Comprendre l'impact sur les entreprises canadiennes des règles de divulgation des risques climatiques du régulateur américain des marchés financiers (en anglais)

12 minutes de lecture
02 avril 2024

In a landmark move, the United States Securities and Exchange Commission (“SEC”) introduced groundbreaking Climate Disclosure Rules (the “US Rules”) on March 6, 2024, reshaping the disclosure landscape for businesses operating within the United States. These final US Rules not only directly affect Canadian companies with cross-border operations, but they also signify a pivotal shift in corporate transparency that will likely affect Canadian public company disclosure requirements and norms around climate change.

In this article, we draw on the expertise of our special guest contributor, Brook Detterman, Boston Office Managing Principal of the US environmental law firm, Beveridge & Diamond PC, to discuss the US Rules, and Gowling WLG (Toronto) environmental lawyers, Graham Reeder and Liane Langstaff, and capital markets lawyer, Kathleen Ritchie, to help you understand the impact of the US Rules on Canadian businesses.



Significance of the Rules in the United States

The US Rules, officially categorized under 17 CFR 210, 229, 230, 232, 239, and 249, mark a response to escalating global concerns surrounding climate change and the growing demand for corporate accountability. Recognizing the integral role financial markets play in addressing climate-related risks, the SEC aims to enhance transparency, allowing investors to make informed decisions and fostering a more sustainable and resilient economy.

Public company requirements under the US Rules

The US Rules are comprehensive, designed to provide a robust framework for climate-related financial disclosures. While the US Rules are extensive, several key components stand out for their potential impact on how public companies must report and manage climate-related risks and opportunities under these final US Rules.

  1. Material Climate Risks (17 CFR 229): The US Rules require disclosing material climate-related risks, acknowledging the dynamic nature of these risks and urging companies to adopt a forward-looking approach. Climate-related risks include both physical and transition risks, with a requirement to assess both over the short-term (likely to manifest within 12 months) and long-term (12+ months).
  2. Greenhouse Gas (“GHG”) Reporting (17 CFR 229): Certain companies (large accelerated filers (“LAFs”) and accelerated filers (“AFs”)) are required to provide comprehensive disclosures, covering direct (Scope 1) and indirect (Scope 2) GHG emissions. Additional attestation requirements also apply to Scope 1 and Scope 2 disclosures.
  3. Board Oversight & Governance (17 CFR 229): Companies must disclose certain aspects of Board oversight of material climate-related risks and risk management; disclosures also are required with respect to the role management has in assessing and managing climate-related risks. These provisions are aimed at fostering accountability at the highest level of corporate governance.
  4. Scenario Analysis (17 CFR 229): The US Rules introduce scenario analysis as a tool to assess potential impacts of various climate-related scenarios on a company's financial position. The US Rules do not require scenario analysis but do require related disclosures for companies conducting scenario analysis.  This forward-looking approach aids in anticipating and mitigating future risks.
  5. Targets, Goals, and Transition Plans: Companies must disclose information related to climate-related targets or goals, if adopted, that may materially affect the registrant’s business, operations, or financial condition. Companies also must disclose transition plans, if adopted, to manage a material transition risk.
  6. Third-Party Verification (17 CFR 229 and 249): To bolster the credibility of climate disclosures, the SEC encourages companies to seek third-party verification of their data, ensuring accuracy and reliability.
  7. Timely Disclosures (17 CFR 232 and 239): Companies must adhere to specific timelines for reporting climate-related information, ensuring timely access for investors and stakeholders.
  8. Financial Statement Effects (Regulation S-X; 17 CFR 210).  Additional disclosures are required with respect to certain climate-related financial impacts, including with respect to: severe weather events or other natural conditions, transition plan costs, and (if material) costs related to carbon offsets and renewable energy credits used to achieve climate-related targets or goals.
  9. Safe Harbor (17 CFR 229): Existing forward-looking statement safe harbors are available for aspects of the climate disclosures, including with respect to material risks, transition plans, and targets and goals. As such, management is protected from liability for making financial projections and forecasts in good faith. Meanwhile, historical facts, such as GHG emissions or Renewable Energy Certificates (also called RECs) or carbon offset use reporting, are not eligible for safe harbor.

