On December 18, 2024, the Canadian Sustainability Standards Board (“CSSB”) announced the release of its first Canadian Sustainability Disclosure Standards (“CSDS”). The new Canadian standards, effective January 1, 2025, align with international benchmarks while considering the unique Canadian context.

Although currently voluntary, the Canadian standards provide useful guidance for disclosing sustainability-related financial information and climate-related risks and opportunities. The standards could become mandatory if adopted by regulators or governments in the future.

Notably, the Canadian Securities Administrators (“CSA”) are reviewing the standards and will conduct consultations. If incorporated into a CSA rule, the standards would become obligatory for Canadian public companies.

Why the CSSB standards matter

Established in June 2022, the CSSB assesses the applicability of international sustainability disclosure standards to the Canadian context and promotes their adoption. The standards respond to increasing demands from investors, regulators, and other stakeholders for consistent and comparable sustainability disclosures.

Canada is under pressure to improve transparency in environmental and climate-related issues, and these standards aim to bridge the gap between sustainability initiatives and financial reporting, ensuring that businesses provide decision-useful information to the market.

In June 2023, the International Sustainability Standards Board (“ISSB”) released IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. These standards aim to enhance investor trust by communicating sustainability-related risks and opportunities.

The CSSB standards build on the ISSB framework, with modifications outlined in the “Proposed Criteria for Modification Framework” released in March 2024. The Exposure Drafts for CSDS 1 and CSDS 2 underwent a 90-day review in early 2024, leading to their December 2024 release.

Adopting the CSSB standards supports Canada’s commitment to global sustainability goals, aligning closely with both the ISSB and the Task Force on Climate-related Financial Disclosures (“TCFD”). For businesses, this means that adherence to CSSB standards will also satisfy global investor expectations, thereby enhancing their competitiveness on the international stage.

Highlights from the CSDS standards

CSDS 1: General requirements for disclosure of sustainability-related financial information

CSDS 1 outlines principles for sustainability disclosures. Its primary goal is to provide a cohesive framework that enables organizations to communicate how sustainability-related risks and opportunities affect their financial position, performance, and prospects. Key aspects include:

  1. Materiality assessment: Requires organizations to disclose information that is material to investors and other primary users of financial reports. Materiality is determined based on the potential impact of sustainability issues on an organization’s enterprise value.
  2. Connected reporting: Emphasizes integration of sustainability information with financial reporting. This ensures that disclosures are not siloed but instead reflect the interconnected nature of sustainability and financial performance.
  3. Flexibility and scalability: Offers flexibility for organizations to tailor their disclosures based on the nature of their business and industry-specific factors.
  4. Governance and strategy: Requires detailed disclosures on governance structures and strategic decision-making processes related to sustainability risks and opportunities.

CSDS 2: Climate-related disclosures

CSDS 2 provides specific guidance for climate-related disclosures, aligning closely with the TCFD recommendations. It addresses the following four key pillars:

  1. Governance: Companies must disclose the governance structures for overseeing climate-related risks and opportunities. This includes detailing the board’s role and the management’s responsibilities in addressing climate issues.
  2. Strategy: Businesses are required to outline the actual and potential impacts of climate-related risks and opportunities on their business models, strategies, and financial planning over short, medium, and long-term horizons.
  3. Risk management: The standard mandates comprehensive disclosures on how organizations identify, assess, and manage climate-related risks. This involves integrating climate risks into existing enterprise risk management frameworks.
  4. Metrics and targets: Companies must report the metrics they use to measure and monitor climate-related risks and opportunities, as well as disclose targets for managing these issues. This includes information on greenhouse gas (“GHG”) emissions, categorized by scope (Scope 1, 2, and, where appropriate, Scope 3 emissions).[1]

The Canadian CSDS 1 and CSDS 2 standards align with IFRS S1 and IFRS S2 but with the following modifications to address Canadian public interest needs:

  • Added transition relief of one year to the effective date of the standards (CSDS 1 – E1). The effective date of the Canadian standards is now January 1, 2025. This means companies can report on their 2025 fiscal year in their 2026 fiscal year reports.
  • Added transition relief of one year for the start date for reporting on sustainability matters beyond climate (CSDS 1 - E5). An entity is now permitted to disclose information on only climate-related risk and opportunities in the first two annual reporting periods. This means companies can disclose only climate-related risk and opportunities in their 2026 and 2027 fiscal year reports, with sustainability matters requiring reporting in the 2028 fiscal year report.
  • Added two years of relief for the start of aligned reporting, with such reporting being required within the first six months following the second- and third-year end respectively (CSDS 1 - E4(b)). This means companies must begin aligned reporting with financial statements in the third quarter of 2027 and 2028.
  • Added three years of relief for only the quantitative aspects of scenario analysis data reporting (not qualitative aspects) (CSDS 2 - C4(c)). This means quantitative aspects of scenario analysis data reporting would be required starting in 2028 fiscal year reports.
  • Added two years of transition relief for Scope 3 GHG emissions reporting (CSDS 2 - C4(b)) to give a total of three years before an entity must disclose Scope 3 GHG emissions. This means companies must disclose Scope 3 GHG emissions in their 2028 fiscal year report.

Implications for Canadian businesses

The introduction of CSDS 1 and CSDS 2 marks a shift in Canadian sustainability reporting. For businesses, these standards present opportunities, challenges and strategic considerations, including the following:

  • Opportunities: Early adoption can enhance investor confidence, improve access to capital, and boost corporate reputations. Businesses that proactively embrace these standards may gain a competitive edge by demonstrating leadership in sustainability practices.
  • Challenges: Compliance with the new standards will require undertaking data collection and verification data, integrating sustainability considerations into financial reporting, and establishing robust governance frameworks. Smaller businesses may face resource constraints, while larger organizations may need to navigate the complexities of aligning their existing practices with the new standards.
  • Strategic considerations: To prepare for compliance with the new CSSB Standards, companies should begin by conducting a materiality assessment to identify the most relevant sustainability issues for their operations. Engaging with stakeholders—including investors, customers, and regulators—will be essential to ensure that disclosures meet their expectations. Additionally, businesses should consider leveraging technology and external expertise to streamline data collection and reporting processes.

Where to find the new standards

The CSDS 1 and CSDS 2 standards, as well as the supporting Bases for Conclusions document, are provided in the CPA Canada Handbook – Sustainability, which is currently available for free for a limited period of time on the Chartered Professional Accountants Canada website.

Next steps

The CSSB’s standards represent a significant advancement in sustainability reporting for Canadian businesses. The CSSB will continue to seek feedback and provide resources to facilitate the adoption of CSDSs and to ensure that Indigenous rights and interests are meaningfully integrated into their work. CSSB will also be hosting consultation on its 2025-2028 Strategic Plan in April 2025.

For more information about the CSSB standards and other ESG, climate and environmental law inquiries, please contact the authors or a member of Gowling ESG and Environmental Law Groups.


[1] Scope 1 emissions are direct GHG emissions from sources controlled by an organization. Scope 2 emissions are indirect GHG emissions associated with the purchase of energy. Scope 3 emissions are indirect GHG emissions from activities along an organization’s value chain (both upstream and downstream).