risk.

Step 5. Validate materiality and metrics. Apply CSDS 2 materiality to select decision-useful metrics (Scope 1–2 intensity and absolutes; Scope 3 mapping plan; capex/opex for transition). Include governance, risk management, and target-setting narratives that match board minutes.

Step 6. Link pay and performance carefully. If using climate KPIs in executive compensation, define them precisely, disclose calculation methods, and describe board oversight to withstand investor and proxy advisor scrutiny.

Step 7. Prepare for assurance. Engage external assurance advisors early for readiness assessments on climate metrics and controls. Plan limited assurance first, with a roadmap to reasonable assurance as data maturity improves.

Real-world example: A TSX issuer with a December 31 year-end prepares CSDS 2-style disclosures for the 2026 report cycle by documenting board oversight in Q1 2025, implementing a GHG inventory and control framework in Q2, piloting scenario analysis in Q3, and drafting integrated MD&A/AIF content in Q4.

 

Quick wins you can deliver in 30–60 days

Board governance tune-up. Refresh charters, the skills matrix, and committee workplans; minute climate oversight discussions. Data baseline. Confirm Scope 1–2 inventory boundaries, select factors, and lock calculation files with version control. Disclosure harmony check. Cross-check ESG webpages, lender certificates, and filings for consistency and cautionary language.

Benchmark: Target an auditable Scope 1–2 baseline within 60 days, with a Scope 3 screening and data plan within 120 days.

 

Build for the next 6–18 months

Controls and assurance-readiness. Extend DC&P-style controls to climate data; test quarterly. Scenario analysis and targets. Run at least two scenarios (e.g., 1.5–2°C transition and a disorderly case), define intensity and absolute targets, and link to capex plans. Supply chain and procurement. Phase in supplier emissions requests starting with strategic vendors; align with federal procurement trends. Regulatory watch. Track CSA adoption of CSDS and cross-border impacts for dual-listed issuers.

Outcome to aim for: Limited assurance on climate metrics in year one; reasonable assurance pathway defined by year three.

 

Documents to update and where issues hide

Board and committee charters; director education plan; risk appetite statement. AIF, MD&A, proxy circular, and earnings scripts. Look for mismatches in risk language and KPI definitions. Disclosure controls memos and management representation letters. Build evidence to support assurance and regulator reviews.

 

Why this matters now

Investors, lenders, and regulators are converging on one playbook. Canadian rules are moving toward CSDS 1/2, and FRFIs are already under climate risk and disclosure expectations. Early movers will lower assurance costs, reduce litigation and greenwashing risk, and win capital access.

For context and the latest timelines, see the CSSB CSDS 1 and CSDS 2 consultation materials and OSFI’s Guideline B-15: Climate Risk Management.

 

Work with a partner who has done this

If you need a board-charter refresh, disclosure mapping, or assurance-readiness playbook, talk to us. Explore how we help on Services, learn more About Us, or Work With Us. For tailored guidance on ESG and climate disclosure readiness in Canada, visit Lamba Law.