Changes from the proposed US Rules

The SEC had previously released the US Rules in proposal form, but the final US Rules are significantly less ambitious. Smaller reporting companies, emerging growth companies, and non-AFs are exempt from Scope 1 emissions (direct GHG emission) and Scope 2 emissions (GHG emissions from purchased energy) disclosure and attestation requirements. No companies will be required to disclose or report on Scope 3 emissions (other indirect GHG emissions), which would have forced companies to more carefully document GHG emissions along their supply chains. Aspects of climate-risk disclosure also are less prescriptive, with the SEC backing off line-item assessments and including a 1% disclosure threshold for disclosure of capitalized costs, expenditures expensed, charges, and losses incurred as a result of severe weather events and other natural conditions, along with additional de minimis thresholds.

Implementation uncertain

Compliance dates will depend on filer status, but the earliest filing requirements for Scope 1 and 2 emissions for LAFs are set to begin at the beginning of the 2026 financial year.

However, numerous challenges to the US Rules were filed in six different US Courts of Appeal, which now are consolidated in the Eighth Circuit Court of Appeals, which is unlikely to present a favorable forum to the SEC. Challengers include at least 25 different states (through their state Attorneys General) and two environmental non-governmental organizations (“NGOs”), the Sierra Club and the Natural Resources Defense Council.  The NGO challenges support the US Rules but are suing to reinstate the proposed SEC Scope 3 GHG reporting requirements (i.e. the more ambitious requirements that did not make it into the final US Rules).  With a likely appeal to the US Supreme Court from any outcome in the Eighth Circuit, a final resolution is likely several years away. 

Impact on Canadian businesses

The implications of the US Rules extend beyond US borders, impacting Canadian businesses with operations or financial interests in the United States. As cross-border economic activities become increasingly intertwined, Canadian companies must prepare for potential shifts in disclosure requirements, governance expectations, and investor priorities.  For example, Canadian providers of Renewable Energy Certificates or carbon offsets may face additional documentation requests from US buyers subject to the US Rules. 

Following the US Rules also may allow Canadian businesses to proactively align with global sustainability standards. Adapting to these regulations not only enhances a company's reputation but also positions it as a forward-thinking player in the international business arena, while aiding in a more robust assessment of climate-related impacts and risks that the company may face.

The US Rules are also expected to be considered in the development of future Canadian climate-related disclosures standards. The Canadian Securities Administrators (“CSA”) released Proposed National Instrument 51-107 Disclosure of Climate-related Matters for public comment on Oct. 18, 2021. However, despite calls from organizations like the Canada Climate Law Initiative for greater guidance, the CSA has not finalized the Proposed National Instrument. While the CSA has assessed the 125+ comment letters received on the Proposed National Instrument (before the February 16, 2022 deadline), the CSA has been waiting for the release of the Canadian Sustainability Standards Board’s proposed Canadian Sustainability Disclosure Standards (which were released on March 13, 2024 and are open for comment until June 10, 2024) and the final US Rules. With all of these recent developments, the CSA is now in a better position to consider next steps.[1]

Finally, even privately held companies and companies that only have Canadian domestic operations, should take note of the US Rules. The US Rules can assist Canadian businesses in aligning with evolving climate norms, not merely as a regulatory requirement but as a strategic imperative for long-term success – particularly given the proliferation of both climate-related impacts and disclosure requirements globally, such as those in California (which apply to privately held companies doing business in California) and Europe.

Ultimately, the US Rules offer a roadmap for companies to integrate climate-related considerations into their decision-making processes, fostering resilience, sustainability, and accountability. For Canadian businesses, the time to embrace these changes is now, proactively anticipating climate-related risks to your businesses and planning for a changing future.

If you have any questions about this article, please contact one of the authors, or a member of our Environmental, Social Governance (ESG) Group or our Capital Markets Group.

Update: On April 4, 2024, the SEC issued an Order staying the effectiveness of the final US SEC Climate Disclosure Rules, pending completion of the judicial review of the consolidated petitions pending before the Eighth Circuit Court of Appeals discussed in our article. In doing so, the SEC indicated that it is not departing from its view that the final US Rules are consistent with applicable law and with the SEC’s long-standing authority. The SEC also indicated that it will continue to “vigorously defend” the final US Rules’ validity in court. The SEC stay will, however, avoid potential regulatory uncertainty if entities were to become subject to the final US Rules’ requirements during the pendency of the challenges to their validity.


[1] In any event, Canadian public companies have always had obligations to disclose the material risks facing their corporations, which increasingly includes climate risk. See also the August 2019 CSA Staff Notice 51-358, Reporting of Climate Change-related Risks which recognized climate change as a mainstream business issue and that all public companies must disclose material risks and how they are managing them.


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